Several of the GOP holdouts with ethanol concerns signaled overnight they would flip their votes to yes given the changes, according to two people familiar with the discussions.
“Midwestern members made some good progress tonight,” one of the members involved in the talks said, speaking on condition of anonymity. This Republican cited the securing of “five critical wins for biofuels.”
“People were very pleased with this amendment,” echoed another Republican familiar with the conversations.
While it remains unclear if the wee-hour changes are enough to secure final passage on the floor, which Republicans are aiming for later Wednesday, McCarthy has regained momentum heading into a morning House GOP conference meeting that could help seal the fate of the bill.
Since McCarthy can only stand to lose four Republican votes assuming full attendance, wrangling all his members has been no easy task. In the end, GOP leaders agreed to changes that are designed to appease nearly all of their holdouts.
The amended proposal accelerates changes to work requirements for those receiving federal benefits, including food stamps, to 2024, a change intended to satisfy a small group of conservatives that includes Rep. Matt Gaetz (R-Fla.). Starting in September, states would be barred from saving up unused exemptions under the SNAP food assistance program and in October additional constraints on the Temporary Assistance for Needy Families program would kick in.
Major portions of the Inflation Reduction Act signed into law last summer would be eliminated as well, including $1 billion to boost the adoption of building codes for energy-efficient construction, $5 billion for loans to back energy infrastructure projects, $1.9 billion in grants to improve transportation access to neighborhoods, $200 million for National Park System maintenance projects and $5 billion in grants for reducing climate pollution.
And the revised bill would still repeal the tax credits on clean fuels, but would now include an exception to allow the tax perk to continue for those in binding contracts or locked into investments for sustainable aviation fuel or for producing other “clean” fuel before April 19. The amendment would also kill changes in the incentive structure for renewable diesel, second generation biofuel, carbon dioxide sequestration and biodiesel.
Still, McCarthy still may have some work left to do.
As of Tuesday evening, at least two GOP lawmakers were declared no’s for different reasons: Reps. Nancy Mace (R-S.C.) and Tim Burchett (R-Tenn.). In addition, Rep. Andy Biggs (R-Ariz.) has signaled he may oppose the bill. Gaetz, a perennial leadership gadfly, predicted before the late-hour deal that leaders was facing “at least” eight GOP no votes on the debt measure.
Mace argued to reporters that McCarthy’s debt ceiling proposal didn’t address balancing the federal budget and that it “doesn’t really tackle spending.” Burchett, meanwhile, told POLITICO that he is a decided “no” vote after he was stood up by someone in leadership during a planned meeting on Wednesday.
“The reality is: I’m a no vote and just don’t take me for granted,” he said.
Biggs, meanwhile, described himself as a “lean no” and warned that discussions “might have gone beyond the place” to get him to a yes — arguing that Republicans should return to fiscal year 2019 spending. The Arizona Republican is part of a conservative block, which also includes Reps. Thomas Massie (R-Ky.) and Eli Crane (R-Ariz.), who have been pushing McCarthy to go further in his opening bid, according to people familiar with their thinking.
In a sign of the bigger potential headache awaiting McCarthy if he didn’t make changes: House Freedom Caucus Chair Scott Perry (R-Pa.), Rep. Bob Good (R-Va.) and other members of his group were publicly warning that they were undecided on the bill as they pushed to tighten work requirements for government programs. In addition to wanting to speed up their implementation, some conservatives were also looking to beef up the number of hours recipients had to work per week from 20 to 30.
“I’d love to see some changes on the work requirements. I want to see people going to work for, like, more than just a hobby,” Perry said.
Perry, though, declined to say if he had enough votes to sink the legislation if it wasn’t changed, quipping: “That’s for me to know and for you to see on the board.”
Meredith Lee Hill and Katherine Tully-McManus contributed to this report.
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“This week, we will pass” the debt bill, McCarthy declared to reporters after a full day of meetings.
“We’re done negotiating,” added Rep. Mike Johnson (R-La.), a member of GOP leadership, while projecting confidence that “the whole Republican conference is going to get on board.”
The GOP plan, which includes across-the-board spending cuts, stricter rules for social safety net programs and energy production incentives, has largely earned cheers across the conference despite zero expectations that it will become law. Republicans have nonetheless insisted that this week’s debt bill is their best chance to restart stagnant talks with President Joe Biden ahead of a deadline that could come as soon as June.
But with a small margin of error, and potential absences among the GOP ranks, they’ll need near-unanimity among his conference to avoid an embarrassing setback that would undercut Republican efforts to force Biden to come to the negotiating table.
Already, two Republicans went on record Tuesday night saying they’ll oppose the bill: Rep. Nancy Mace (R-S.C.) and Tim Burchett (R-Tenn.). And Rep. Andy Biggs (R-Ariz.) said he is a “lean no.“
Burchett, for his part, praised McCarthy but said that he hadn’t heard from the California Republican. Instead, he heard from his team who scheduled a meeting with the Tennessee Republican — but then skipped it.
“I’m not going flip a vote because of my ego, but … just don’t take me for granted dude,” Burchett said.
Underscoring the fluidity, Freedom Caucus Chair Scott Perry (R-Pa.) declined to say, after meeting with McCarthy, if he would support the GOP debt bill or how many of his members might defect.
“I don’t know what might change. I don’t know right now what might change and so I’m waiting to see,” he said.
Perry is amongst a group of conservatives who want to boost work requirements up to 30 hours per week — up from 20 hours in the current plan. Members of the Freedom Caucus are expected to discuss the debt plan during a meeting on Tuesday night.
Other conservatives, including Reps. Eli Crane (Ariz.), Thomas Massie (Ky.) and Biggs, have also urged McCarthy to go further in his opening bid, according to people familiar with their thinking and public statements.
Still, the largest contingent of Republicans rebelling against their leaders’ plan is pushing to roll back certain tax incentives — specifically for biodiesel — that threatens to hurt their home states’ bottom line. A group of those members, mostly from the Midwest, have demanded changes to the bill, with many telling leadership they remain undecided.
