This Time the Debt Limit Fight Scares Me
Photo by The White House, Public domain, via Wikimedia Commons
The debt limit fight is something that reoccurs periodically in American politics. Every few years we reach the congressionally-mandated limit on borrowing and Congress has to raise the roof as it were. (I’ve always wanted to use “as it were” in a sentence and it fits nicely here.) But this year, the tug of war seems more disconcerting and I think there is a real possibility that we could end up in a federal default.
One good example of why I am nervous is what I heard on Sean Hannity’s show earlier this week. I don’t usually linger on Fox News these days, but my wife had the clicker and stopped while Hannity was talking to Newt Gingrich.
“The Biden team has come to recognize that if there’s a default,” Gingrich opined, “it’s going to go down in history as the ‘Biden default,’ it’s going to end his presidential campaign for 2024, and it’s unacceptable.”
This is precisely what you’d expect a Republican to say, and it’s precisely wrong.
While I sympathize with the desire to trim some fat from the federal budget, I have grown very tired of the brinksmanship that goes along with the debt limit increases. The rhetoric surrounding the increases has grown more combative over the years to the point where some Republicans, including their 2024 frontrunner, purport to be fine with pushing the country into default.
Aside from the hypocrisy of the fact that these Republicans raised the debt limit without spending reforms when they held congressional majorities and the White House and actually could have passed meaningful reforms with minimum fuss, they don’t seem to care that default is bad for the country as long as it’s bad for Biden.
House Republicans were able to pass a spending bill, but their measure has gone nowhere. Still, this does allow them to say, “Look what we did, now the ball is in Biden’s court.”
Over the past couple of months, we’ve seen the financial turmoil when a few large banks collapse. Imagine the problems that a federal default could cause. But hey, it will be the “Biden default.”
Or will it?
The House bill is pretty transparently a wish list that was never meant to pass. And although some polls say that voters think the debt limit should be tied to spending cuts, there are also other polls that show voters just want to raise the debt limit and defuse the crisis. My bet would be that if the government does shut down or default, public opinion will swing pretty quickly.
History has shown us that government shutdowns typically hurt both parties, but they are worse for the party that is deemed to have caused the problem. In most cases, that is the Republicans because in most cases it is Republicans who are screaming “Shut it down!” all over television and the internet. Accordingly, Republicans usually get the worst end of public opinion. That includes the Gingrich-era shutdowns of the 1990s.In this case, it seems likely that, after months of watching Republicans threaten default if they don’t get their way, voters will once again blame the GOP for the fiscal mess.
Interestingly, the AP poll that I cited above as favoring spending cuts with the debt limit increase, the Republican position, also showed that President Biden and the Democrats had higher approval ratings on how they were handling debt limit negotiations than the Republicans that the poll respondents agreed with on policy. The people citing that poll to support their brinksmanship won’t tell you that detail, but it’s another example of how the electorate can send very conflicting signals.
Democrats shouldn’t get too cocky though, because none of this necessarily translates into an electoral win for Team Biden. In 2013, Republicans were overwhelmingly blamed for that year’s government shutdown, but they still won a sweeping midterm election victory a year later. Why? Because the country moved on and decided that Obamacare was a bigger problem than the idea of giving Ted Cruz more power in the Senate.
Sometimes Democrats do get blamed. In the 2019 shutdown, Democrats were considered mostly to blame. Republicans fared better in general but Donald Trump was blamed almost as much as the Democrats.
And Democrats are not blameless this year. The Democrats had two years as a majority party to force through an increase but failed to take the opportunity thanks in part to Senators Manchin and Sinema. Once the Republicans took the House, President Biden vowed not to negotiate on the increase. This was never a viable strategy and was a large factor in why no talks were conducted until the clock was ticking down.
If negotiations break down, Democrats have two options and both of them are bad. One option is to invoke the 14th Amendment, which states that the “validity of the public debt… shall not be questioned.” The problem is that while this might allow the servicing of current debt, it probably wouldn’t allow the government to borrow to keep funding its operations. It might avert a default but not a shutdown.
