WASHINGTON, May 29 (Reuters) – A handful of hard-right Republican lawmakers said on Monday they opposed a deal to raise the U.S. $31.4 trillion debt ceiling, a sign that the bipartisan deal may face a rocky road ahead in Congress. America will run out of money next week.
As expected, Democratic President Joe Biden and top congressional Republican Kevin McCarthy outline the obstacles to seeing the Republican-controlled House of Representatives and the Democratic-controlled Senate pass the package.
Florida Gov. Ron DeSantis, a Republican 2024 presidential candidate, said the deal was not enough to change the fiscal trajectory. “After this deal, our country will be headed for bankruptcy,” he said on Fox News.
However, when the Treasury Department says it will happen on June 5, supporters predict that Congress will clear it before America runs out of money to pay its bills.
“This thing will absolutely pass. There’s no question about it,” said Republican Rep. Dusty Johnson, who said he had spoken with dozens of fellow lawmakers.
Biden said he also works on phones. “It looks good. We will see when the polling starts,” he told reporters.
The 99 page bill It would suspend the debt ceiling until Jan. 1, 2025, allowing lawmakers to shelve the politically sensitive issue until after the November 2024 presidential election. This will reduce some government spending over the next two years.
An important first test will come Tuesday, when the House Rules Committee takes up the bill, a necessary first step before a vote in the full House. Although the group generally aligned closely with the House leadership, McCarthy was forced to include some skeptical conservatives as the price of the Speaker’s victory.
One of those conservatives, Representative Chip Roy, said Tuesday he did not support the bill.
“This is not a good deal. There is some $4 trillion in debt — at best — two years of spending freezes and no serious policy reforms,” Roy wrote on Twitter.
Another board member, Ralph Norman, has already come out against the deal.
McCarthy told reporters on Monday that he wasn’t worried about the package’s prospects at the board.
In the Senate, Republican Mike Lee also came out against the bill, which could point to a tough vote there, where either member has the power to delay action for days. Democrats control the Senate 51-49.
McCarthy predicted he would win the support of his fellow Republicans, who control the House 222-213. House Democratic Leader Hakeem Jeffries said he expects support from across the aisle — many on the left of his party may vote “no.”
Representative Raul Grijalva, a progressive Democrat, wrote on Twitter that the bill’s changes to environmental provisions were “disturbing and deeply disappointing.”
Grijalva was referring to a component of the bill that would speed up the permitting process for certain energy projects. The bill would roll back unused COVID-19 funds and tighten work requirements for food assistance programs for poor Americans.
It would divert some funding from the Internal Revenue Service, which collects the tax, though White House officials say it shouldn’t reduce enforcement anytime soon.
The initial reaction was positive from financial markets, which would be thrown into chaos if the US, which forms the bedrock of the global financial system, is unable to pay on its bonds.
But some investors are wary that the spending cuts championed by McCarthy could weigh on U.S. growth. Investors are bracing for potential volatility in the US bond market.
Republicans have argued that steep spending cuts are necessary to control the growth of the national debt, which equates to $31.4 trillion in annual economic output.
Interest payments on that debt are expected to eat up a growing share of the budget in coming decades, as an aging population raises health and pension costs, according to government forecasts.
The agreement does nothing to limit fast-growing projects. Much of the savings will come from limiting spending on domestic programs such as housing, border control, scientific research, and other types of “discretionary” spending. Military spending will be allowed to increase over the next two years.
Reporting by Andy Sullivan, Gram Slattery, Kanishka Singh, Steve Holland and Douglas Gillison; Editing by Chris Saunders, Andrea Ritchie and Leslie Adler
Our Standards: Thomson Reuters Trust Principles.