By David Morgan
WASHINGTON (Reuters) -U.S. House of Representatives Speaker Kevin McCarthy plunged forward on Monday into the biggest challenge of his eight months as the top Republican in Congress as he tries to avoid a government shutdown in less than two weeks without losing his speakership.
The Republican-controlled House and the Democratic-led Senate have until Sept. 30 to avoid the fourth partial government shutdown in a decade by passing spending legislation that President Joe Biden can sign into law to keep federal agencies afloat.
Republicans hold a 221-212 majority in the House that leaves McCarthy with little room to maneuver as he contends with opposition to the spending legislation from a small group of hardline conservatives. McCarthy told reporters he would bring two spending bills to the House floor for consideration this week, including a short-term stopgap measure, to see if they can pass.
"I will continue to fight all the way through," said McCarthy, saying that a government shutdown would undermine U.S. security abroad and at the border with Mexico.
"We should show the American public our ideas and be able to pass them," McCarthy added. "We're going to be rational, responsible and reasonable."
Political brinkmanship has begun to attract the attention of Wall Street, with rating agency Fitch citing repeated down-to-the-wire negotiations that threaten the government's ability to pay its bills when it downgraded U.S. debt rating to AA+ from its top-notch AAA designation earlier this year.
The log-jams are not limited to the House, as one hardline Senate Republican holdout, Tommy Tuberville, has blocked confirmation of hundreds of senior military officers due to his opposition to policies facilitating abortion access for female service members.
McCarthy has vowed to move forward this week on an $886 billion fiscal 2024 defense appropriations bill, which stalled last week as hardliners withheld support to demand a top line fiscal 2024 spending level of $1.47 trillion - $120 billion less than what McCarthy and Biden agreed to in May.
That vote is expected on Wednesday. McCarthy said he will bring a stopgap measure - known as a "continuing resolution," or CR - to the floor on Thursday. McCarthy can afford to lose no more than four Republican votes on partisan legislation. More than a half-dozen, including allies of former President Donald Trump, are vocally opposed to the continuing resolution.
The measure would keep federal agencies afloat until Oct. 31, giving Congress more time to enact full-scale appropriations for 2024. It would cut discretionary spending by about 8% for agencies outside of defense, veterans affairs and disaster relief and would impose certain restrictions on immigration and the border.
"This is a terrible bill, lumping the funding of disparate agencies of government into one BAD VOTE," Republican Representative Matt Gaetz, a McCarthy opponent, said on social media.
Others complained that it would not cut spending by enough and would retain funding for U.S. Special Counsel Jack Smith, who has charged Trump with felonies over his handling of classified documents and efforts to overturn the 2020 election.
"The Republican House is failing the American people again and pursuing a path of gamesmanship and circus," Republican Representative Victoria Spartz said in a statement. "It is a shame that our weak speaker cannot even commit to having a commission to discuss our looming fiscal catastrophe."
Neither bill is likely to win Democratic support and become law, even if it garnered enough Republican votes to pass the House.
Senate Majority Leader Chuck Schumer, a Democrat, called the House Republican CR agreement "slapdash and reckless," adding that a bipartisan continuing resolution is "the only answer for avoiding a government shutdown."
'HOLD THE LINE'
Some members of the hardline House Freedom Caucus are openly embracing a shutdown as a negotiating tactic to get their way on spending and conservative policy priorities.
"We have to hold the line," Representative Chip Roy, a Freedom Caucus member, said last week.
Roy told a cheering conservative audience that a shutdown was now "almost" inevitable, and said conservatives must be prepared for "the fight coming in October."
Unless the House can move forward on spending, Republican leaders said privately that they could be forced to move directly into negotiations with Senate Democrats on appropriations bills, circumventing hardliners.
The goal would be bipartisan legislation that could pass both chambers quickly and be signed into law by Biden. But the consequences could be dire for McCarthy, who is already staring down the threat of ouster from his post.
"It'd be the end of his speakership," said Representative Ralph Norman, another Freedom Caucus member.
Stock Market Today: Dow ekes out gain as energy, tech rise; Fed meeting eyed By