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What debt deal means for President Biden, Speaker McCarthy

Semafor Founding Editor-at-Large Steve Clemons joins Yahoo Finance Live to discuss details regarding the tentative debt ceiling deal, Speaker Kevin McCarthy's future, and the debt limit bill deadline.

Video transcript

- But the deal faces a crucial week of votes, while the default deadline quickly approaches in the coming days. Here to break it all down, we've got Steve Clemons, Semafor founding editor at large. And Steve, I'm looking at Semafor's own reporting that suggests there are at least 10 Republicans that are likely to oppose this bill already. Are there enough Democrats supporting this bill to get it across the line, at least, in the House?

STEVE CLEMONS: Well, our Semafore team thinks there are. And they think that this bill-- when you kind of get into it, you kind of look at all the pieces, there was some serious negotiation going on there. And clearly, the Freedom Caucus, Andy Biggs, a number of people that are to the right of Kevin McCarthy, did not get what they want. And they also feel a little bit betrayed by him I think right now. And we're seeing how that all sorts out.

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But right now, as I understand it, my people are telling me, there may be up to 100 Democrats that jump on and support this bill. So it will be a truly bipartisan bill with the overwhelming bulk of both parties supporting it if things go the way they look this moment. Could change.

- Steve, What do you think of the bill as it stands right now, the negotiations that did take place? Because I was also reading on Semafore, you guys had a great breakdown of this. And you highlighted the fact that this deal is not much different than an ordinary budget agreement and what we've seen in the past, Trump administration and Obama administration.

STEVE CLEMONS: Well, I mean, I think that you really hit it on the head. I think that this bill is not radical. But certainly, Joe Biden did some things he didn't necessarily want to do. They did raise the age limit on work requirements for the Snap Food Assistance Program from 50 to 54, that was a red line for a lot of Democrats.

You had certain other elements there, where they didn't want to freeze spending back in that. They're going into an election, they wanted to basically be able to raise spending in a lot of non-discretionary, non-defense discretionary accounts. So when you look at that dimension of it.

And the fact that Joe Biden said he wasn't going to negotiate at all and didn't talk to Kevin McCarthy for about 100 days. So you see here politics working, where, eventually, for the greater good of the country in this case, because the full faith and credit of the United States was on the line, they came to a deal that, to me, in my personal view, looks like they really kind of packaged it sort of softly here and there.

To give people talking points, give Kevin McCarthy, to say, he constrained spending, he helped support the military, they got work in age increase in food assistance programs. So there were things that the Republicans got that they can go to their base and say, we really delivered to you, without it having tipped over the ship.

- Steve, you already hinted at a potential fallout for the House Speaker. When you say some Republicans feel betrayed with the details of the deal. And I want to point to a tweet that we got from Texas Congressman, Chip Roy, who, of course, is one of those who've come out and said, this is not a deal that I would vote for. Saying, a reminder that during Speaker negotiations to build a coalition, that it was explicit.

Both that nothing would pass Rules Committee without at least seven GOP votes. The committee would not allow reporting out rules without unanimous Republican votes, that hasn't actually materialized. So what does that fallout look like for the House Speaker, who's already had a very fragile coalition within the party.

STEVE CLEMONS: Well, look, it's a real test. I saw some analysis the other day about Kevin McCarthy and the deals he had made with the Freedom Caucus, to become Speaker after 15 ballots. And what was interesting-- and I don't know if I agree with it-- but I was interesting in the framing, where they said that McCarthy has given the Freedom Caucus the illusion of power but not the actual practice of power.

And we're going to see that tested because Chip Roy and others are very frustrated with this moment. They're basically publicizing deals that were not written down. But they know, behind closed doors, what they agreed to, and whether or not they now trust Kevin McCarthy or not. And you mentioned 10 votes. 10 votes is enough to bring Kevin McCarthy down, if they all feel strongly that they've been betrayed.

One member can call for a motion to vacate and call for an immediate judgment on Kevin McCarthy's stewardship as Speaker of the House, and bring him down if they have enough votes, unless the Democrats want to come save Kevin McCarthy, which I sort of doubt.

But I think in this moment, right now we've seen Kevin McCarthy do far, far better than many of us expected he would do. He delivered a bill, he got it through, it wasn't a crazy bill, he negotiated with the President, and a lot of what they wanted is in this final package.

And so at the end of the day, you have to look at the fact that the Republican base is not pounding on Kevin McCarthy. They sort of like him, his popularity is high, so it puts the Freedom Caucus in an awkward position taking him on if they try to take him on after this.

- Steve, what about the timing of this and how this could potentially play out in the Senate, because now we have this June 5th date? But we've heard from a couple of senators, Lindsey Graham being one of them, we also heard from Mike Lee, saying that they're going to do everything they can to slow this process of it getting through the Senate.

STEVE CLEMONS: Well, I mean, that's a real problem. And I don't know-- frankly, a default is a default. And I get a little text every morning from a senator's office-- from somebody in his office who says, sends me the official national debt amount that day, and it's around 31.461 trillion, to be precise, around that amount. So we're a little bit over the 31.4 trillion. So they're already kind of goosing the numbers a little bit and how they move things around.

But you have to sort of take the Secretary of Treasury at her word, at an element when she feels looking at the various accounts, income and expenses, when they're going to hit and cross that line and have to bump up beyond that 31.6 trillion substantially. And a default is a default.

And we are already on rocky terms with a lot of rating agencies. And I think that after getting a deal like this, I don't know what Senator Graham has in mind about why he would want to slow a process where Mitch McConnell and other people have said, default is not in the works. The only one that was playing with the question of whether it would be default was Kevin McCarthy. So why others would now join that once they get beyond, essentially, the appearance of a deal, kind of boggles the mind.

- We heard the President say when announcing this deal that, look, this is a compromise, which means not everybody got what they wanted. And yet there's a few things, sort of, that stand out to me. There's the student loan pause that's no longer on pause.

STEVE CLEMONS: Right.

- And then, of course, the additional work requirements here, particularly around programs like Snap. Who takes the bigger political hit on the back of this, if, in fact, the deal passes in its current form?

STEVE CLEMONS: Honestly, I think, given-- I think it's fairly even. I know that's cowardly of me to say in a way, but I actually think that Joe Biden and his team got most of what they wanted. They lost things like IRS enforcement, who cares, right? 10 billion. Now it's part of basically income to the government.

You had slightly tweaked age requirements, you have certain things. But I have to say, across a lot of independents in the country, there's sympathy with some of those views that Republicans express. So I think that the President was able to maintain the structure of the federal assistance programs in math, in a way that, I think, Kevin McCarthy was trying to dent on the front-end of this.

So I think at the end of the day, the President came out a winner, but Kevin McCarthy didn't come out a loser. And that's how I would frame it.

- Which is why we've seen the left wing of the party and the right wing sort of come out and say, this is not something we like.

STEVE CLEMONS: Well, I tell you, when they were getting closer and closer to deal, our folks at Semafore kept saying, as they got closer and closer to deal, those wings of the parties were getting more and more frustrated with the process. Some of them just didn't want a deal. The sign of getting to a deal was a worry for them that their champion was compromising. I found it funny to watch.

- We'll see if it gets through the House. Steve Clemons, Semafore founding editor at large. Good to talk to you today.

STEVE CLEMONS: Great to be with you.