McCarthy fails key House stress test as he seeks government shutdown stopgap

WASHINGTON — House Speaker Kevin McCarthy failed a crucial test Thursday of his ability to unite his fractured Republican caucus as he tries to rally support to pass a spending bill aimed at avoiding a government shutdown at the end of the month.

The House failed to pass a measure to set the rules for debate on a Pentagon funding bill, and served as a dress rehearsal for the bill itself, which had been expected to come to the House floor later Thursday.

Such measures are traditionally approved by wide margins.

More importantly, the vote would have rallied House Republicans around a shared cause and built momentum for a much more difficult vote in the coming days: Passing a government spending bill in time to avert a potentially damaging government shutdown set to begin Oct. 1.

After the failed vote, McCarthy, R-Calif., said, “It’s frustrating in the sense that I don’t understand why anybody votes against bringing the idea up and having the debate and then you got all the amendments if you don’t like the bill.”

On Wednesday, two Republicans who had formerly opposed the rules bill signaled they would switch sides to support it, raising hopes that it could pass.

But two conservative hardliners, Rep. Marjorie Taylor Greene, Ga. and Rep. Eli Crane, Ariz., who had supported an identical bill earlier just days ago, surprised everyone when they voted No.

McCarthy vented his frustration with them after the vote.

“This is a whole new concept of individuals that just want to burn the whole place down. That doesn’t work,” he said.

“I know it’s an obstacle but I find it as a challenge. We’re gonna solve it,” McCarthy added.

Once it was clear the vote would fail, House Rules Committee chairman Rep. Tom Cole, Okla., also changed his vote to “No,” making it easier for him to bring it up again in the future.

Across the Capitol, Republicans in both the House and Senate held their breath to see what the California lawmaker and his lieutenants would do next.

“We want to avoid this shutdown however we can,” Oklahoma GOP Sen. Markwayne Mullin told CNBC Thursday.

“McCarthy is trying to work with his members to get the most conservative bill that they can pass, that can also be passed in the Senate,” Mullin said.

On Wednesday evening, House Republicans emerged from a two-hour caucus meeting in the basement of the Capitol expressing newfound optimism that McCarthy and his razor-thin majority would be able to resolve enough of their internal squabbles to pass a continuing resolution, or CR, to fund the government, potentially as early as this weekend.

The implosion of the Defense rules bill on Thursday morning, however, quickly sent any optimism from the night before up in smoke.

Meanwhile, House Democrats expressed a mixture of frustration and schadenfreude this week as they watched their opponents flounder.

“They need to end their civil war because it’s hurting the American people,” said House Democratic Leader Rep. Hakeem Jeffries, N.Y. Thursday at a press conference. “I’m not saying they all have to like each other. But we should be able to figure out a way to get the business of the American people done.”

Markets opened Thursday morning on a negative note, weighed down by signs the Fed intends to raise interest rates later this year, and by the ongoing United Auto Workers strike.

But investors are also growing increasingly concerned that a government shutdown would cut into 4th quarter gross domestic product and, more broadly, that it would undermine global confidence in America’s ability to keep its own government open and operating.

“If we lapse in appropriations, a whole lot of very important things with the U.S. government begin a process of shuttering their services and it will impact people,” Rep. Steve Womack, R-Ark., a key House appropriator, told reporters Wednesday evening as he left the GOP caucus meeting.

During that meeting, Republicans largely agreed on the rough outlines of a CR that would slash topline government funding well below the levels McCarthy and President Joe Biden agreed to last summer during high-stakes debt ceiling talks.

This bill would also likely contain a number of poison-pill policy riders such as border security measures, while providing no emergency funding for Ukraine — a key White House demand.

But whether such a bill could pass the House this weekend on a party-line vote was far from certain Thursday. Already, more Republicans than would be needed to sink it have publicly announced their opposition.

Even if it were to pass by the equivalent of a legislative miracle, the Republican House CR would be dead on arrival in the Democratic-controlled Senate.

As Washington moves closer to a shutdown, pressure mounted on Democrats in the Senate to craft their own bipartisan CR fund the government through the end of the year. If they could pass it with a filibuster-proof 60 votes, the Senate would then send that bill to the House.

This scenario would present McCarthy with a brand new dilemma: Whether to vote with Democrats and pass a bipartisan CR to keep the government operating. This outcome would likely enrage conservatives, who could respond by trying to remove McCarthy as speaker.

Yet this fight still seemed miles away on Thursday, as various factions both inside the Capitol and far from it all sought to exert leverage over McCarthy’s next steps.

The 64 members of the bipartisan Problem Solvers Caucus, 32 of them House Republicans, released their own CR plan late Wednesday night. The compromise bill would set border security measures popular with Republicans alongside funding levels that Democrats can get behind.

Pressing McCarthy from the other side was Donald Trump, who encouraged his fellow Republicans to demand a bill that strips all funding from federal agencies that are prosecuting the ex-president on 44 criminal counts.

“This is also the last chance to defund these political prosecutions against me and other Patriots,” Trump wrote late Wednesday on Truth Social. Taking aim at McCarthy, Trump continued, “They failed on the debt limit, but they must not fail now. Use the power of the purse and defend the Country!”

— CNBC’s Chelsey Cox contributed reporting from Washington.