House Chaos a Preview of What’s to Come

The impasse over who will serve as House Speaker is just the first of what will likely be many chaotic votes in the House this session.

Yesterday marked the beginning of a new Congress, the 118th, in the nation’s capital. While there were no legislative hearings, Senate filibusters, or oversight investigations, there was plenty of drama — and it all occurred on the House side of Capitol Hill.

Let’s take a look at what happened, and what it could mean for the ability of Congress to shape federal policy — or get anything done — over the next two years.

And the Speaker of the House Is …

Still TBD.

As we wrote in a previous blog post, an individual needs to receive the support of the bare majority of House lawmakers casting ballots (currently 218 votes) to become speaker of the House. No one achieved that number yesterday.

It has been nearly a century since it took House lawmakers more than one ballot to decide on a speaker. In 1923, it took nine ballots to elect Rep. Frederick Huntington Gillett to be speaker. But that struggle was nothing compared to what happened in 1855. That year, it took 133 ballots for the House to elect Rep. Nathaniel Prentice Banks as speaker! (Here’s hoping the current impasse breaks well before the 133rd ballot.)

One the first ballot yesterday, Rep. Hakeem Jeffries (D-N.Y.), a Democrat whose party is not in the majority, received the most votes at 212. His party was unified behind his candidacy. Rep. Kevin McCarthy (R-Calif.), who for months had been presumptive speaker if his party won enough seats in the 2022 election to control the House, only received 203 votes. The rest of the votes were divided between a handful of other Republicans, including one person who is no longer serving in the House. Rep. McCarthy went into the day with nine Republicans pledging to “never” vote for him. The congressman lost those votes, and 10 others, on the first ballot.

Under rules outlined in 1923, the House clerk called for a second vote.

On that vote, Rep. McCarthy again received the support of only 203 House Republicans while 19 GOP lawmakers voted for Rep. Jim Jordan (R-Ohio), who actually had made a speech in favor of Rep. McCarthy as speaker prior to the second ballot. All 212 Democrats again supported Rep. Jeffries. A third vote was called. The tally was the same for Rep. Jeffries, but Rep. McCarthy actually lost a vote when Rep. Byron Donalds (R-Fla.) switched to the Rep. Jordan camp.

At that point, voting was suspended, and the House adjourned for the day.

The House will reconvene at noon Eastern today. Since the body must elect a speaker before moving on to any other business — adopting rules for governing the body, forming its standing committees, and even administering the oaths of office for newly elected members — we can expect Rep. McCarthy’s leadership fight to resume today where it left off yesterday afternoon.

In other words: you do not need to tune into midday soap operas to get a drama fix.

What Might Happen Today?

According to the inside-the-Beltway news outlet Punchbowl, late Tuesday, Rep. McCarthy dispatched supporters to negotiate with the 20 holdout Republicans. Their mission: to try to cut a deal. These emissaries reportedly met with Rep. McCarthy’s opponents for several hours.

No deal was reached.

Then, early this morning news broke that Rep. McCarthy had won the support of another Republican albeit one who does not actually have the ability to cast a vote today. And it is one whose influence, by most accounts, is waning in the party.

Who is it? Former President Donald Trump, of course.

In a public statement, the former commander in chief urged House Republicans to support Rep. McCarthy for speaker, telling them not to turn a “great triumph into a giant and embarrassing defeat.” On Fox News last night, conservative news darling Sean Hannity also argued the speakership fiasco was bad for the party and urged the holdouts to support Rep. McCarthy.

It is unclear, however, that the 20 lawmakers who voted against Rep. McCarthy on the third ballot will be swayed by these words. After all, they cast their votes for Rep. Jordan, a lawmaker who has stood firmly behind Rep. McCarthy.

That is why, this morning, Politico concluded, “[A]t this point, it’s difficult to see a path to the gavel for McCarthy. … [H]is detractors have privately indicated that their lack of trust in him outweighs any rules, policy or personnel concession that he can offer.”

The McCarthy camp will continue to try to identify concessions they can make to appease the 20 holdouts. There certainly are some things that this group wants.

But more on the horse-trading below.

