May 31, 2023 House passes US debt ceiling bill

The House of Representatives is on track to vote Wednesday on a bill to suspend the nation’s debt limit through January 1, 2025, as lawmakers race to prevent a catastrophic default.

Earlier Wednesday, the chamber cleared a key hurdle to advance to a final vote when it approved a rule governing floor debate for the debt limit bill.

Rules are typically supported by just the majority party and opposed by the minority. But in this case, 52 Democrats voted “yes” to get the rule across the finish line after 29 Republicans voted against it.

These are the 29 Republicans who voted "no":

The House has passed the rule governing floor debate for the debt ceiling bill.

The tally was 241 to 187, with 29 Republicans voting “no” and 52 Democrats voting “yes.” Passage of the rule clears the way for a final House vote on the debt ceiling bill this evening. 

Rules are typically supported by just the majority party and opposed by the minority, but in this case, Democrats had to cross the aisle to get the rule across the finish line.

The GOP defections exposed deep divisions within the House Republican conference.

Democratic leaders instructed their members to let Republicans put up their votes for the rule first, a source familiar with the matter told CNN.

The strategy for the Democrats: Let Republicans sweat and show how many defections GOP leaders had. 

The Dow slipped more than 100 points on Wednesday as investors kept a close eye on the progress of the debt ceiling deal in Congress.

The Dow closed down 132 points, or 0.4%. The S&P 500 was 0.6% lower. The Nasdaq Composite also lost 0.6%.

President Joe Biden and Republican House Leader Kevin McCarthy reached a spending deal over the weekend to raise the debt limit. The House is expected to vote on the bill later today.

Senate Minority Leader Mitch McConnell told reporters on Wednesday that he hopes the chamber will finish voting on the debt ceiling agreement tomorrow or Friday.

Still, the timeframe to get the bill passed through both chambers of Congress and signed into law is extremely tight.

Lawmakers are racing against the clock to avert a catastrophic default ahead of June 5, the day the Treasury Department has said it will no longer be able to pay all of the nation's obligations in full and on time.

Analysts say the proposed debt ceiling deal could have only marginal effects on the US economy.

That's based on various estimates showing that government spending will be only slightly pared back over the two years of the deal, creating a small effect on overall economic output as measured by gross domestic product, including a limited number of job losses.

Despite the deal's limited macroeconomic impact, some analysts say it could also usher in a new era of tighter fiscal policy as congressional lawmakers contend with a national deficit that ballooned during the years of the Covid-19 pandemic.

Here's what's in the proposed deal and how it would show up in the broader economy:

What's in the deal? The deal would suspend the federal government's $31.4 trillion debt limit through January 2025. It would keep non-defense spending relatively flat in fiscal 2024 and then set a cap of 1% in spending increases for fiscal 2025. The US government's fiscal year runs from October through September.

In addition to curbing spending, the deal would protect veterans' health care benefits, temporarily broaden work requirements for certain adults receiving food assistance benefits, claw back some Covid-19 relief funds, cut funding for the Internal Revenue Service, restart student loan repayments, maintain climate measures, and expedite a natural gas pipeline in West Virginia.

The debt deal and GDP. Economists at Goldman Sachs expect the deal to reduce federal spending by as much as 0.2% of gross domestic product per year over the two years of the deal, compared with their baseline estimate.

However, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a webinar that he expects the deal to reduce GDP growth by about 0.2% in 2024 and by a further 0.1% in 2025, which are "well within the margin of GDP measurement error."

And Gregory Daco, EY-Parthenon's chief economist, estimated that the proposed deal would have a 0.3% drag on real GDP in 2024 and lead to 250,000 job losses. The economy had about 161 million filled jobs in April, according to data from the Bureau of Labor Statistics.

At least for now, the light at the end of tunnel in the form of a debt-ceiling deal seems to have reassured financial markets.

Read more.

The House of Representatives is now voting on the rule governing floor debate for the debt ceiling bill. The rule must be adopted to clear the way for a final House vote on the bill later this evening. 

Rules are typically supported by just the majority party and opposed by the minority. But in this case, Republicans are expecting as many as 20 GOP lawmakers to vote against the rule, according to a conservative lawmaker familiar with an internal whip count among the bill’s critics.

That means Democrats will have to step in to help push the rule over the finish line. 

Some Democrats have signaled they would be willing to back the rule if their votes were needed, so the rule is unlikely to be in danger of passage.

Still, having that many Republicans defecting on the rule would expose deep divisions in the GOP, which could be problematic for House Speaker Kevin McCarthy. 

Senate Majority Leader Chuck Schumer said that the chamber cannot send a debt ceiling bill back to the House with amendments — even though they may have to agree to votes on some amendments to get all 100 senators to agree to a timeline for the vote.  

The majority leader again emphasized the importance of getting the vote done quickly.

“We're getting close to putting this threat of default behind us, but there's still more work perhaps the most important work to do passing it into law. I hope the House will do its job later today and urge my colleagues in this chamber to be prepared to do the same when the time comes, and it’s coming soon,” Schumer said.

Schumer also responded to the criticism from some that Democrats could have solved the debt ceiling problem last Congress when they had control of both chambers.

“We didn’t have the votes, plain and simple," Schumer said.

As many as 20 House GOP lawmakers are expected to vote against the rule for the debt ceiling bill, according to a conservative lawmaker familiar with an internal whip count among the bill’s critics.

That means Democrats will have to step in to help push the rule over the finish line, which are typically party-line votes. 

Some Democrats have signaled they would be willing to back the rule if their votes were needed, so the rule is unlikely to be in danger of passage.

Still, that many Republicans defecting would expose deep divisions in the GOP, which could be problematic for House Speaker Kevin McCarthy, who has enjoyed a surprising level of unity in his ranks since his bruising speaker’s battle.

Democratic leaders have instructed their members to let Republicans put up their votes for the rule first, a source familiar tells CNN. The strategy for the rule vote: let Republicans sweat and show how many defections GOP leaders have. 

Rep. Brendan Boyle, a Democrat from Pennsylvania, told CNN he plans to take his cues from leaders before he steps in to help Dems on the rule.

CNN's Haley Talbot and Lauren Fox contributed reporting to this post.

Sen. Bernie Sanders said Wednesday he will vote "no" on the debt limit deal.

He is the first senator who caucuses with Democrats to publicly say he will vote against the bill, while many are saying they are undecided. 

Sanders said he opposed the climate provisions, work requirements, and other concessions made by the White House to get a deal with House Speaker Kevin McCarthy. 

He captioned his statement, "I cannot, in good conscience, vote for the debt ceiling deal," on Twitter.

Sanders later defended his decision but noted that he won’t delay its final passage.

The senator from Vermont said there will likely be enough votes to pass the legislation without his support. “I think they can count votes. I suspect it will pass,” he said. 

In the Senate, any member can slow down the process by objecting to waiving time for debate. Sanders told CNN that he will not oppose any time agreement. “No, I think we should move this thing as quickly as possible,” he said.

View Sanders' full statement here:

Senate Minority Leader Mitch McConnell called defense spending levels in the debt limit deal the “worst part” of the agreement, but said that on balance, it is still a good deal. 

He told reporters that he hopes the Senate will finish voting on the debt ceiling deal Thursday or Friday after it receives the bill from the House. 

All 100 senators must consent to this timeline.

The minority leader again praised House Speaker Kevin McCarthy’s negotiation for the agreement, despite “objections” from some Republican senators. 

“I would say that most of my members who do have objections would like to do more of the things that are already in the bill," McConnell said. "I think Speaker McCarthy you should be congratulated on capturing a number of priorities."