Two Huge Obstacles for Kevin McCarthy
Author: Greg Valliere
January 6, 2023
January 6, 2023
AFTER NEGOTIATING WELL INTO THE NIGHT, supporters of Kevin McCarthy think their latest concessions can produce a deal, but they face two huge obstacles: moderate Republicans are aghast over these concessions, and the hard-core four or five McCarthy opponents — just enough to defeat him — show no signs of budging.
THUS IT STILL APPEARS THAT a handful of far-right election deniers has the power to bring the House to its knees — which will have major policy implications if this isn’t resolved soon.
THE VOTING TODAY, set to begin at noon, could be pivotal. McCarthy’s supporters expect to lose the first vote, with a closer margin than earlier this week, which could lead to a much closer second vote, they believe.
BUT GOP MODERATES are close to rebellion, especially over a McCarthy capitulation on several issues, including an outrageous proposal that would allow one single House member to launch a process that could remove the speaker. Another proposal would radically change seniority protection for veteran committee leaders.
THE GREAT IRONY, OF COURSE, is that McCarthy’s willingness to neuter the role of speaker has not budged the five House hard-liners, who apparently will not vote for him under ANY circumstances. And if they relented and accepted McCarthy’s concessions, he would have virtually no power.
SOME HAIL MARYS: All sorts of fallback options are on the table —
A potential new candidate, Rep. Steve Scalise, has widespread support but he is part of the House leadership, which makes him suspect in the eyes of the five holdouts.
A plan for House Democrats and Republicans to form a bipartisan alliance is unlikely; the Democrats are happy to watch McCarthy twist in the wind.
A scheme to reduce the number of necessary votes downward from 218 is under serious consideration but looks un-workable.
WHAT’S THE END GAME? Frankly, it’s not clear. A continuing impasse will begin to affect congressional oversight of foreign policy issues, and it’s likely that California will need several billion dollars in flood aid. Longer term, a huge budget fight looms,
raising the threat of a U.S. debt default. Eventually these threats will finally produce a Speaker, as Republicans conclude that this farce is badly hurting the party’s brand.
McCARTHY HAD A 70-30 CHANCE of becoming speaker just a week ago; now it’s barely 50-50, as five rebels hold the House hostage, adamantly refusing to compromise — regardless of McCarthy’s concessions, which have simply outraged the party’s moderates.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
For further information, please visit AGF.com.
©2024 AGF Management Limited. All rights reserved.
