The hard-to-reach compromise in the debt dispute between the US government and the Republicans has cleared a first hurdle. The responsible committee in the House of Representatives cleared the way in the evening with a narrow majority of seven to six votes to present the bill to the plenary for a vote. Some of the arch-conservative committee members had previously announced they wanted to torpedo the bill. Ultimately, two Republicans voted against.
After a parliamentary debate, the draft is expected to be voted on in the House of Representatives this Wednesday. It’s about suspending the debt ceiling, which is currently $31.4 trillion. The compromise is intended to effectively freeze the size of the federal budget, which the Democrats under Biden actually wanted to increase. This would limit the budgets of many federal agencies and ministries. The Republicans were also able to enforce that recipients of certain social benefits must prove a job. The Democrats actually wanted to increase state revenues by taxing the rich more heavily. The Republicans opposed it.
The upcoming vote is a test for Republican Speaker of the House Kevin McCarthy, who negotiated the debt deal with President Joe Biden: Republican hardliners are dissatisfied with the compromise, and one MP even brought a vote of no confidence in McCarthy into play. Some spoke of a “settlement”. Other Republicans didn’t go quite as far, but urged their party colleagues to also vote no.
It is considered unlikely that the draft law will fail in the parliamentary chamber. Still, the stakes are high for McCarthy. The vote is also a vote on how much power the Republican extremists now have within the party and what McCarthy can do to counter them. If he relies on many votes from the Democratic camp for the vote, that would severely weaken his position.
Law must be passed quickly
The bill would set US federal spending levels for the next two years and suspend the debt ceiling until January 1, 2025. A renewed dispute over the US government’s borrowing is thus postponed until after the presidential elections. These will take place in early November 2024.
The law must be passed in both chambers of Congress – first the House of Representatives and then the Senate – and signed by the President as soon as possible, so that the US government does not run out of money. US Treasury Secretary Janet Yellen recently warned that the bankruptcy could occur on June 5th.