© Reuters. FILE PHOTO: President Joe Biden shakes hands with House Speaker Kevin McCarthy of Calif., after the State of the Union address to a joint session of Congress at the Capitol, Tuesday, Feb. 7, 2023, in Washington. Jacquelyn Martin/Pool via REUTERS
By David Morgan, Richard Cowan and Moira Warburton
WASHINGTON (Reuters) -The U.S. House of Representatives is due to vote on Wednesday on a bill to lift the government’s $31.4 trillion debt ceiling, a critical step to avoid a destabilizing default that could come early next week without congressional action.
Republicans control the House by a narrow 222-213 majority, but the bipartisan deal will need support from both Speaker Kevin McCarthy’s Republicans and President Joe Biden’s Democrats to pass, as members of both parties object to significant parts of the bill.
McCarthy predicted that the evening vote would succeed, telling reporters, “It’s going to become law.”
Biden underlined the stakes of failure, saying on Twitter, “Our bipartisan budget agreement prevents the worst possible crisis: a default for the first time in our nation’s history – an economic recession, retirement accounts devastated, and millions of jobs lost.”
Wall Street’s main indexes opened modestly lower on Wednesday as investors awaited the vote’s outcome.
The House Rules Committee late on Tuesday, in the first procedural vote on the contentious legislation, cleared the measure for debate in the full House on Wednesday.
The committee voted 7-6 to advance the bipartisan deal, with two far-right Republicans in opposition, along with all four Democrats.
The solid Democratic opposition is not necessarily indicative of how the party would vote on the bill itself.
The legislation would suspend the U.S. debt limit through Jan. 1, 2025, allowing Biden and lawmakers to set aside the politically risky issue until after the November 2024 presidential election.
It would also cap some government spending over the next two years, speed up the permitting process for some energy projects, claw back unused COVID-19 funds, and expand work requirements for food aid programs to additional recipients.
The Treasury Department has warned that it will not be able to cover all the government’s obligations by Monday if Congress does not raise the limit.
During Tuesday’s debate in the House Rules Committee, Republican Representative Chip Roy complained that the greater budget savings many conservatives had hoped for had not been achieved. He added that the bill also failed to turn back landmark Biden administration accomplishments, including vigorous spending to fight the effects of climate change.
“How on Earth is this going to be beneficial,” Roy said.
But reflecting party divisions, Representative Erin Houchin countered that despite Democratic control of the White House and Senate, the bill would achieve significant Republican spending cuts. “We are certainly punching above our weight,” she told her fellow House Republicans.
Late on Tuesday, the non-partisan Congressional Budget Office said the legislation would result in $1.5 trillion in savings over a decade.
A successful House vote would send the bill to the Senate, where debate and voting could stretch into the weekend, especially if any one of the 100 senators try to slow its passage.
SENATORS FIRM UP POSITIONS
Senators have been firming up their positions, with Republican Mitt Romney telling reporters he was supportive of the deal, as were others he had spoken to.
“When I was eight years old, I didn’t get all the Christmas presents I might have hoped for, but I got more than I expected,” he said, alluding to the compromise struck by Biden and McCarthy.
The No. 2 Senate Democrat, Dick Durbin, said he was still examining the bill’s details. He told reporters he was especially worried it would harm vital research at the National Institutes of Health, which he called the “premier medical research agency of the world.”
White House Budget Director Shalanda Young, who was one of Biden’s lead negotiators, urged Congress to pass the bill.
“I want to be clear: This agreement represents a compromise, which means no one gets everything that they want and hard choices had to be made,” Young told a news conference.
In a win for Republicans, the bill would shift some funding away from the Internal Revenue Service, although the White House says that should not undercut tax enforcement.
Biden can point to gains as well.
The deal leaves Biden’s signature infrastructure and green-energy laws largely intact, and the spending cuts and work requirements are far less than Republicans had sought.
Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy.
Interest payments on that debt are projected to eat up a growing share of the budget as an aging population pushes up health and retirement costs, according to government forecasts. The deal would not do anything to rein in those fast-growing programs.
Most of the savings would come by capping spending on domestic programs like housing, education, scientific research and other forms of “discretionary” spending. Military spending would be allowed to increase over the next two years.
The debt-ceiling standoff prompted ratings agencies to warn that they might downgrade U.S. debt, which underpins the global financial system.
The last time the U.S. came this close to default was in 2011, a time of similar partisan divide in Washington, with a Democratic president and Senate majority and a Republican-majority House.
This story originally appeared on Investing
