Berliner Boersenzeitung - Washington sweats over high-stakes vote to stave off default

Congress has just five days to green-light an agreement between Republicans and Democrats to allow more borrowing and ensure the country doesn't miss loan repayments, which would send the US and global economies into a potentially ruinous nosedive.

The Fiscal Responsibility Act -- hammered out between Republican Speaker Kevin McCarthy and Democratic President Joe Biden -- needs a simple majority to clear the 435-member Republican-controlled House of Representatives and head to the Senate.

Multiple Republicans have already announced their opposition -- angry that proposed spending cuts accompanying a two-year suspension of the debt ceiling fall far short of what they agreed in a bill passed by the House last month.

McCarthy on Wednesday described the deal as the "largest cut in American history... If I'm a member of Congress I wouldn't want history to pass me by."

But Chip Roy, a leading figure in the hard-right Freedom Caucus, dismissed the proposal.

"Not one Republican should vote for this deal. It is a bad deal. No one sent us here to borrow an additional $4 trillion to get absolutely nothing in return," Roy said.

Despite the Republican dissent, Biden struck an upbeat tone, saying "things are going as planned."

"We believe this is going to get out of the House tonight (and) the president will have a statement" when that happens, White House Press Secretary Karine Jean-Pierre said. "The president is confident."

The Democratic leader in the House, Hakeem Jeffries, urged Republicans to stick to their vote pledge "to produce 150 folks for the resolution that they themselves negotiated."

"And when that happens, Democrats are going to make sure that there is no default," he added.

- 2024 election -

The floor vote is planned for around 8:30 pm (0030 GMT Thursday), according to a provisional House schedule.

The agreement would hold spending flat for 2024 while boosting cash for defense and veterans and clawing back $28 billion in unspent Covid aid money.

Crucially, it will then cap increases at one percent until the year after the presidential election, a win for Biden who would not have to go through a repeat of the crisis at the height of his reelection campaign.

It would increase work requirements on federal food stamp recipients and welfare safety net programs, but does not make the sweeping reforms to government health insurance that Republicans had pushed for.

Republican strategists were bullish that the grousing from the right did not represent a consensus within the broader party.

"Members from all across the conference shared their support for this important bill" Republican Conference Chair Elise Stefanik told reporters after the bill advanced to a floor vote.

She called it "a historic step to restoring fiscal sanity and holding Washington accountable."

But a bloc of at least 20 Republicans have announced they will oppose the compromise, accusing McCarthy of caving to the White House and ensuring he will need to rely on Democratic votes to get the deal over the line.

- Republican frictions -

Congressman Dan Bishop told reporters he had "zero" confidence in McCarthy and threatened to push for his ouster, accusing the party leader of "lying" over the contents of the deal.

Any lawmaker can introduce a "motion to vacate the chair" -- a concession McCarthy offered the Republican hard right in return for their support for his speakership election in January.

Assuming it gets to the House floor, the bill needs 218 votes, with Republican leadership bracing for somewhere between 40 and 60 of their 222 members defecting.

On the left, lawmakers have voiced frustration over the new work requirements that would kick into federal aid programs while corporations and the rich are being asked to pay no more in taxes.

The left-leaning Center on Budget and Policy Priorities said the agreement was a "significant improvement" over the House-passed bill but complained it would leave older, low-income Americans hungry and "should be rejected."

The Treasury has warned that if the borrowing ceiling is not lifted by June 5, the government will run out of cash to service its debt obligations.

(T.Renner--BBZ)