McCarthy met with two of those fence-sitters, Iowa Reps. Ashley Hinson and Randy Feenstra, early Tuesday afternoon and plans to meet with others later in the day. Both Feenstra and Hinson declined to say after their meetings if they would back the bill.
Additionally, two of the holdouts, Reps. Derrick Van Orden (R-Wis.) and Michelle Fischbach (R-Minn.), submitted amendments to strike the parts of the bill that would repeal tax credits for biodiesel and other renewable energy sources. Some members debated internally with their teams into Tuesday evening as to whether they could support either amendment and then vote yes on the final bill — even if the amendment were to fail, which it’s likely to do, according to two people familiar with the discussions. Several members appeared to be open to the option.
The most dug-in members on the ethanol issue include the entire Iowa House delegation — Feenstra, Hinson and Reps. Mariannette Miller-Meeks and Zach Nunn — along with Reps. Brad Finstad and Fischbach of Minnesota, Van Orden and Mark Alford of Missouri, according to three Republicans involved in the talks. Some members from Illinois, Nebraska and Indiana have also raised concerns, but they’re not considered major threats by GOP leaders at this point.
On the centrist side, Rep. Don Bacon (R-Neb.) said Tuesday he’s a yes on the bill, but added: “There are some areas where we’re going to have to hold our nose. But we also know what we got to get something across the net.”
When asked about a potential Wednesday vote, Rep. Dusty Johnson (R-S.D.), a leadership ally, said: “Hard to tell when the stew gets done cooking,” but predicted the conference is in a “good spot” to vote this week. The House is scheduled to recess next week.
GOP leaders have continually projected confidence in their ability to keep their conference together, avoiding a repeat of January’s floor drama as McCarthy toiled through 15 ballots to win the top gavel.
“We’re gonna be good, we’re gonna pass it tomorrow,” House Majority Whip Tom Emmer (R-Minn.) told reporters Tuesday afternoon.
Leadership is taking the position that it’s this bill or nothing. One senior House Republican, familiar with the discussions, said Tuesday: “We got to present this as a binary choice, either you’re voting with Kevin or you’re voting against Kevin.”
On the other side of the Capitol, Senate Budget Chair Sheldon Whitehouse (D-R.I.) said he wouldn’t be surprised if Minority Leader Mitch McConnell is forced to break the debt-limit stalemate between McCarthy and Biden. Whitehouse predicted that the minority leader might get involved once pressure intensifies from Republican donors over relieving the economic pain of a potential default.
“At the end of the day, something will occur in the Senate. I just don’t think the conditions for that have yet been set,” he said. “Mitch McConnell has brokered deadlocks before, and I think that remains a possibility.”
Caitlin Emma contributed to this report.
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Still, the speaker can only lose four Republicans and still pass his debt limit legislation. Most House Republicans are on board, but McCarthy’s leadership team remains short of the 218 votes it needs for passage. Conversations continued over the weekend to try and bring stragglers into the “yes” camp.
Even if McCarthy is able to push his debt limit bill to House approval, the legislation is dead-on-arrival in the Democratic-controlled Senate. Instead, the GOP debt bill is effectively a messaging tool for Republicans in their push for talks with President Joe Biden, who has thus far insisted on a no-strings-attached increase of the debt limit.
The Treasury Department has already been using “extraordinary measures” for months to hold off a default while an unclear “X-date” looms. But there could be more clarity soon: The Congressional Budget office and the Bipartisan Policy Center are planning to release updated projections the second week of May.
Agitation for changes to the legislation began almost as soon as the bill text was released last week, including a higher bar for work requirements for Medicaid and food assistance programs and a sooner start date. As written, the measure would require Medicaid recipients to work 80 hours per month, or 20 hours per week.
“Work Requirements in the House debt limit bill must begin in 2024, not 2025 (as is currently drafted). The reason we demanded 72 hours to review legislation is so we could identify and fix issues with specifics precisely like this. Let’s Get to Work!” Rep. Matt Gaetz (R-Fla.) wrote on Twitter over the weekend.
Gaetz was in a meeting last Thursday with McCarthy’s leadership team, Budget Chair Jodey Arrington (R-Texas), Ways and Means Chair Jason Smith (R-Mo.) and leaders of different factions of the conference, discussing both work requirements and the general temperature across the conference.
The elimination of certain tax credits, from ethanol to biofuels, is another source of stress for some members, but confidence that those wouldn’t survive any White House deal has dialed down the concerns.
Other bill components include the claw-back of upsent pandemic funds and IRS funding for customer service and finding tax cheats, a cap on spending to levels from fiscal year 2022, a roll back energy tax credits from Inflation Reduction Act and tighter work requirements for recipients of food stamps and Medicaid benefits. As written, it would raise the debt limit through March of 2024 or until the debt grows to $32.9 trillion, whichever comes first.
The House Rules Committee takes up the bill Tuesday afternoon, a precursor to a floor vote. Should McCarthy need more time to whip votes, the House, which does not return from its weekend recess until Tuesday, is scheduled to be in on Friday.
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How Wall Street investors react to a possible default is crucial because they’re the ones who finance the country’s enormous debt by buying the securities that Treasury sells to fund the government. If they shy away from the market, interest rates could skyrocket, squeezing the government, businesses and consumers.
That’s why their level of confidence can serve as the strongest force to drive Washington partisans to make a deal.
For most of this year, many on Wall Street assumed that lessons learned from the 2011 crisis — including voters furious over declines in their retirement accounts as stocks plunged — would prevent such an event from happening again. That faith is starting to fade.
“Debt ceiling negotiations are essentially nowhere,” Brian Gardner, chief Washington policy strategist at investment bank Stifel, wrote in a note to clients. Gardner added that while a last-minute deal could certainly emerge, “the GOP’s narrow majority and the Speaker’s tenuous political position make the pathway to an agreement more uncertain than usual.”
To be clear, it’s nowhere near all-out panic. The government has until the summer to strike a deal, when the Treasury Department is likely to run out of room to keep paying the nation’s bills and servicing its existing debt.