Along with negotiations, we are likely to see more and more Republican infighting — and it could get harsher. Consider this: this morning Politico also reported centrist Rep. Don Bacon (R-Neb.) referred to the 20 GOP lawmakers who voted against Rep. McCarthy – his Republican House colleagues – as the “Taliban 20.”

The that type of vitriol likely will not stop even after the speakership is decided.

What the Speakership Fight Means for the Next Two Years

In truth, the speakership outcome probably has little impact on how Republicans will govern over the next two years.

Knowing that the Democratic-led Senate will be a foe and not a friend when it comes to getting legislation to President Joe Biden’s desk, the GOP majority will focus largely on oversight and investigations of the Biden administration and federal agencies. It is likely these efforts will focus on the Department of Justice, the FBI, immigration officials at the Department of Homeland Security, and, in the financial services context, two high-priority targets: Consumer Financial Protection Bureau Director Rohit Chopra and Securities and Exchange Commission Chair Gary Gensler.

If the speakership is decided this week, we expect committee chairs and/or House leadership to make formal investigative demands to the CFPB and the SEC — two agencies whose leaders every single House Republican (and, candidly, many House Democrats) believe have routinely overstepped the bounds of their statutory authorities over the last two years.

On the CFPB, Republicans will focus on the agency’s perceived “regulation by enforcement” regime, which detractors argue sidesteps the congressionally-mandated rulemaking process, as well as investigations surrounding the CFPB’s legal authorities to enact some of the policy changes it has made over the last 24 months, including the proposed creation of a federal database of state regulatory enforcement activity against any nonbank financial services company.

The SEC and Chair Gensler will find themselves in similar territory. House Republicans will investigate whether Gensler and the SEC violated the Administrative Procedures Act in proposing and finalizing a variety of rulemakings over the last two years, and will also explore whether the SEC has the statutory authority to undertake some of the initiatives Gensler has spearheaded recently, including on market structure issues.

If Rep. Bacon had choice words for Rep. McCarthy’s opponents, just want to see what Republicans say about the SEC and CFPB.

What Congress Must Get Done

While they fill time with oversight, there are several legislative matters with which Republicans must contend this year. That list includes an expiring Farm Bill (a comprehensive package of bills considered every five years that authorizes agriculture, food, and nutrition programs), the fiscal year 2024 spending bills, and, of course, an increase to or suspension of the debt limit.

The federal government could hit its debt (or borrowing) limit at some point this spring or early summer. The U.S. Department of the Treasury can take some measures to avoid breaching the limit, but If Congress does not raise the borrowing threshold by end of the second or early third quarter of 2023, the U.S. government will default on its debts — an outcome that would roil financial markets and potentially push an already tender U.S. economy into recession.

It is very possible the GOP House and Democratic White House will not be able to come to an agreement on legislation to raise or suspend the debt limit.

Which brings us back to the race for speaker. A debt limit stalemate will be even more likely if yesterday’s 20 holdouts get what they want in today’s horse-trading.

There are two potential changes to House rules that this group wants that, if Rep. McCarthy agrees, could make it nearly impossible for Congress to raise the debt limit.

The first is a rule to refrain from bringing a bill to the House floor that does not have the support of a majority of Republicans. It is clear even now that a majority of the caucus will not support raising the debt limit. This rule would clearly tie Rep. McCarthy’s hands on that issue.

The second rule is a ban on so-called “discharge petitions.”

Normally, the House speaker decides what bills the full House will consider. Discharge petitions are a way around that rule, however; they allow for lawmakers to come together across party lines to compel the House to vote on an issue. How? A lawmaker files a motion to have a bill discharged, or released, from consideration by the committee. A majority of House lawmakers, regardless of party, must sign the petition. Once the petition has majority support, the House can debate and vote on the petition. If the vote passes (and it will if all lawmakers who signed the petition vote for discharge), then the House will have to consider the bill.

Some analysts have speculated Rep. McCarthy could use a discharge petition to “allow” votes on matters, like raising the debt limit, that the majority of his fellow Republicans would never support. If Rep. McCarthy eliminates use of discharge petitions, it cuts off another avenue for bipartisan cooperation.

What we saw yesterday on Capitol Hill, and what we will likely see again today, is prelude for the next two years.