Evercore ISI Senior U.S. Policy and Politics Strategist Tobin Marcus joins Yahoo Finance Live to discuss Kevin McCarthy’s failed House speaker bid, the state of the Republican party, the expectations for Washington, D.C., and the outlook for a debt ceiling showdown.
Video Transcript
– Republicans now leading the House with a razor-thin majority, and already finding it tough to complete tasks, with Speaker designate, Representative Kevin McCarthy, facing opposition after 11 votes over the past three days. Here to weigh in is Evercore ISI Senior Policy and Politics Strategist Tobin Marcus. Great to have you here. Help us break this down. What is the pathway forward? Do we just continue on with the votes until no end, until somebody is selected to lead now the Republican side that has the House majority?
TOBIN MARCUS: Good to be here. Yeah, at this moment, I think we’re basically in a staring match. Republicans have been furiously negotiating. I think the McCarthy camp feels that they have an agreement that’s going to be able to peel off some of the Conservative hardliners. But it doesn’t look to me as if they’re going to be able to get enough to get over the finish line, at least not right away.
So I think they’re hoping, at this point, to run a kind of a two-stage pincer strategy, where first they get 10 or so of the more reasonable hardliners on board with the package of concessions, and then just continue to apply pressure to the remaining holdouts who are more sort of firmly entrenched against McCarthy. But this could drag out. It certainly does not look like it’s going to be resolved today. So I think this stretches probably through the weekend and into next week.
– Tobin, you recently put out a note highlighting several key dates in the months ahead. How does what’s happening now, in terms of the Speaker debacle– how does it impact some of the outcomes around those events?
TOBIN MARCUS: Yeah, absolutely. You know, I think that in terms of the proactive agenda that Republicans have come in taking the House that they’re intending to pursue, this Speaker battle is not going to make a big difference. I don’t think that there’s anything really that they would do under McCarthy and won’t do under a plausible replacement like Steve Scalise, the number two in leadership, or vice versa.
Where I think it has a bigger impact is when it comes to the debt ceiling showdown that I expect in the middle of the year. And we’re going to hit the debt ceiling again, probably sometime late in Q1. Treasury is going to run out of so-called extraordinary measures to keep from breaching the debt ceiling in the middle of the year in late Q2 or early Q3.
And I think that we’re going to have a big, protracted 2011-style showdown on the debt ceiling this year, because House Republicans are going to be really apprehensive about providing the votes to fix that. And so again, I think this looks much more like 2011, when the US got its credit rating downgraded. And it looks like some of the more performative fights of recent years.
And I think that when you look at this Speaker showdown, this is kind of a proof of concept for a small handful of conservatives to provoke a crisis that most House Republicans can see is counterproductive and self-destructive. And I think that we’re going to see something similar in the middle of the year.
So I know a lot of investors might be inclined to look at this and say, there’s not going to be a default. This doesn’t ultimately matter to markets. I don’t think there will be a default, but I do think that this is going to drag on sentiment and add uncertainty at a time that we may already be dealing with economic softening and markets may already be on edge.
– That’s a really interesting perspective. I well remember in 2011 when we had the downgrade of US debt, and there was a lot of concern about the default.
From a purely political perspective, there’s been a lot made of how bad, allegedly, this makes the Republicans look to their constituents. I wonder how much they care, though. I mean, US opinion is already pretty low when it comes to Congress. And so I wonder if this really does drive it that much lower and what sort of real implications all of this has in that regard.
TOBIN MARCUS: Yeah, I mean, it certainly doesn’t help. You know, frankly, I think that opinion among Republicans is divided– among Republicans in Congress. Because certainly, they’re not monolithic, as we’re seeing this week. I think that the establishment Republicans do worry that this makes them look bad, both that it makes them look clownish and incapable of governing, which obviously is not the contrast that they want to draw, but also that it prevents them from doing the things that they want to do, many of which are ultimately intended for political purposes. They can’t start their mini investigations of the Biden administration that they want to do until they get all this resolved. They can’t introduce all the message bills that they want to use to draw a contrast with Democrats.
For the people who are staging this crisis, though, for the Conservative holdouts, you know, I think that they, for their political purposes, want to make a point of standing against the powers that be, and drawing attention to this kind of clash between conservative insurgents and the swamp, the establishment, the powers that be. I think that serves their political purposes, which is part of why I think this is going to be so intractable. You know, I don’t know that they feel under a ton of pressure. I think this is sort of largely working for them on their own terms.
– If some other name emerges, does that mean that we would have a significant kind of positioning or stance change within the Republican Party as well? Especially as Kevin McCarthy and the state of California– their representation is starting to wither a little bit more at some of the top ranks within the House, given Nancy Pelosi no longer Speaker of the House. And Kevin McCarthy, at that point, if somebody else did emerge, then he would no longer have that kind of sway or say at the top there.
TOBIN MARCUS: Right. I don’t really think that it is going to change much of what they do, again, except for their ability to avoid these sort of unnecessary crises. Any Speaker is going to have to govern from the center of this caucus. Their margins are so narrow in the House that there’s just really not a lot of room for the Speaker to kind of steer them in a more moderate or more conservative direction without losing enough votes at one fringe or the other that they can’t assemble a majority to get things done.
And so, you know, again, we’ve seen McCarthy tack more conservative over the course of the past, frankly, decade, right, as he’s been sort of pursuing power in the Republican Party. And remains distrusted by conservatives, but I think he would be leading from a pretty conservative position. I think if you replace them with someone like, again, the most plausible alternative, Steve Scalise, that’s someone who I think is more authentically conservative. If you gave him truth serum, I think he’d be closer to where these conservative holdouts are. But I think they would pursue essentially the same agenda, just given how constrained they are by the overall makeup of the party.
– All right, still a lot of suspense, Tobin. Thanks for helping us try to figure out what might happen. Tobin Marcus, Evercore ISI Senior US Policy and Politics Strategist. Thank you.
Source link
