House Majority Leader Kevin McCarthy’s (R-California) decision to take his name out of the race for speaker means that “winter has come,” Guggenheim Securities analyst Chris Krueger said.
“We will not mince words — this is the political equivalent of a dumpster fire,” Krueger said in a note hours after McCarthy announced his decision.
The chaos comes as Congress is rapidly approaching three key fall deadlines:
- An October 29 deadline to replenish the Highway Trust Fund, which funds many construction projects across the country.
- A November 5 deadline to raise the nation’s debt ceiling or risk a default on the country’s obligations.
- A December 11 deadline to keep the government funded and avoid a second shutdown in two-plus years.
Amid the turmoil, Krueger raised the odds to 40% of some kind of “accident” involving the debt ceiling, wherein Congress would fail to raise it by the deadline.
House Speaker John Boehner (R-Ohio), who announced his pending resignation less than two weeks ago, postponed leadership elections indefinitely and said he would remain on as speaker until a new one is elected. It’s unclear when a new vote will be held, and Congress is on recess next week.
Some analysts have speculated that Boehner, on his way out, could move to help pass an extension of highway funding and an increase in the debt ceiling. Boehner hasn’t ruled out that possibility, saying recently that he wouldn’t rule out a debt-ceiling vote.
Krueger, for one, is sceptical of that scenario. He suggested Thursday’s developments would only serve to embolden the House Freedom Caucus, the group of hard-line conservative lawmakers who endorsed one of McCarthy’s rivals for speaker.
“Everyone who believes that this chaos now emboldens John Boehner to ‘clean the barn’ and pass the debt ceiling should take a deep breath,” he wrote. “With leadership elections now taking up precious time, he will have an even narrower window. And with the Freedom Caucus stock on the rise, we would expect Speaker candidates to be even more confrontational.”
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