But signs of stress are piling up, especially after House Speaker Kevin McCarthy came to the New York Stock Exchange on April 17 to make the GOP case that any hike in the borrowing limit must come with significant spending cuts. That’s something the White House and congressional Democrats say they won’t consider.
The shift from general nonchalance to rising concern can be seen in an obscure corner of the markets: the soaring cost of insuring against exposure to U.S. debt through instruments called credit default swaps, which mitigate risk for large holders of Treasury securities.
The cost of insuring against a U.S. default rose to its highest level in over a decade on Thursday as JPMorgan analysts said there was a “non-trivial risk” of at least a technical default on the government’s debt in which the nation runs out of borrowing ability for even a short period before a deal is reached.
Darrell Cronk, chief investment officer of Wells Fargo’s wealth and investment management division, said his biggest worry is that the “X-Date” — the moment when emergency moves to forestall default are exhausted — gets pulled forward to early-to-mid June with 2022 tax receipts likely weak after a brutal year for markets.
Goldman Sachs researchers said they also expect a much shorter timeline due to a steep reduction in capital gains revenue. And McCarthy’s hardline position — as well as questions about whether he can unify House Republicans over any strategy at all — have amped up alarms. “People seem to be dug in a little bit more in the trenches,” Cronk said.
Some bank executives said they are growing more concerned about the state of play in Washington but remain unsure how to inject themselves into the debate. Speaking out would be unlikely to sway hard-line conservatives, they fear, given that such calls would probably be dismissed as special pleading by rich Wall Streeters.
So for now, they are mostly issuing anodyne statements arguing for the importance of not allowing the U.S. to default, in a bid to nudge the two sides toward a solution.
Following McCarthy’s address, congressional Republicans urged bankers to press Biden to engage with the GOP.
“Obviously, people [on Wall Street] are worried,” Sen. J.D. Vance of Ohio said in an interview. “We’ll just say, ‘Look, it’s a two-party system. And Kevin McCarthy gets to make the first shot across the bow, but they need to put pressure on Joe Biden, to the extent they’re able to, to actually come to the negotiating table.’”
Rep. Warren Davidson of Ohio said he’s telling bankers that “the only way that we’re going to not default later is if we start taking corrective action now.”
“Joe Biden’s plan is to not take corrective action now,” said Davidson, a member of the House Freedom Caucus. “That’s a nonstarter. We’re not going to move his ‘no action now’ bill,” he said, referring to Democrats’ hopes of passing a “clean” debt limit hike with no spending cuts.
Democrats expressed frustration that the financial world hasn’t exerted more pressure on Republicans.
“Wall Street and business need to start getting energized and put pressure on Republicans to do what we’ve done all these years, which is pay for the debt that we incurred and not hold the American people hostage,” said Rep. Pramila Jayapal of Washington, who chairs the Congressional Progressive Caucus.
Senate Banking Chair Sherrod Brown (D-Ohio) said he was confident Wall Street would eventually speak up. “But I think that it’s telling that McCarthy went to Wall Street to talk about all this because he’s Wall Street’s guy,” Brown added. “So we’ll see.”
Meanwhile, concerns over the impact that a nasty fight over the debt limit could have on the economy are showing up on bank earnings calls.
Goldman CEO David Solomon identified uncertainty over the debt limit as a potential source of volatility during the bank’s call on Tuesday. An hour earlier, responding to a question from POLITICO, Bank of America CFO Alastair Borthwick told reporters he didn’t have much to say on the status of non-existent negotiations between the White House and McCarthy.
“Obviously, we’re all hoping that gets resolved successfully,” he added.
Citi CEO Jane Fraser said her bank believes it’s “now more likely that the U.S. will enter into a shallow recession” later this year. “The biggest unknown,” she told analysts on the bank’s recent earnings call, is “how the debt ceiling plays out.”
BlackRock Vice Chair Philipp Hildebrand warned at the Bloomberg New Economy Gateway Europe Forum on Thursday that default would undermine “a basic anchor” of the world’s financial system and “must not happen.”
“All we can do is to pray that everyone in the United States understands how important the sanctity of the sovereign signature of the leading currency, of the leading bond market, of the leading economy in the world is,” Hildebrand said.
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Republicans, led by House Speaker Kevin McCarthy, can point to polls showing only tepid backing for raising the debt ceiling and preference for spending cuts over tax increases to bring down the budget deficit. On President Joe Biden and the Democrats’ side: overwhelming support for lifting the cap once poll respondents are told breaching it could lead to a default.
That’s a mixed bag of public opinion: 54 percent of Americans opposed raising the debt ceiling in a new CBS News/YouGov poll this week, but that number dropped to only 30 percent when respondents were asked if they would let the U.S. default. But in Washington, polling uncertainty about the political fallout can have serious consequences. In the debt limit fight, it’s emboldening both sides.
Biden is in an especially precarious position, as he reportedly prepares to roll out his reelection campaign as soon as next week. He’s entering this fight with lower approval ratings than Obama’s ahead of the 2011 crisis, and voters remain worried about inflation and the economy — which, along with government dysfunction, could supplant more Democratic-friendly issues like abortion in the news in the coming weeks.
A POLITICO/Morning Consult poll from late February underscored the volatility of the situation — and the current disincentive for either party to cave: Asked whom they would blame if the U.S. defaulted, a plurality of voters, 37 percent, said they’d hold both parties equally responsible. Another 30 percent said Democrats would be most to blame, while 24 percent said the GOP would be.
It’s a different climate from 12 years ago. A Washington Post/Pew Research Center poll from mid-June of 2011 — about six weeks before the crisis was ultimately resolved — found more Americans said they would blame Republicans (42 percent) than Obama (33 percent) if the debt limit wasn’t raised.
In that debate, Obama and Democrats were generally seen as more in line with public opinion, backing a combination of spending reductions and tax increases on the wealthy — a generally popular plank — in exchange for raising the debt ceiling, compared with Republicans’ more drastic budget cuts.
