Uncertain debt-ceiling vote looms for US House Republicans

WASHINGTON, April 25 (Reuters) – A top Republican in the U.S. House of Representatives predicted on Tuesday his party will overcome resistance within its ranks and muster the votes needed to adopt a plan to slash spending and raise the government’s $31.4 trillion debt ceiling.

“This will pass. I’m telling you right now, it will pass the House floor,” Representative Tom Emmer, the No. 3 House Republican, told Reuters in an interview.

House Speaker Kevin McCarthy can afford to lose support from no more than four of his 222 Republican members, if he is to pass the bill, which would raise the borrowing limit by $1.5 trillion.

But at least that many appeared to be withholding support as lawmakers returned to Washington on Tuesday. Republican leaders say the legislation is not open to changes and they plan to vote on it this week. “Right now we’re moving forward,” McCarthy told reporters.

The proposal has little chance of passing the Democratic-controlled Senate, and the White House said Tuesday that President Joe Biden would veto it if it reached his desk.

Biden said Congress must raise the debt ceiling without conditions, as it did three times under Republican President Donald Trump, to avoid default.

“A default would be totally irresponsible,” Biden told a union gathering in Washington. “We’re not a deadbeat nation.”

Republicans hope a show of unity can force Biden to negotiate after a months-long standoff.

“For Republicans, this is literally a choice between getting this done and giving the ball to Kevin McCarthy, or if you don’t want to get it done, then you’re giving a blank check to Joe Biden,” Emmer said.

The House Rules Committee, a gatekeeper on legislation, will take up the bill on Tuesday afternoon. That could be followed by a House floor vote as early as Wednesday.

Washington and Wall Street are focused on the coming “X-date,” possibly just weeks away, when the U.S. Treasury would no longer be able to pay all its bills, triggering a default that would shake the global economy.

It could be difficult for Congress to raise the debt ceiling before then if House Republicans are unable to unite behind a proposal, analysts say.

“That’s the scenario that introduces the greatest amount of risk into the equation,” said Rohit Kumar, co-leader of PwC’s national tax office in Washington.

The last prolonged standoff over the debt limit, in 2011, led to a downgrade of the U.S. credit rating, which shook financial markets and raised borrowing costs.

‘FINANCIAL CATASTROPHE’

Debt markets are already flashing warning signs as investors grow wary. Investors expect the Treasury Department to offer a new “X-date” forecast in the coming weeks.

Treasury Secretary Janet Yellen warned on Tuesday that a failure to raise the debt ceiling would trigger a “financial catastrophe” that would sharply raise the cost of borrowing money.

Manhattan Institute senior fellow Brian Riedl gives House Republicans a 50-50 chance of passing the legislation this week.

“The vast majority of Republicans are on board,” Riedl said. “But you have both moderate and conservative lawmakers trying to push it in competing directions.”

Some Republicans say it does not do enough to cut the deficit.

“At this moment, I’m a no,” Representative Nancy Mace told Reuters.

Others are pushing for tougher work requirements for social programs, or worry that proposed cuts to renewable-energy tax credits would hurt their home states.

Reporting by David Morgan and Katharine Jackson; Editing by Scott Malone and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.