GOP debt ceiling bill faces its first test as analysts warn U.S. faces default risk as early as June

WASHINGTON — A House Republican bill to raise the debt limit while dramatically cutting federal spending faces its first test Tuesday afternoon, when the sprawling legislation is reviewed and "marked up" by the House Rules Committee,

The panel is expected to vote on whether to send the plan to the House floor.

Republicans insist they will only vote to raise the debt ceiling, and avoid a potentially catastrophic U.S. debt default, if President Joe Biden and the Senate's Democratic majority agree to a long list of budgetary demands contained in the 320-page bill, dubbed the Limit, Save and Grow Act.

In the week since the legislation was first unveiled, several new reports have suggested that a larger than expected drop in federal tax receipts this year may hasten the arrival of the so-called X-date. This is the projected date the Treasury Department will exhaust the emergency measures it is taking to prevent a federal debt default.

Goldman Sachs analysts wrote that their "base case remains for the debt limit deadline to fall in late July," as long as tax receipts only fall by 30%. If federal revenues fall by 35%, however, the x-date could move up to "early June."

Yet hours before Tuesday's committee meeting, it was still uncertain whether all the Republicans on the panel would support amendments that will be crucial to winning over GOP holdouts in the broader caucus when the legislation comes to the floor.

Moreover, there was still a Republican member of the committee, Rep. Ralph Norman of South Carolina, who had yet to confirm that he would vote for the bill.

"We've got to still do some work on it, but [the bill is] a step in the right direction," Norman said last week to Breitbart News.

Even if it were to pass the full House, the bill faces long odds in the Democratic-controlled Senate, where Senate Majority Leader Chuck Schumer has already declared it dead in the upper chamber.

An equally tall roadblock awaits it in the White House, which issued a scathing veto threat of the bill on Tuesday. The Biden administration called it a "reckless attempt to extract extreme concessions as a condition for the United States simply paying the bills it has already incurred."

The bill would raise the debt limit by $1.5 trillion in exchange for slashing federal spending and imposing tough new work requirements on many recipients of food aid and welfare assistance. The bill would also eliminate a central tenet of Biden's 2022 Inflation Reduction Act: green energy tax breaks.

Additionally, the legislation would cancel Biden's student loan forgiveness plan and rescind $80 billion the IRA appropriated to the Internal Revenue Service.

Republican leadership understands that the bill in its current form will not become law. Instead, it is intended to serve as McCarthy's opening salvo in his looming negotiation with Biden over the debt limit and federal spending.

If McCarthy can pass it through his fractious caucus, it would also telegraph his ability to impose discipline in the House GOP, potentially strengthening his hand with the White House.

The margins are tight. Republicans can only afford to lose four votes in their caucus and still pass the bill on the House floor without Democratic support.

To that end, Republican Whip Rep. Tom Emmer of Minnesota has been furiously negotiating with members of his party to get everyone on board.

Over the weekend, Emmer said that while the final bill might not be perfect, the alternative for a Republican House member would be worse.

"Your choice is you vote for this to move this forward and do what's in the best interest of the country or you give Joe Biden and Chuck Schumer a blank check," Emmer said on Fox News Sunday.

He also suggested that there's a limit to how much he was willing to go back and forth with some Republican holdouts.

"Be careful about getting into a wrestling match with a pig in a mud hole, because after a while you might find out the pig is having a good time," Emmer said.