House Speaker Kevin McCarthy won the support of a few hardliners Wednesday night in his effort to quell his restive right flank and pass a short-term spending bill, but the risk of a US government shutdown remains high just 10 days before a funding lapse.
(Bloomberg) — House Speaker Kevin McCarthy won the support of a few hardliners Wednesday night in his effort to quell his restive right flank and pass a short-term spending bill, but the risk of a US government shutdown remains high just 10 days before a funding lapse.
After a closed-door meeting that lasted more than two hours, the besieged speaker was still short of the votes he needs to pass a Republican-only spending measure that has no chance of winning support in the Democratic-controlled Senate.
Should McCarthy ultimately succeed, the House-passed bill would at least set the terms for a possible negotiation with the Senate on federal spending.
A government shutdown would unfold at a vulnerable moment for the US economy. The peak impact of the Federal Reserve’s interest rate increases is about to hit, oil prices are rising and consumer spending is expected to weaken as student loan payments resume in October.
A lapse in federal funding would cut 0.2 percentage points from GDP for the quarter each week it lasts, estimates Bloomberg chief US economist Anna Wong. With forecasters already anticipating slower growth, an extended shutdown risks tipping the US into a recession.
McCarthy’s latest offer would impose a temporary 8% domestic spending cut and toughen immigration laws. It also would create a fiscal commission to review changes to entitlement spending.
To sweeten the deal, McCarthy proposed that the GOP agree to a top-line spending level for all fiscal 2024 bills that totals $1.526 trillion, a $64 billion cut from the cap in this year’s debt ceiling agreement negotiated with the White House. In another concession to his rebellious members, McCarthy called on Republicans to reject so-called budget gimmicks, which would make the effects of those cuts even deeper.
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The House now plans to bring a stalled defense spending bill blocked earlier this week by five conservatives and unified Democrats to the floor again Thursday. That could clear the way for a vote on the short-term spending measure Saturday, lawmakers said.
Conservatives Ralph Norman of South Carolina and Bob Good of Virginia said McCarthy’s deal had won them over.
“We’re very close there. I feel like it’s just got a little more movement to go,” McCarthy told reporters after the meeting.
He can only afford to lose four GOP votes on any party-line bill if all members are present.
Other conservatives including stalwart McCarthy critic Matt Gaetz and Cory Mills, both of Florida, said they would never vote for a short-term spending bill. Instead they want to force a prolonged shutdown while Congress takes weeks to pass 12 individual spending bills.
Meanwhile, McCarthy came under pressure from GOP moderates late Wednesday when 32 of them endorsed a plan to keep the government open through Jan 11. Members of the group have threatened to use a lengthy petition process to bring the bill to a vote if a shutdown begins.
(Updates with moderate position)
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