McCarthy’s Losing Streak Hits 10

Plus: Greenspan sees recession ahead ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Good Thursday evening! Rep. Kevin McCarthy (R-CA) failed for a third straight day to secure the votes he needs to be named speaker of the House. Here’s the latest. Still not speaker (Reuters) McCarthy’s Losing Streak Hits 10 The House Republican stalemate continues. For the third straight day, Rep. Kevin McCarthy (R-CA) and Republican lawmakers were unable to break their deadlock in voting for the next speaker of the House. As GOP negotiations continued, 20 members of the Republican conference maintained their steadfast opposition to McCarthy’s bid for the gavel. The seventh, eighth, ninth and tenth rounds of balloting all failed to show much movement or deliver McCarthy a majority of votes. The eleventh round has just begun, as Republicans don't have the votes they need to adjourn. This speaker election has now gone on longer than the one in 1923, which lasted nine rounds, and longer than any since before the Civil War. Some movement may come soon. Rep. Pete Sessions (R-TX) told CNN Thursday evening that the talks had yielded some real progress. "The newest word is that there is some sort of a breakthrough, not towards victory, but towards ending the numbers, reducing them, and evidently that's going to take place tonight,” he said. Negotiators reportedly have put a deal [in writing]( but any breakthrough still may not be enough to fully resolve the impasse. McCarthy reportedly has made additional concessions to the group of GOP rebels, agreeing to nearly all their demands, including allowing any single House member to offer a “motion to vacate the chair” — which would effectively grant the right-wing holdouts the leverage to depose him as speaker at any time. McCarthy’s offer reportedly also would put more House Freedom Caucus members on the Rules Committee and would guarantee floor votes on term limits for members and border security legislation. Conservatives reportedly were also pressing for plum committee and subcommittee posts and standalone votes for the 12 annual appropriations bills and separate votes on earmarks. In another effort to win over the rebels, the conservative Club for Growth on Wednesday night announced it would back McCarthy for speaker as part of a deal in which the McCarthy-aligned Congressional Leadership Fund, a super PAC, agreed to not spend money in open-seat primaries in GOP districts. That deal could help anti-establishment conservatives land more nominations. Yet the ongoing negotiations failed to win McCarthy any new votes through four more rounds of voting on Thursday. “We’re just gonna keep working until we solve it,” McCarthy [told reporters]( ahead of the seventh vote. “We’re going to go in here; we’re going to have a vote. Nothing is going to change. But what we’re doing is we’re having really good progress.” That progress remained under warps into the evening. “We’re going to be doing this for a long time,” Rep. Don Bacon (R-NE), who supports McCarthy, told CNN. He argued that the majority of Republicans can’t allow themselves to be held hostage by 20 holdouts and emphasized that House business — and the conservative agenda — can’t get done before a speaker is elected. The bottom line: This fight looks likely to drag into next week. McCarthy still doesn’t have a clear path to get the votes he needs given that at least five GOP members insist they won’t support him and he can’t lose more than four of his members if all 434 current House members cast votes. Quote of the Day “Once they finally pick a Speaker, the very first bill House Republicans will adopt likely would make it harder for the IRS to help taxpayers file their returns and easier for tax dodgers to cheat.” − Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, in a [blog post]( examining a stated priority of House Republicans, who have pledged to repeal billions in additional funding provided for the pax agency by Democrats’ 2022 Inflation Reduction Act. Any repeal effort would be more than likely to die in the Democratically controlled Senate. Greenspan Sees Recession Ahead Former Federal Reserve Chairman Alan Greenspan thinks the economy is headed for a rough patch. “A recession does appear to be the most likely outcome at this time,” Greenspan said in a [commentary]( released this week. “While the last two monthly inflation reports did show a deceleration in the rate of price increases, it does not change the fact that prices are still increasing. Indeed, official inflation numbers could remain tame in the near term owing solely to the methodology by which they are measured, most notably housing costs. However, I don’t think it will warrant a Fed reversal that is substantial enough to avoid at least a mild recession.” As CNN’s Nicole Goodkind [notes]( Greenspan’s view carries extra weight since, in addition to running the central bank for nearly two