That combination hasn’t been floated this year, given Republicans’ aversion to new taxes and Biden’s lack of engagement with McCarthy so far. Broadly, Americans are split when asked to choose between the two: tax hikes or spending cuts, with a slight preference to trimming spending.
A NPR/PBS Newshour/Marist College poll in February found that half of voters, 50 percent, thought in order to close the national debt the government should “mostly cut programs and services,” while 47 percent said it should “mostly increase taxes and fees.”
In that poll, 52 percent of voters favored raising the debt ceiling “to deal with the federal budget deficit” — slightly different wording than the CBS News poll that yielded slightly stronger support. But only 26 percent of Republicans supported raising the debt ceiling, even as McCarthy seeks support for his plan in the House next week among a bloc of members who even opposed hiking it under then-President Donald Trump.
What could make 2023 different from 2011, Republicans say, is inflation.
“There is one really important change that’s occurred,” said David Winston, a Republican pollster and adviser to former House Speakers Newt Gingrich and John Boehner. “When you go back to prior discussions [about the debt ceiling], the national debt is still an abstraction.”
But now, Winston said, “There is a clear connection that the electorate has between spending and inflation.”
The GOP catered much of its 2022 midterm economic message around trying to connect government spending with the rapid increase in prices over the past few years.
There’s some evidence that’s worked, to a degree: A YouGov poll from last October, just weeks before the midterms, found that 53 percent of Americans assigned “a lot” of blame for inflation to “spending from the federal government” — though that was fewer than blamed “the price of foreign oil” (60 percent) and roughly equal to those who held “large corporations trying to maximize profits” (52 percent).
For Biden and Democrats searching for the upper hand, there are some encouraging signals in the polling. An ABC News/Washington Post poll from late January and early February asked Americans if Congress should only raise the debt ceiling if Biden agrees to spending cuts, or if “the issues of debt payment and federal spending” should “be handled separately?”
The public took Biden’s side on the strategic question: Only 26 percent said Congress should only raise the debt limit if Biden cut spending, while 65 percent said the debt payments and spending should be separate.
Moreover, while reducing spending might be broadly popular, there’s the issue of what to cut. In this week’s CBS News/YouGov poll, not only do seven-in-10 respondents want the country to avoid a default, but majorities actually support increasing spending on Social Security, Medicare and Medicaid as part of the budget notifications. Even on defense spending, more Americans want to see it increased (41 percent) than decreased (26 percent). A third, 33 percent, want it to remain the same.
But Biden is also less popular than Obama — who was still enjoying a bounce in his poll numbers after the killing of Osama bin Laden entering the final three months of the 2011 debt crisis — at this point in the process. Biden’s average approval rating is 42 percent, according to FiveThirtyEight, while Obama in May 2011 was sitting on majority approval. And even Obama’s approval rating slipped as the country approached the debt ceiling that summer — a potential preview of what’s to come.
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The endgame is still hard to see, weeks or even months away depending on how quickly the nation approaches default. But the political battle entered a new phase this week when McCarthy finally put forth a legislative proposal in his speech Monday, laying out the spending cuts Republicans wanted in exchange for a one-year debt ceiling increase — and giving the White House officials something specific to attack.
And attack they have. Biden’s speech Wednesday at a Maryland union hall served as a summation of his team’s theory of the case. And White House aides have made it clear they’re eager to continue talking about this, whether through emails from the press shop, Cabinet officials describing the specific impacts of proposed cuts or at the briefing room podium.
On Friday, press secretary Karine Jean-Pierre called McCarthy’s proposal a “ransom note” and emphasized a new VA analysis on the impact of proposed GOP cuts on veterans healthcare. The president’s economic agenda, the White House believes, is popular. Repealing laws that have helped the middle class and created jobs, cutting taxes for corporations and the rich, and risking default are not.
Republicans, Biden asserted Wednesday, “say they’re going to default unless I agree to all these wacko notions they have. Default. It would be worse than totally irresponsible.”
He reminded McCarthy of the GOP’s hypocrisy — they had no problem raising the debt ceiling three times during the Trump presidency — and of Ronald Reagan and Donald Trump’s own comments decrying debt limit brinkmanship as reckless. Biden also urged the speaker to “take default off the table, and let’s have a real, serious, detailed conversation about how to grow the economy, lower costs and reduce the deficit.”
According to two people familiar with the administration’s strategy, it’s not clear to anyone inside the White House if McCarthy has the votes from his own caucus to pass his bill, and it may not yet be clear to the speaker himself, who has what one person familiar with the White House’s thinking termed a “principal-agent problem.”
The bill would be dead on arrival in a Democrat-controlled Senate. But the White House is signaling clearly to GOP moderates in the House: Vote to cut popular programs, including Social Security and Medicare, at your own risk.
“If they pass this, we are going to hang it around their moderates’ necks,” said one person familiar with the administration’s thinking.
Chad Gilmartin, a McCarthy spokesperson, said “the White House is clearly having trouble defending President Biden’s reckless spending and irresponsible refusal to negotiate with Speaker McCarthy on the debt limit.”
He added: “It’s no surprise that the administration now has to fall back on crazy accusations against the only plan in Congress that would avoid default.”
But Biden, his aides say, learned from the Obama administration’s 2011 standoff with Republicans that it’s imperative not to allow the debt ceiling to become part of negotiations. But with McCarthy’s tenuous speakership constantly hanging by a thread, and dependent in large part on his ability to placate his most extreme members, the White House knows that talking him off the ledge on risking default — giving up what he sees as his main point of leverage — won’t be easy.
And as much as White House officials like the politics of the negotiations’ current phase, they know they, too, will face pressure to negotiate the closer they get to D-Day.
The window for scoring points, in fact, could be quite short as the danger of default grows. Goldman Sachs economists this week said that, due to weaker than expected tax season revenues, the U.S. could hit the debt ceiling in early June, earlier than expected. Within the administration, there are some differences in the level of alarm, as senior officials focused on economic matters have privately expressed more concern about the serious possibility of default than others whose purview is politics, according to one senior administration official, who spoke on the condition of anonymity to speak freely.
