(Bloomberg) — Once President Joe Biden and House Speaker Kevin McCarthy shake hands on a debt-limit deal, there is still a procedural and political gauntlet to run before the US can avert a default.
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First the two sides need to ensure they have the votes. McCarthy has said he expects a majority of House Republicans to back any deal he negotiates. But plenty of Democratic votes are sure to be needed as GOP hard liners aren’t likely to stand for compromises with the White House.
Senate approval is virtually certain, but timing is another matter.
The chamber’s rules allow any one senator to delay a deal for days, threatening to breach the June 1 date when Treasury Secretary Janet Yellen has warned the US might no longer be able to pay all of its bills. No senator has yet threatened to do so, and Senate Republican Leader Mitch McConnell has predicted any White House-McCarthy deal would pass on a bipartisan basis and avert a default.
The Senate can act extremely quickly when motivated — bills have whisked through in minutes in the past to avert government shutdowns.
Congress could theoretically pass a short-term debt-limit patch to give the Treasury a little breathing room, though McCarthy so far is dismissing the idea.
In some previous budget deals, Congress has approved patches after a handshake on a larger deal to give time to get through the process.
The timetable is complicated by a commitment the speaker made to House members: a full 72 hours to read any debt limit legislation. If a bill is published over the weekend and voted on in the House on Tuesday, the Senate would have less than 48 hours to approve the bill before midnight on Wednesday, May 31st. A determined senator can gum up the process much longer than that.
Senators to watch include Kentucky’s Rand Paul and Utah’s Mike Lee, Republicans who are among the conservatives who occasionally hold up legislation to try to force changes. Paul said in an interview last week there would be “a debate” on any debt-limit bill but stopped short of promising to obstruct it.
Even getting close to a default can hurt the economy. A last-minute deal, even if it avoids default, could still tip a mild recession into a deep downturn and cost an additional 790,000 jobs, according to a Bloomberg Economics model.
Here’s what needs to happen once a deal is reached:
Aides work to turn it into legislative text.
The bill itself is posted, and the Rules Committee sets the rules for debating and voting on it.
After 72 hours, the House votes on the bill (this rule can be waived, but the speaker says he won’t waive it).
The Senate receives the bill and leaders try to get unanimous consent for a final vote before the deadline. This process sometimes includes negotiating votes on amendments or other concessions.
If there is maximum obstruction, Senate Majority Leader Chuck Schumer could be forced into the lengthy process of overcoming a filibuster, which can take the better part of a week.
If all goes as expected, the Senate eventually votes on the bill and sends it to the White House.
Biden signs the bill into law.
While negotiations continue, House Republicans have said they plan to leave Washington late Thursday afternoon for the Memorial Day weekend.
That adds another risk: Lawmakers in overwhelmingly Republican and Democratic districts may get an earful from voters back home that calcifies their positions. And that could make getting the necessary 218 votes in the House that much harder.
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