decades, he is the last Fed chief to pull off a soft landing for the economy. In 1994, worried about a growing threat of inflation, Greenspan jacked up interest rates to 6%, successfully applying the brakes to the economy and avoiding a recession while laying the monetary foundation for a years-long boom during the rest of the Clinton administration. Greenspan said Fed officials are likely more worried about easing too quickly in their battle against inflation than pushing too hard. If the Fed lowers interest rates too early, “inflation could flare up again and we would be back at square one.” Greenspan said, adding that such a move “could potentially damage the Federal Reserve’s credibility as a purveyor of stable prices, especially if the action were seen to be taken merely to protect the stock market rather than in response to truly unstable financial conditions.” Given those constraints, Greenspan said he does “not expect the Federal Reserve to loosen prematurely unless they deem it absolutely necessary, for example to prevent financial market malfunctioning.” But a recession may not be inevitable: Most economists agree with Greenspan’s outlook, but there are some who think the Fed can still achieve the soft landing it’s aiming for. David Mericle, chief U.S. economist at Goldman Sachs, told Politico’s Victoria Guida that the soft landing is “not a lost cause.” “A recession is not inevitable,” Mericle said. “There’s a risk, a higher risk than usual, but we’re making pretty good progress so far.” Other analysts think that while the economy may hit a rough patch, it won’t be too bad, more like a brief stall than a crash. “Don’t put a capital ‘R’ on it,” Mickey Levy, chief economist for Americas and Asia at Berenberg Capital Markets, told Guida. “You and anybody else is barely going to know the difference between real GDP that declines by half a percent and one that increases by half a percent. It’s almost imperceptible.” Chart of the Day: Approaching the Debt Limit The chaos surrounding the Republican effort to elect a new speaker of the House is feeding concerns about how difficult it could be to raise the federal debt limit when the time comes sometime later this year. Some conservative lawmakers are expected to use the debt ceiling as a negotiating chip as part of an effort to cut federal spending, raising the threat of default in the process. Rep. Brendan Boyle (PA), the top-ranking Democrat on the House Budget Committee, [told Bloomberg]( that he is becoming more worried about the likely conflict over the debt ceiling, which analysts expect to need attention as soon as the third quarter of 2023. “The last 48 hours have only raised my level of concern,” he said. “Failing to raise the debt ceiling would be catastrophic, not just to the United States but to the world.” Brian Gardner, chief Washington strategist at the investment banking firm Stifel Nicolaus, told clients in a note that the “dysfunction is a clear signal,” and that investors “should be on guard as the summer approaches” because “brinkmanship over the debt ceiling could lead to market volatility.” --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- News - [House GOP Holds Breath for Elusive Speaker Deal]( – Politico - [Insight: Term Limits Demanded by Holdouts. McCarthy Allies Seem Happy to Oblige]( – Washington Post - [What Do These Hardliners Want? Here’s What They’ve Said]( – CNN - [House’s Speaker Drama Shrinks Congressional Agenda]( – Politico - [Speaker Debacle Puts U.S. Security 'at Risk,' GOP Lawmakers Warn]( – Politico - [Lawmakers Say McCarthy Speaker Fight Portends Debt Ceiling Crisis]( – The Hill - [McCarthy’s Political Operation Spent Millions on Lawmakers Now Opposing His Speaker Dreams]( – Politico - [Biden Will Send Bradley Fighting Vehicles to Ukraine. And Tanks Could Be Next]( – Politico - [Biden Launches Defense of Student Debt Relief at Supreme Court]( – Politico - [The State of Mental Health and Substance Use in the U.S.]( – Politico Views and Analysis - ['Not a Lost Cause': The Argument for Averting a Recession in 2023]( – Victoria Guida, Politico - [Why Fearmongering About Deficits Might Be Losing Its Sting]( – Paul Waldman, Washington Post - [Why Would Politicians Make It Harder to File Tax Returns and Easier to Cheat?]( – Howard Gleckman, Tax Policy Center - [McCarthy Tried Compromise. Now He’s Trying Appeasement]( – John F. Harris, Politico - [Why the Fringiest Fringe of the G.O.P. Now Has So Much Power Over the Party]( – Richard H. Pildes, New York Times - [Kevin McCarthy Is a Victim of the GOP Rebellion About Nothing]( – Mark Gongloff, Bloomberg - [McCarthy Speaker Spectacle Is No Joke. It Shows the Republican Party Will Damage America]( – Jill Lawrence, USA Today - [The GOP Is More Ungovernable Than Ever Before]( – Eric Levitz, New York - [Leopards Eat Kevin McCarthy’s Face]( – Michelle Goldberg, New York Times Copyright © 2023 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](