Already, some Democrats are urging Biden to engage with McCarthy sooner rather than later. But at this point, Biden would be unlikely to say anything different to the speaker in private than what he’s said publicly — he’s open to a bipartisan deal on spending but only after lawmakers authorize a clean debt ceiling increase. That said, Jean-Pierre Friday wouldn’t go as far as to say that Biden would only meet with McCarthy after he puts forth a clean debt ceiling hike.
And there’s doubt inside the West Wing about whether McCarthy is ready for a meeting. Some aides believe it will take mounting pressure from the business community for the speaker to relent and that, given the difficult politics within his own caucus, he may not be able to back down. In such a scenario, the White House hopes that the House might at the very least swallow a Senate-passed bill to avoid default, if some Republicans are willing to use a discharge petition to get such a bill to the floor.
But some in the administration are less confident about that scenario coming to fruition than the White House is at the moment about the current contours of the debate. Senate Republican Leader “Mitch McConnell as the backstop is scary,” the senior administration official said.
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Greene is far from alone among Republicans cheering clean energy investments created by Democratic policies they all snubbed. And that’s creating some awkward dynamics for GOP lawmakers who are seeking to wipe out Biden’s clean-energy spending plans as part of any deal to avert a U.S. debt default.
The White House, and supporters of Biden’s clean energy programs, are eagerly seizing on the contradiction.
“The Biden Clean Energy Plan has helped create more than 140,000 clean energy jobs across the U.S. — the majority of which are in Republican-held districts,” said Lori Lodes, executive director of the group Climate Power, citing its own estimates of the law’s economic impact.
“Now MAGA extremists are threatening to implode our country’s economy — and the clean energy manufacturing boom that’s happening in their communities — to protect their own corporate, anti-climate interests,” she said.
According to data provided by Climate Power, which was then reviewed, vetted and confirmed by POLITICO’s E&E News, at least 37 congressional districts now represented by Republicans have welcomed expansions of new clean energy operations fostered by three major Biden-era laws — last year’s Inflation Reduction Act, the 2021 bipartisan infrastructure law or the CHIPS and Science Act.
A POLITICO analysis early this year similarly found that Republican districts were home to about two-thirds of the major renewable energy, battery and electric vehicle projects that companies had announced since Biden signed the IRA in August.
House Republicans all opposed the Inflation Reduction Act. All but 13 opposed the infrastructure law, and all but 34 voted against the CHIPS and Science Act.
Three House Republicans who are poised to see new chip manufacturing booms in their districts — Reps. Mike Simpson of Idaho, John Curtis of Utah and Richard Hudson of North Carolina, who chairs the National Republican Congressional Committee — were among those who scorned CHIPS.
In its reporting, E&E News found that 21 projects in Republican-led districts were a result of benefits from the IRA, while 15 were made possible by the infrastructure law. Some Republicans had multiple projects in their districts due to one or both of these laws.
Eleven Republicans responded to requests for comment or made themselves available for interviews to explain how they squared their opposition to these laws with their support for the jobs in their districts. They include Greene, who denied that any contradiction exists in her stance on Biden’s programs.
“I don’t think the government should be controlling our energy sector,” Greene said in an interview Thursday on Capitol Hill.
‘Height of hypocrisy’
Greene also insisted that the climate law’s enactment was not the catalyst for the expansion of QCells, despite the company’s statements asserting as much.
“Those jobs were jobs in my district under the Trump administration,” she said. “QCells … gave all the credit to the local counties there that helped them get started, and [Republican] Gov. [Brian] Kemp and the Trump administration.”
The company announced in January that it would add to existing facilities in Greene’s Dalton district, plus add a new facility in Cartersville, the district of Republican Rep. Barry Loudermilk. Qcells said at the time that the action “follow[ed] the passage of the Solar Energy Manufacturing in America Act within the Inflation Reduction Act.”
In April, Qcells further celebrated a deal that would require the Dalton plant to manufacture 2.5 million solar panels — the largest community solar order in American history — made possible by the 2022 climate spending law. Vice President Kamala Harris attended the festivities.
“It’s the height of hypocrisy for [Republicans] to be blasting the president and all he’s done to address climate change and build a clean energy economy that is directly benefiting people in their districts,” Craig Auster, vice president for political affairs at the League of Conservation Voters, said of the GOP lawmakers.
White House deputy press secretary Andrew Bates similarly scorned the GOP position in a memo Thursday that was later provided to news outlets including POLITICO’s E&E News. “Killing newly-created American manufacturing jobs just so the super wealthy and big corporations can enjoy tax welfare would be a gut-punch to America’s competitiveness and to thousands of working families in red states,” he wrote.
In South Charleston, West Virginia, GreenPower Motor Co. has said its electric school bus facility benefited from the infrastructure law’s clean school bus program, and it has highlighted how its buses can also get tax credits worth up to $40,000 from the Inflation Reduction Act.
Republican Rep. Carol Miller, who represents that area, said in a statement that while “hardworking businesses like GreenPower Motor are responding to the rules set by the federal government to bring much needed investment to West Virginia … we should have provided them with the ability to grow without sending American tax dollars to the Chinese Communist Party.” (The administration insists its agenda is meant to provide jobs and economic security inside the U.S., not China.)
Miller added that “the jobs West Virginia is creating through the so-called ‘Inflation Reduction Act’ come nowhere close to replacing the opportunities that liberal activists destroyed in my state. The faster we can repeal these IRA tax credits and replace them with incentives that fully support American manufacturing and energy production, the better.”
Elsewhere in West Virginia, Sparkz Inc. — an energy startup producing lithium-ion batteries — is growing operations in Republican Rep. Alex Mooney’s district.
In March, Sparkz CEO Sanjiv Malhotra told an audience at the premier annual energy conference CERAWeek by S&P Global that he had Biden and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) to thank for the Inflation Reduction Act, which led to the massive investment the company has made in the state.
