Bloomberg News
WASHINGTON — Between a hectic day of caucus meetings and press conferences, leaders from both parties scrambled to win “yea” votes among their members on the debt ceiling deal ahead of a critical House vote scheduled for late Wednesday evening — only days before a potential default that would upend the U.S. financial system.
The leaders of both parties still expect the bill to pass, but the tally of “nos” grew in the afternoon leading up to the vote. This likely means that Republicans will need to gain Democrats’ support to get the bill through the lower chamber, according to five people familiar with negotiations.
The deal, brokered in part by House Financial Services Committee Chairman Patrick McHenry, R-N.C., was met with a sigh of relief from Wall Street when it was announced over the weekend.
The deal would avert a default that would be catastrophic for banks by suspending the borrowing limit until January 2025. Bank CEOs had been pushing for such a deal when they visited Washington a few weeks ago, according to three people familiar with the meetings between congressional leadership and Wall Street executives.
Markets ticked down in the lead-up to the vote. The Dow Jones Industrial Average dropped 118 points, or 0.3%, while the S&P 500 decreased .5% and the Nasdaq slipped 0.4%.
The bill would cut federal spending by $1.5 trillion over a decade, the Congressional Budget Office said. It would impose stricter work requirements for some food stamp recipients and claw back some funding for the Internal Revenue Service and coronavirus relief. The bill would also end President Joe Biden’s student loan repayment freeze.
“In a progressive-left administration and Democratic Senate, we will now have new work requirements,” McHenry told reporters. “We have conservative reforms that are included in this debt ceiling, and these things should help Republicans rally to the cause.”
Still, an ultra-conservative group of House Republicans continued to threaten the deal’s passage.
“I encourage my colleagues to vote ‘no’ on the rule and to oppose this resolution,” Rep. Chip Roy, R-Texas, said on the House floor Wednesday.
Some progressive Democratic members also said they would vote against the bill. Rep. Jesús “Chuy” García, D-Ill., for example, said in a statement that he “cannot support a bill that blocks necessary infrastructure investments, worsens housing instability, and takes away resources to support immigrant and mixed-status families.”
Leaders of both parties said that, despite this opposition, they anticipate that they have the votes for the deal to pass.
“I’m going to support the legislation that is on the floor today,” House Minority Leader Hakeem Jeffries, D-N.Y., told reporters after a closed-door House Democratic caucus meeting. “I support it without hesitation or reservation or trepidation — not because it’s perfect, but in divided government we cannot allow the perfect to be the enemy of the good.”
Should the House approve the bill Wednesday evening, it would be sent to the Senate, where lawmakers and Biden are still up against a tight deadline before the Treasury Department runs out of funds to pay its bills on Monday. The deal is largely expected to have an easier time in the Democratic-controlled upper chamber.
While bank executives have long supported raising the debt ceiling, the protracted debate will still cause some pain for the industry. While the Treasury Department has been prioritizing payments to avoid a default so far, it will need to issue billions of dollars in short-term debt to refill its coffers once the debt ceiling is raised. That debt could be purchased by bank depositors, leading to an outflow of reserves, or by money market funds, which could decrease the Federal Reserve’s overnight reverse repurchase program.