STORY: With less than a week left until the U.S. runs out of money if Congress fails to raise or suspend the $31 trillion debt ceiling…
…. Democratic President Joe Biden and Republican House Speaker Kevin McCarthy appeared upbeat Monday that both chambers of Congress will pass their tentative deal, hammered out over the weekend, and prevent what Treasury Secretary Janet Yellen has called the ‘unthinkable’ from happening.
Biden said he had been working the phones to get lawmakers on his side.
“Look, you know I never say I'm confident in what the Congress is going to do, but I feel very good about it. I've spoken to a number of the members. I spoke to McConnell. I spoke to a whole bunch of people, and it feels good. We'll see when the vote starts.”
After weeks of tough negotiations, the crucial test now comes on Tuesday.
That’s when the House Rules Committee takes up the bill.
McCarthy predicts most of his fellow Republicans, who control the House 222 – 213, will support suspending the debt ceiling.
House Democratic Leader Hakeem Jeffries also says he expects support from his side, although also some on the far left to vote “no” as well.
And at least two hard-right Republicans McCarthy appointed to the Rules Committee, the price he paid to secure his position as House Speaker, say they do not support the bill.
Representative Chip Roy wrote on Twitter that there were “no serious substantive policy reforms”.
Another panel member, Ralph Norman called the deal “insanity” as the spending cuts don’t go far enough.
The bill would suspend the debt limit through January 2025, and set aside the politically risky issue until after the 2024 presidential election. It also claws back unused COVID relief, caps government spending, and raises the defense budget.
The financial markets responded mostly positively on Monday to the prospects of a Biden-McCarthy deal, seeing it as a path to avert potential chaos on a massive scale if the U.S. was unable to make payments on its securities.
But some investors are wary that the spending cuts secured by McCarthy could drag down U.S. growth.
Investors are also bracing for potential volatility in the U.S. bond market as the Treasury is expected to quickly refill its empty coffers by issuing bonds once the debt ceiling is raised.