Mooney, who is vying to unseat Manchin in 2024, issued a statement that didn’t address how he reconciled his opposition to the climate law with jobs coming to his community.
“The Inflation Enhancement Act is a $745 billion spending spree that alone adds $146 billion to the national debt,” he said. “West Virginians are paying more at the pump and the grocery store as they suffer from Biden’s regressive inflation tax.”
Justifying the disconnect
Not every Republican had an explanation ready for how they squared their positions.
In Clarksville, Tenn., for instance, which is part of Rep. Mark Green’s district, Texas-based Microvast Holdings plans to expand an existing facility with a new plant for battery components. The Department of Energy picked the plant in October for a $200 million award under an infrastructure law program meant to boost battery materials processing and battery manufacturing.
GOP lawmakers are scrutinizing that award because of Microvast’s significant presence and operations in China. DOE officials have said the money has not yet gone out while the agency continues to vet all of the award recipients.
Green said while he was concerned about the China connections, he didn’t feel prepared to talk about how the existence of the facility colors his view of the infrastructure law, which he voted against.
“I have to get some more information on it to answer the questions,” he said.
Others, however, sought to justify the disconnect.
Republican Rep. Mark Amodei of Nevada has two battery manufacturing facilities in his district that received incentives from the Inflation Reduction Act — Zinc8 Energy Solutions and Redwood Materials. The district is also home to a lithium manufacturing plant from Lilac Solutions because of the infrastructure law.
Despite all this activity, he said, “when you look at the overall policy, let’s just say for Nevada, these two pieces of funding do not make up for the damage these two pieces of legislation can do or are threatening to do.”
Rep. Chuck Fleischmann of Tennessee, the top Republican on the House Energy and Water Development Appropriations Subcommittee, was emphatic that a grant made possible by the infrastructure law for Novonix Ltd. to produce battery components in his district did not depend on protecting that piece of legislation in the long term.
In fact, he argued, the appropriations process has been filling the coffers of this project and others like it for some time now.
The infrastructure law and the Inflation Reduction Act “were like a false positive, if you will … the money’s there.”
Rep. Dan Newhouse, the chair of the Congressional Western Caucus, represents Moses Lake, Wash., where Sila Nanotechnologies received a $100 million award through an infrastructure law Energy Department program. Separately, REC Silicon, a solar-grade polysilicon manufacturer, said last year that the Inflation Reduction Act “underpinned” its decision to reopen its own closed plant in Moses Lake.
“Rep. Newhouse had fundamental disagreements with the massive infrastructure package that spurred a socialist spending spree and led to record-high inflation,” said spokesperson Mike Marinella.
“While he acknowledges that the bill did more harm than good for the American people, he will always recognize and applaud economic opportunity for the hardworking men and women in his district.”
Concerns for projects despite ‘no’ votes
Some Republicans also laid bare how complicated the dynamics can be.
Just outside Charleston, S.C., in Rep. Nancy Mace’s district, the battery minerals recycling company Redwood Materials is working to build a $3.5 billion manufacturing campus.
“When paired with the benefits of the recent Inflation Reduction Act, this strategic location also allows us the opportunity to invest more heavily at home while potentially exporting components in the future, allowing the U.S. to become a global leader in this manufacturing capability,” the company said in announcing its plans.
J.B. Straubel, the company’s CEO, told The Wall Street Journal that the Inflation Reduction Act “has gently shifted our priorities to really accelerate investment in the U.S. a little bit ahead of looking overseas.”
Mace, in an interview, said the Redwood plant doesn’t change her opposition to the climate law: “It doesn’t do anything for inflation,” she said. “It was really just a gift to the Green New Deal.”
On the other hand, Mace is leaning against supporting House GOP leadership’s debt limit deal because of its rollbacks to the IRA’s clean energy provisions.
“I’m concerned about some of the things that’ll hurt some green energy like solar,” she said. “Solar is huge — not only in the Lowcountry, but across the entire state of South Carolina, it’s huge. This would adversely affect solar.”
Curtis, the chair of the Conservative Climate Caucus, has a semiconductor wafer plant from Texas Instruments booming in his Utah district thanks to an investment from the CHIPS and Science Act.
In a statement this week, he intimated that he would support the GOP debt limit bill but acknowledged it “also proposes cuts to clean energy tax credits” that he supported in previous legislative iterations before they were packaged in the partisan Inflation Reduction Act.
“I … will continue to advocate for policies that lead to affordable, reliable, clean energy,” Curtis said.
‘Candy apples’ and ‘toads’
Many of the GOP’s allies in the advocacy and industry community are likewise gritting their teeth at the party’s demands in the debt standoff.
“In the last nine months, the clean energy industry has announced 46 major manufacturing facilities and scores of clean energy projects in communities across the country,” said Jason Grumet, the CEO of the American Clean Power Association — the largest clean energy trade group — in a statement. “If enacted, [the GOP bill] would jeopardize these investments and thousands of good paying American jobs.”
But Heather Reams, president of the right-leaning Citizens for Responsible Energy Solutions, said in an interview Thursday that she couldn’t fault Republicans for rejecting the one-sided political process that surrounded the drafting, and enactment, of the Inflation Reduction Act.
“I don’t think you’re seeing Republicans turn their backs entirely as a party on clean energy; I think you’re seeing conservatives turning their backs on out-of-control spending, and the IRA being ground zero for partisan spending,” she said.
Luke Bolar, who leads external relations and communications at the conservative clean energy group ClearPath, dwelled on Republicans’ complicated relationship with the IRA’s clean energy tax credits during a keynote speech in March at the Conservative Climate Leadership Conference.
He urged citizen lobbyists to press for implementation of elements of the climate law, but conceded: “That’s a tricky one, right? Zero Republicans supported that. … However, some of the tax incentives that were included in the IRA had tremendous Republican support.”
Bolar mentioned the law’s incentives for carbon capture and sequestration, which can offer fossil fuel companies payments for corralling greenhouse gases.
Rep. Morgan Griffith (R-Va.) put the GOP’s green jobs predicament more colorfully.