Another option is a plan by Minority Leader Hakim Jeffries (D-N.Y.) that would allow a clean debt limit increase bill to come to the floor of the Hosue without Speaker McCarthy’s support. This plan involves a new House rule filed by Democrats on the Rules Committee that would allow a clean bill to bypass McCarthy. The downside here is that Democrats are a minority so the bill would need some Republican support. That support would be very slow in coming.
Obviously, the best solution – and what’s best for America – is for the parties to get together and pass a freaking compromise bill already. While Republican candidates might like to see Biden taken down a notch by a default, the bigger danger is from the Chinese and the Russians, who would like to see the US weakened and the dollar destabilized.
Both sides should publicly state that a default is not an option, just as President Obama did back in 2011. Get the best deal that you can – for America, not for your voters back in the district or the base watching Fox News – but don’t put a default on the table. Because if default is on the table, sooner or later someone is going to misjudge the other side and push us over the edge.
It’s pretty difficult to make the case that you’re trying to make America great again if you’re pushing for a default that will benefit China in order to make the current president look bad. You might even call it Biden Derangement Syndrome.
There’s no one left for Biden to negotiate with. All the “adults” in the republicans party have decided that holding at power they have – after four decades of amassing it – is more important then anything.Report
If this were a functioning country, the Republicans would realize that they do not have a majority in the Senate and that they need to come to the negotiating table in good faith and to get things done.
However, the GOP has been so radicalized and the few remaining “moderates” are more concerned about being primaried from the right than anything else that they are at the Joker “let it burn” stage.Report
This about sums it up:
https://heathercoxrichardson.substack.com/p/may-23-2023Report
A good analysis and generally pretty fair, well done.
I continue to really feel the gap, here, between what can be publicly seen (and what we, as the public, are meant to see) and what is happening, and being planned, behind the curtains.
Biden and his crew either are fumbling, completely wrong footed by as simple a thing as the GOP managing to herd their cats enough to pass their deranged ransom list through congress, or they’re planning their messaging very carefully and have a game plan.
I can’t even begin to guess what is going on inside McCarthy’s weaselly little brain other than a desperate sweaty desire to hang onto his gavel. The wingers in Congress, on the other hand, obviously think they can put the blame on Biden if we blow past the debt limit and the public will buy it. That seems deranged considering they’re the ones on record constantly saying “capitulate to our nutty demands or we’ll force a default” but maybe the only audience they care about is the right wing media circuits audience.
And I have no idea where it’s all going to end up.Report
I don’t think Biden is messing this up. He is doing the best he can with a crazy situation. He might not be handling the situation perfectly but I am not sure who could.
The inmates have taken over the asylum in the GOP and McCarthy is currently too partisan and not scared enough to make a deal that passes with a majority of Democrats and a handful of GOP votes. At best, he knows he will be eaten alive for such an agreement even from his lover.*
Biden and a lot of Democrats, for better and for worse, have a compulsive need to always appear to be the reasonable adults in the room. This is something we have argued before because I am a lot more hotheaded than you on what I consider bad faith BS arguments and whether to tolerate them and respond with a detailed rebuttal of each bad faith point.
The GOP in the House and largely everywhere else have become a party of ultras who do not mind causing massive suffering if it means not having to compromise.
*I am betting it is only a matter of time before we find out McCarthy and MTG are sleeping together.Report
I deeply deeply hope ol’ Uncle Joe has a plan and is executing it. I just can’t see any leading indicators. That could be an indication that he’s running a tight strategy and everyone is keeping their yaps shut (this has been a historically tight lipped administration, particularily in contrast to the dairretic once that preceded it) or that silence could be bafflement or quiet panic. I don’t know. I hope, but I don’t have concrete indicators.
But, agreed, this is a unique situation even compared to 2011.Report
There may be a deal: https://www.nytimes.com/2023/05/25/us/politics/republicans-debt-limit-talks-biden.html
The compromise, if it can be agreed upon and enacted, would raise the government’s borrowing limit for two years, past the 2024 election, according to three people familiar with it who insisted on anonymity to discuss a plan that was still being hammered out.
