Friday was a busy day for letters to and from Speaker McCarthy. The Speaker wrote a letter to the President inviting him to appear before a joint session of Congress on February 7 to deliver the annual State of the Union address. It will be a night of high drama as it will be Biden’s first appearance before a divided Congress. From the budget to Ukraine there will be much for the President to address.
The second letter was to Speaker McCarthy from Treasury Secretary Yellen advising him the US will hit the statutory debt ceiling next Thursday, January 19. In the letter the Secretary informs the Congressional leadership that like her Democratic and Republican predecessors she will start using the “extraordinary measures” approved by Congress. While no “drop dead” date was given Yellen told Congress that the extraordinary measures should hold off any potential government default until at least June.
The Secretary said that US Government cash flows are very difficult to predict and hence she will keep Congress informed as the Department is able to better gauge the eventual date when an increase in the debt ceiling will be needed. Obviously, this is one of the most important markets-related stories in DC in the coming months and I will be following it very closely.
House starts business
With the drama over the Speaker’s vote complete the House got down to its basic business of organizing Committees and passing high priority Republican bills. High on the list was a proposal to create a new Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party. In a surprise to many, Democrats joined their Republican colleagues in voting for the new Select Committee, and the final vote was a bipartisan 365 to 65. Former Speaker Nancy Pelosi was among the Democrats supporting the measure.
The vote shows how Democrats will act as they move from the majority to the minority, selectively looking for bipartisanship. It will be an interesting dynamic—with Republicans holding only a five-seat majority, the Democrats may have several cards to play in the coming months.