Republicans in chaos as favorite quits House leadership race

Republicans in Washington faced a sudden leadership vacuum on Thursday when the front-runner to take control of the House of Representatives, Kevin McCarthy, dropped out of the race in a surprise that raised concerns about the party's ability to govern effectively.

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Representative McCarthy, the No. 2 House Republican, had been expected to win Thursday's contest for the nomination to succeed retiring Speaker John Boehner despite opposition from more conservative lawmakers who have called for a confrontational approach toward Democratic President Barack Obama's agenda.

Instead, lacking the mandate he thought he needed to be an effective speaker, McCarthy stunned his colleagues by bowing out. "For us to unite, we probably need a fresh face," McCarthy, who is from California, told reporters. He said he would remain majority leader, a post he has held since August 2014.

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Boehner, who planned to retire from Congress on Oct. 30, said he would stay on the job as speaker until a replacement is elected. Both the secret-ballot vote to nominate a Republican candidate for speaker and the full House vote, which was set for Oct. 29, have been postponed until further notice.

It was unclear who the "fresh face" that McCarthy spoke of will be as lawmakers face difficult decisions about the spending and national debt that could threaten the country's ability to pay its bills and keep its government running.

Under the leadership of Boehner, an Ohio Republican who relied on McCarthy as an ally, Republicans stumbled into a 16-day government shutdown in 2013 and brought the country to the brink of default in 2011, leading to the United States' first-ever debt rating downgrade.

The next speaker will have to answer to a newly-assertive conservative wing at a time when the party is trying to show voters they can govern effectively ahead of the November 2016 presidential elections.

In several closed-door meetings this week, McCarthy told Republican lawmakers he would run the House in a more inclusive manner than Boehner.

But he failed to convince the 40 or so members of the House Freedom Caucus, a group aligned with the Tea Party movement that calls for lower taxes, less federal spending and reduction of the national debt and federal budget deficit.

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The Caucus decided to back a rival of McCarthy, Representative Daniel Webster of Florida. McCarthy also faced criticism for suggesting last week that a congressional probe of the 2012 attacks in Benghazi, Libya were designed to hurt Democratic presidential candidate Hillary Clinton. Clinton was secretary of state at the time of the attack, which killed four Americans.

House Republicans' inability to merely pick a leader comes after Boehner and Senate Majority Leader Mitch McConnell, also a Republican, had gone to great lengths to demonstrate that their party can effectively run Congress.

The two lawmakers who had challenged McCarthy for the post, Webster and Representative Jason Chaffetz of Utah, said they were still in the race.

"It was just absolutely stunning what happened," Chaffetz said. "I don't know if I am the right person. I put my name in the hat because I do want to unite this party internally."

Other candidates could enter the contest as well.

The Republicans were tossed into upheaval just a few weeks before the United States is due to reach the limits of its borrowing authority. The Treasury department has estimated that the United States will hit its $18 trillion debt cap around Nov. 5, and the White House urged Congress to raise the limit before then to avoid a possible default.

Guggenheim Securities analyst Chris Krueger said he now saw a 40 percent chance that Congress could fail to raise the debt ceiling in time because of gridlock, brinkmanship or procrastination.

"At the end of the day, we still believe this gets done. But we are purely basing that on blind faith because no one on Capitol Hill has a plan to get out of this mess," Krueger wrote in a research note.

Lawmakers are also struggling with Obama on spending levels before government funding runs out on Dec. 11.

White House spokesman Josh Earnest urged Republicans to raise the debt ceiling promptly. He said "there's been a rupture in the Republican Party" between moderates and a vocal conservative minority.

"It does threaten their ability to make a strong case to the American public that they have what it takes to govern the country," Earnest said at a news briefing.

One possible successor to Boehner, Wisconsin Representative Paul Ryan, said he was not interested in becoming speaker.

(Additional reporting by David Lawder, Roberta Rampton, Doina Chiacu, Susan Heaveyand Lisa Lambert; Editing by Grant McCool)

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