Republicans confront intraparty divisions

Jennifer Schonberger, Yahoo Finance’s reporter, discusses reports that Rep. Kevin McCarthy made concessions in his bid for the House Speaker position.

Video Transcript

BRIAN SOZZI It’s now to Washington, DC ahead of the contentious year that will see the House change hands. CNN reports that Kevin McCarthy, House GOP Leader, has conceded to critics in his bid to be the speaker. This was a reduction in threshold for a vote to oust the current speaker.

For a detailed breakdown, let’s visit Jen Schonberger at Yahoo Finance. Jen.

JENNIFERSCHONBERGER Hey. Good morning Brian. The party is currently dealing with intraparty divisions as Republicans prepare to take control of the House next week. This could lead to a halt in their legislative agenda. It is clear that some conservative Republicans are not willing to give the votes required for Kevin McCarthy’s appointment as Speaker of the House. This could lead to a clash at the door when the new Congress meets on Tuesday. Many House Republicans are refusing to support McCarthy in exchange for legislative and spending commitments.

Last week, McCarthy made concessions to gain support. He demanded that the House block bills from Republican senators. This is a difficult commitment to keep especially if McCarthy wants the Senate to pass legislation. House Republicans will have a difficult time coming together if they are forced to accept different factions within their party, even with a slim majority.

Although Kevin McCarthy will be the next speaker of the House, this fight shows how difficult it will be for Republicans over the next two-years to pass legislation. This is why raising debt ceiling next year is a concern. House Republicans could use the nation’s borrowing limit as leverage in pushing for large spending cuts. This could create a potential standoff that could rock markets.

Jared Bernstein, White House Chief Economist, cautioned Republicans against using the debt limit as a negotiation instrument next year. With the economy in transition facing the headwinds from rising interest rates and high inflation, Bernstein advised them not to use it. In a Yahoo Finance interview last week Bernstein stated that it is never a good time to play with the debt ceiling in the manner the Republicans have been discussing. But, it is even worse now. Talking about an economy in transition and headwinds that are real has been a common theme. There are many landing options. This is the most dangerous moment to consider your goals. He continued, saying that “Use of the debt ceiling to attain spending goals is the highest form of irresponsibility.” To raise the debt ceiling, you must spend money that Congress has authorized.

McCarthy has promised to monitor spending on Ukraine. House Republicans are concerned that they won’t be writing a blank check for Ukraine. It was expected that there’d be gridlock between the parties next fiscal year. However, there may be gridlock within Republican Party. Brian.

BRAD SMITH Okay, let me take it from you. Many thanks. Jen Schonberger of Yahoo Finance.