“I always refer to pieces of legislation as having either candy apples or toads,” Griffith observed. “If there’s enough candy apples, you can swallow a toad or two. Some of the renewable or biofuels tax credits, those are the toads you may have to swallow in order to set the stage and have some candy apples and try to rein in some of this government spending.”
Jeremy Dillon contributed to this report.
A version of this report first ran in E&E Daily. Get access to more comprehensive and in-depth reporting on the energy transition, natural resources, climate change and more in E&E News.
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Most House Republicans insist publicly that they’re paying no attention to the simmering mistrust between McCarthy and Scalise. But privately, many are watching the duo’s dynamic strain under the stress of the debt-limit fight. That’s true even as McCarthy mends fences with the budget chief he’d previously sidelined, Scalise ally Rep. Jodey Arrington (R-Texas).
GOP lawmakers and senior aides say McCarthy and Scalise are friendly in private, and that Scalise is happy at No. 2, where he’s focused on policy priorities like energy and education. Yet it’s no secret that Scalise, once seen as waiting in the wings if McCarthy stumbled, is now competing for the speaker’s ear with other confidants on several issues.
The resulting tension is starting to simmer just as McCarthy, like his predecessors John Boehner and Paul Ryan, faces the ultimate test of House Republican loyalty — a debt standoff. And it shows that the rift that opened between McCarthy and some senior Republicans during his grueling bid for the job hasn’t faded in the months since.
“People say there’s goldfish memory: 30 seconds, and everything’s forgotten,” said Rep. Dan Bishop (R-N.C.), one of the 20 conservative holdouts who delayed McCarthy’s ascension to speaker. “But I’m not sure that’s always true.”
It’s not uncommon for legislative leaders to lean on an unofficial circle of friendly colleagues. But any sign of daylight within McCarthy’s leadership team was bound to draw scrutiny after what he endured to secure the speakership — and his narrow margin for error to keep it.
McCarthy’s relationship with Scalise isn’t the only one taxed by the debt drama. As he moved closer to releasing a bill designed to unite his members, the speaker put distance between himself and Arrington. Allies of McCarthy had seen Arrington as speaking out of turn about the conference’s approach to the high-stakes debt-limit talks.
But since then, McCarthy has quietly worked to repair ties with Arrington — even putting the Budget Committee chair’s name on the GOP’s opening bid in the debt talks — in what members saw as an effort to show unity to the rank and file.
Arrington said in an interview that McCarthy called him hours before releasing the House GOP’s debt plan and asked if he would add his name as lead sponsor.
“I said, ‘If I can help the conference succeed in this endeavor, which I think is critical for our country’s future, I’m in’,” the Texan recalled.
Still, some members are keeping a close eye on McCarthy and Scalise as the House hurtles toward a likely vote next week on the speaker’s debt plan. The two meet one-on-one at least weekly, but suspicion about a rift between them flared again heading into January’s speakership race, as McCarthy worked fiercely to win over his skeptics, while behind closed doors his allies fumed that Scalise wasn’t boosting him enough.
“Steve could have said the simple thing in the press and refused to do so,” one House Republican allied with McCarthy said, insisting on anonymity to speak freely about Scalise’s handling of the speakership fight. “I think there’s a level of distrust between the two members that exists, sure. But the staffs are working well together and that’s all it really needs for this [debt ceiling] thing.”
Scalise made several public statements supporting McCarthy for speaker in the runup to the balloting and nominated the Californian on the floor. And Scalise allies are defending his efforts on steering other high-profile GOP measures to passage in recent weeks, including a marquee energy bill and a “parents’ bill of rights.”
Rep. Andrew Garbarino (R-N.Y.), a member of the elected leadership team, said Scalise was instrumental in smoothing over hiccups on the parents’ bill as language in the text threatened to trigger a damaging jailbreak: “It went from a dead bill to something we were able to fix in 30 to 45 minutes.”
In the first months of the new majority, however, McCarthy became increasingly reliant on his own sounding boards, like McHenry, Hill, Graves and others. They serve as McCarthy’s shadow Cabinet of sorts, offering perhaps the most precious commodity in Washington: loyalty.
Graves and McHenry, in particular, seem to be involved in most of the GOP’s tactical decisions these days. Graves is running point on McCarthy’s debt conversations across the conference, after helping to shepherd a major energy bill and internal talks about earmark rules. McHenry has been pulled in on multiple issues that range beyond his financial expertise.
Their fellow House Republicans note that McCarthy’s unelected lieutenants, in addition to being viewed as strong on policy, are also not as threatening as Scalise because they’re not seen as angling for his job.
“It’s natural for folks to fall back with people they trust, and people who aren’t afraid to tell them ‘that’s a bad idea,’” Rep. Dave Joyce (R-Ohio) said.
It’s a practice that past speakers have also engaged in, as former Rep. Rodney Davis (R-Ill.) pointed out.
“Having close friends be trusted advisers outside of elected leadership is not uncommon,” said Davis, a close McCarthy ally. “Boehner had members like Tom Latham and Dave Joyce, among others. Paul Ryan had Jim Sensenbrenner and Sean Duffy, too. Kevin is doing the same thing with trusted folks that were essential in helping him win the speaker’s gavel.”
But that practice has a way of chafing the members left on the outskirts of the conversation — such as those elected to leadership or committee chair positions. In Scalise’s case, he took pains to project alignment with McCarthy in the run-up to November’s midterms that became harder to maintain after the House GOP’s hopes of a commanding victory faded to a narrow, four-seat majority.
That small margin of control, of course, made it much harder for McCarthy to win the speakership earlier this year. Throughout the 15 ballots he needed to win, McCarthy allies argue Scalise should’ve had more of a hands-on approach, rather than a hands off, which triggered old suspicions that the Louisianan was lying in wait for his opening to rise, feelings of which have percolated throughout the duo’s first 100 days in charge of the House.
