WASHINGTON, Oct. 8, 2015 - Kevin McCarthy stunned House Republicans by dropping out of the race for speaker at the last minute, saying he couldn’t unify the fractured GOP caucus. 

McCarthy, R-Calif., said he would stay on as House majority leader, but his decision left the House GOP reeling heading into a critical negotiations over the budget, debt limit and highway spending. 

McCarthy’s announcement, which came shortly before Republicans were to vote on a nominee to replace outgoing Speaker John Boehner, is likely to embolden conservatives who have been demanding that the GOP leadership take a harder line in negotiations with the Senate and the White House. 

It also raises new questions about the ability of congressional Republicans to reach agreement with President Barack Obama on a fiscal 2016 spending bill that GOP members hope to use to block portions of his regulatory agenda. 

McCarthy’s decision is also a blow to agriculture interests who saw him as a powerful ally because of his base in California’s Central Valley.

“We probably need a fresh face,” McCarthy told reporters Thursday. 

Lawmakers who were in the room said McCarthy’s statement to them was brief, shocking, and delivered so quietly that it was inaudible to some members. 

Rep. Steve Israel, D-N.Y., called House Republicans a “caucus in chaos.”

“We have got serious issues and looming deadlines and the Republican caucus has been unable to address those issues and deadlines because they’re consumed with their own civil war,” he said. 

House Agriculture Chairman Mike Conaway, who is close to the current leadership, said House Republicans had to “figure out a way to coexist with each other.” “It’s going to be a tough job to unite our team, but that’s what we’ve got to do,” the Texan said.

The House has been scheduled to vote on the speakership Oct. 29, but it’s not clear whether that will be delayed. Some Republicans were discussing the possibility of a short-term caretaker speaker to handle issues facing Congress this fall.

“You can look at this as a pause in selecting a leader for the entire country who has a very essential position,” said Rep. Jeff Fortenberry, R-Neb. “There is a pool of people who have been in this institution for a long time … and they could come forward to shepherd during this interim period.”

But Rep. Robert Aderholt, R-Ala., said the idea of a caretaker speaker was “purely speculation. People are just grasping at straws right now as to what the options would be. No serious conversation has taken place.”

Conaway and others rejected outright the idea of an interim speaker. “Given the lame-duck status of an interim guy, there’s no leverage there,” he said.

As for the budget talks, “I guess we go to a restart. they’re delayed a little bit,” said Aderholt, the chairman of the House Agriculture Appropriations Subcommittee.

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The chairman of the full House Appropriations Committee, Harold Rogers of Kentucky, said the House needs a strong new leader “right away.” There are “a lot of heavy issues coming due about the same time,” he said. 

Boehner is staying on as speaker until the election of his replacement and has already started negotiations on the top-line spending levels in the budget. Appropriators want to start working on the details of the budget beginning next month. Funding is currently due to run out Dec. 11.

House Ways and Means Chairman Paul Ryan, R-Wis., continued to rule out seeking the speakership. "Kevin McCarthy is best person to lead the House, and so I’m disappointed in this decision. Now it is important that we, as a conference, take time to deliberate and seek new candidates for the speakership,” he said. 

McCarthy needed 218 votes to win the speakership, and it was clear he would likely be short of that Thursday. 

The House Freedom Caucus, made up of more than 40 of the most hard-line conservatives, had decided to unify around Rep. Daniel Webster, R-Fla. Both he and Jason Chaffetz of Utah, who was also in the race, said Thursday that they would remain as candidates.

The conservatives were making clear to McCarthy that they will be demanding commitments from McCarthy between now and when the full House votes for the speakership. “What we didn’t hear from McCarthy was what he would do differently,” said Rep. Tim Huelskamp, R-Kan.

Conservatives had said they would be watching what happens between now and then on issues like the Export-Import bank and the debt limit, a couple of issues that Boehner is expected to try to address before he leaves his post.