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Kevin McCarthy, bracing for defections, eyes fraught path to deal

The political reality is weighing on both Republicans and Democrats in the debt-limit talks, which continued Tuesday on Capitol Hill with no sign of imminent resolution

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Catie Edmondson & Luke Broadwater

Speaker Kevin McCarthy is attempting a difficult balancing act as he tries to extract spending concessions from President Biden in exchange for raising the debt ceiling: cobbling together a deal that can win the votes of a majority of Republicans without alienating the critical mass of Democrats he would need to push it through the House.
 
Hard-right Republicans have fueled the debt-limit standoff by demanding deep spending cuts as the price of averting a default, and they are all but certain to oppose any compromise. That means that McCarthy, a California Republican, would need the support of a solid bloc of Democrats in the closely divided chamber.
 
The political reality is weighing on both Republicans and Democrats in the debt-limit talks, which continued Tuesday on Capitol Hill with no sign of imminent resolution. 
 
They will resume debt ceiling talks on Wednesday morning, McCarthy said.
 
McCarthy and Biden are weighing compromises that would likely result in losing the votes of both the hard left and right flanks in Congress, meaning they would need to assemble a coalition of Republicans and centrist Democrats to back any final deal to avert a default.
 
The strategy carries steep political risks for McCarthy, who won his post earlier this year after a bruising 15 rounds of votes in part by promising to elevate the voices of his most conservative lawmakers — and agreeing to a snap vote to oust him at any time. He can afford to lose conservatives’ votes on the debt ceiling, but if he strikes a deal that angers them too much, he could be out of his job.
 
The dynamic has complicated the task of finding a palatable agreement, placing negotiators on a precarious legislative seesaw. Further complicating the picture is an unwritten but virtually inviolable rule long adhered to by speakers of both parties that any legislation they bring up must win at least a majority of their members.
 
The question is whether McCarthy can negotiate an agreement that his most conservative lawmakers, many of whom had never before voted to raise the debt ceiling, might oppose but will not attack.
Default risks denting nation’s credit rating

If the US government defaults on its debt even for just a few hours next week, it could have long-lasting consequences for the nation’s future. Three major ratings companies — S&P Global Ratings, Moody’s and Fitch Ratings — play a big role in how damaging those consequences can be.
 
Because the financial fallout of a default would be severe, the agencies expect lawmakers to come to an agreement before the government runs out of cash to pay its bills. But if the government ends up missing a debt payment, all three companies have vowed to lower the rating of the US as a borrower, and they may be reluctant to restore it to its previous level, even if a deal is reached soon after the default. The US has never deliberately reneged on its debt in the modern era, but even a brief default would alter the perception of debt-ceiling brinkmanship as political theater and turn it into a real risk to the creditworthiness of the government, Moody’s has warned.


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First Published: May 24 2023 | 11:48 PM IST

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