Allies in both camps note that the majority leader is keeping his head down and focused on policy — including putting out fires in another fraught intraparty debate: immigration policy. The Louisianan has helped broker conversations between holdouts like Rep. Tony Gonzales (R-Texas) and his Lone Star State rival, GOP Rep. Chip Roy. But a New York Times report earlier this month that highlighted his frayed relationship with McCarthy only made things worse.
“It was a little weird. I don’t think that was one of the best moments, but there have been many good moments,” Bishop acknowledged.
Rep. Don Bacon (R-Neb.), a purple-district incumbent and McCarthy ally, said he called the speaker’s office to raise concerns about the “undermining” that he perceived in the Times report. Bacon added that he’s “seen no evidence” of bad blood between the “very collegial” speaker and majority leader.
In a potential win for McCarthy, some of his biggest skeptics during the speakership skirmish appear to be tuning out what’s happening at the top. About a half-dozen members of the House Freedom Caucus interviewed for this story largely shrugged off the leadership drama as separate from their world — though some were displeased and defensive about the sidelining of Arrington, a fellow conservative albeit not a member of the group.
The Freedom Caucus’ bigger focus right now is eking all the wins they can get from the debt deal, which leadership needs the right flank on board for as much as possible.
Arrington, for his part, appears back in the fray on the debt talks. He attended a closed-door meeting Thursday afternoon as a cross-section of the conference demanded changes to the leadership-crafted measure’s proposed Medicaid work requirements, while shrugging off any questions about discord.
Rep. Steve Womack (R-Ark.), one of the conference’s more respected senior members, observed that Boehner once likened the speakership, during tough internal battles to corralling “jumping frogs in the wheelbarrow.”
“Keeping all the jumping frogs together, at some snapshot in time when we’re voting, is going to be the test of leadership,” Womack said.
Jennifer Scholtes, Jordain Carney and Caitlin Emma contributed to this report.
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“They’ve got to do it soon,” Rep. Debbie Dingell (D-Mich.), a close White House ally, said of a Biden-McCarthy sitdown, adding that while she believes there will ultimately be a clean debt-ceiling increase, the administration “can’t keep waiting.”
Democratic lawmakers have already pressed that point in private, according to two people close to the discussions, urging the White House to lay out plans to meet with McCarthy for fear that public opinion would turn against the party. And swing-seat lawmakers stressed there’s no harm in starting a conversation, even as they all oppose McCarthy’s opening bid.
“I don’t think there’s any harm in the two of them sitting down to talk,” said first-term Rep. Greg Landsman (D-Ohio). “The idea that we’re even coming this close to a potential default is insane.”
Over in the Senate, centrist Joe Manchin (D-W.Va.) has been pushing Biden for weeks to restart talks. Manchin said in a statement Thursday he didn’t fully agree with McCarthy’s proposal but slammed Biden’s refusal to meet with the Republican leader as a “deficiency of leadership.”
Rank-and-file House Democrats aren’t going that far.
“This is not a serious piece of legislation,” said Rep. Jared Moskowitz (D-Fla.). “That being said, I am happy we are talking about the debt ceiling, because I think it’s very critical to talk, and so do I think the speaker of the House and the president should sit down and talk about the debt ceiling? Of course they should.”
Democratic leaders aren’t budging, yet. They remain in lockstep with the White House’s position that talks can’t begin until House Republicans release their own budget and fully divorce the conversation about debt from spending. Biden and McCarthy last met on the debt ceiling at the White House in early February, and while both characterized it as a promising start, the meeting didn’t produce any breakthroughs. Democratic leaders believe they should maintain maximum pressure on Republicans rather than strengthen McCarthy’s hand heading into a difficult vote for the GOP conference.
House Minority Leader Hakeem Jeffries told reporters Thursday he didn’t expect any Democrats to support McCarthy’s offer and reiterated that they could talk with Republicans once they produced a budget. “I don’t know whether reasonable people would conclude that we should be negotiating against ourselves. That’s not a logical place to be,” he said.
Biden allies are also salivating over the political contrast they believe the GOP’s debt plan creates, allowing Democrats to position themselves as the bulwark against proposals that would roll back clean energy tax credits and impose work requirements on Medicaid beneficiaries.
“Ask House Republicans: Do they support Speaker McCarthy’s plan to kill manufacturing jobs in their home districts?” read the headline of a White House memo Thursday detailing more than a half-dozen Republican members whose districts are benefiting from manufacturing projects supported by the Inflation Reduction Act’s tax credits.
In a speech Wednesday, Biden rejected McCarthy’s proposal as full of “wacko notions” and reiterated his demand for a clean debt ceiling increase.
Yet while he’s maintained for months that he wants McCarthy to put out a budget before meeting with him again, officials have refrained from saying definitively whether the GOP passing its debt-limit bill would shift that calculus.
“If you do another meeting, there’ll be an expectation of negotiations,” one adviser close to the White House, granted anonymity to speak candidly, said of the dilemma facing Biden and his top aides. “The White House would have to be able to structure the lead up to the meetings to say, we’re happy to talk to him but we’re not negotiating. … And then the question becomes: ‘What’s the meeting for?’”
A bipartisan group of lawmakers from the Problem Solvers Caucus endorsed a separate debt framework Wednesday to hike the debt limit without drastic spending cuts. They’re billing it as a potential path to a compromise.
“Probably everyone’s rooting for the speaker and the president to come to a deal,” said Rep. Scott Peters (D-Calif.), a member of the bipartisan group. He said he wasn’t going to dictate what the president and speaker should do, but added: “I think more discussion or exploration about where people are, what would work, is helpful — and that’s why we did what we did.”
Democratic leaders haven’t openly embraced the bipartisan bid, though Jeffries said Thursday he saw it as proof that there are several dozen Republican lawmakers “who disagree with the extreme Republican proposal.”
Still, others projected optimism that a sitdown between Biden and McCarthy could produce a bipartisan breakthrough.
“They’re both Irish-American. They ought to have a nice dinner, and they ought to get to work and get it done for the sake of the country,” said Rep. Marcy Kaptur (D-Ohio), who represents a district former President Donald Trump won in 2020.
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