By Kevin Cirilli - 06/10/14 10:37 PM EDT
House Majority Leader Eric Cantor canceled a scheduled speech he was to give Wednesday morning before the National Association of Manufacturers, as policymakers scramble to sort through what his stunning political loss means for the financial sector.
Cantor was expected to discuss a host of conservative policy initiatives at NAM's annual summit, but now he will be replaced by Sen. Chris Coons (D-Del.), according to a source familiar with the matter. No explanation was given by the source.
NAM has been actively engaged on a number of financial issues and Cantor served as a key congressional ally.
From reauthorizing the Export-Import Bank, bipartisan immigration reform, to eliminating taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, Cantor was able to flex his political muscle in part because many viewed him as a potential successor to House Speaker John Boehner (R-Ohio).
All of that's out the window now.
Cantor and House Financial Services Committee Chairman Jeb Hensarling (R-Texas), a more Tea Party-oriented Republican, were both rumored to be mulling a run for Speaker if Boehner doesn't seek another term following midterms.
"This definitely strengthens Hensarling's hand. He's a lot closer to being Speaker now," said Mark Calabria, director of financial regulation at the libertarian-leaning Cato Institute, who was "still in a little bit of shock," he explained.
Calabria added: "This ends any talk for awhile that the Tea Party is dead, and definitely puts establishment GOP on notice."
A Republican staffer of a member who works for the House Financial Services committee said that Cantor's loss "endangered the entire leadership structure."
"Now's the best time for Hensarling to take a shot at leadership," the GOP staffer said. "Conservatives will demand their place in leadership and more committee chairmanships."
Republican strategist Ford O'Connell said that Cantor's Speakership ambitions could have made him a bigger target for the Tea Party.
"The fact that Cantor was one step from the Speaker’s gavel helped put the target more squarely on his back," O'Connell said. "This is upset of the 2014 primary season and an enormous victory for the conservative grassroots. It will certainly serve as a 'come to Jesus' moment for some folks in the GOP with respect to immigration reform."
Still, much of the political world was trying to figure out what Cantor's loss means for policy.
"Cantor was far from moderate, but I don't see how the helps any legislation at all right now," said Gabe Horwitz, economics director of left-leaning think tank Third Way.
Cantor had more centrist and establishment Republicans' back on issues such as working across the political aisle on immigration; to reforming taxpayer-backed mortgage giants Fannie Mae and Freddie Mac; to reauthorizing the Export-Import Bank, which expires at the end of September. Cantor and establishment Republicans argue it's an economic engine, while Tea Partiers say it's an example of "corporate cronyism," and an unneeded relic leftover from FDR's administration.
"This increases chance that Ex-Im will be allowed to expire," Calabria said.
That's because Hensarling vehemently opposes its reauthorization, which expires at the end of September, and many thought he used the position to help distance himself from Cantor to contrast himself if he decided to run for Speaker. Now Ex-Im's fate is even more unclear if there isn't a serious challenger among Republicans to fight back against Hensarling.
This is an epic fall for Cantor," Horwitz said. "It's too soon to tell what the fallout will be. But the civil war within the Republican Party that has been simmering is going to bubble over for who will control once Boehner leaves."
Should Hensarling become Speaker, it would set up a "free-for-all" for his House financial services chairmanship gavel between rising GOP Congressional stars such as Reps. Scott Garrett (R-N.J.), Patrick McHenry (R-N.C.), Randy Neugebaurer (R-Texas) and Ed Royce (R-Calif.), the GOP staffer said.
A Republican senior Senate staffer said: "Washington, D.C. is in a collective state of shock tonight. If Team USA were to beat Brazil in the championship game of the World Cup in the next few weeks, it would come in as the second most shocking victory of the year behind the toppling of House Majority Leader Eric Cantor, in a Republican primary no less."