The United States hit the legal limit, currently $31.4 trillion, in January and has been relying on accounting measures to avoid defaulting since then. The Treasury Department has projected it will run out of its ability to pay bills on time as early as June 1.
In exchange for lifting the debt limit, the deal would meet Republicans’ demand to cut some federal spending, albeit with the help of accounting maneuvers that would give both sides political cover for an agreement likely to be unpopular with large swaths of their base voters.Report
Interesting, I didn’t see anything in the article talking about what, even generally, the deal is supposed to be.Report
Creative accounting to save face as far as I can tellReport
If that’s the price take it and run then repeal the stupid thing next time there’s a trifecta.Report
Yes, with two serious debt limit showdowns in recent times it’s been revealed as a partisan weapon and should be obliterated the next time they have a trifecta. The value of inveigling about it under GOP presidents is nowhere near the peril of how it’s being used under Democratic presidents.Report
I’ve heard something along those lines as well. If that is the deal I’d take it in a heartbeat. Republicans can say they forced Biden to pay a “ransom” for the debt ceiling but if it takes a budget showdown and government shutdown off the table in the fall then I’d say that’s a tolerable deal for Joe. If there’s actual permitting reform in it too then that’s a full on win.Report
It’s counter intuitive but I think it would end up good for the Biden brand to be seen as having done some ‘deal’ as long as it doesn’t have much substance to it. This whole tactic needs to be taken off the table as soon as possible but the more important near term goal should be for Biden to be looking like a stable, good for business as usual bet for 2024.Report
Agreed. If the payoff is some spending caps accounting stuff and permitting reform and the return is a debt cap lift through 2024 and a budget showdown and shutdown being off the table for later this year that’s a good deal. The Dems should still knife the heck out of the debt limit the moment they have the votes to do so- either by abolishing it entirely or reviving the Gephardt Rule.Report
There’s still a lot of sabre rattling from the Freedom Caucus and if McCarthy can’t get them in line there’s not going to be a deal.Report
That may not necessarily be true. From this story at WaPo:
“The extent and ferocity of the conservative revolt could prove crucial to the ongoing debt ceiling standoff, as well as McCarthy’s future. But it was not exactly yet clear how many GOP lawmakers shared the objections voiced by Norman and Good. Since the beginning of the negotiations, McCarthy has been widely assumed to be able to lose the roughly three dozen members of the far-right House Freedom Caucus and still manage to pass the debt ceiling increase and retain his position as speaker. If he loses several dozen additional House Republican lawmakers, though, both the deal — and his grip on power — could be on shaky ground.
“These guys were never going to vote for it, so the question becomes how many of them you lose,” said one GOP strategist, speaking on the condition of anonymity to frankly describe internal dynamics.”
https://www.washingtonpost.com/business/2023/05/26/debt-ceiling-deal/Report
McCarthy’s own job might be in peril but if he produces anything that Biden and Jeffries supports and he personally endorses and schedules a vote on it the Dems will vote for it en masse and only a handful of GOP moderates would be needed to bring it across the finish line.Report
Hmmm so more details are coming into view.
A- Debt ceiling lifted so it won’t be hit again before the 2024 election.
1-Some work requirements added onto SNAP recipients who’re 50-55 (the previous cutoff was 50).
2-Budget caps for spending that basically holds spending levels on non defense items at around the current level. In nominal dollars that’s a spending cut as well because of inflation. They gave Biden the numbers he asked for on military spending.
3-A rule that if congress doesn’t pass their 12 budget bills then a continuing resolution automatically kicks in with a 1% across the board cut.
4- Of Bidens 80 million dollar boost to IRS funding the GOP clawed 10 million back and diverted it to other things.
5-Remaining Covid relief funding is clawed back.
Noodling it all over it’s not terrible news for Biden. Lifting the debt ceiling issue (A) through the next election is good news for him. You can see where his messaging is going to aim and has already been aimed in claiming that this was a budget deal and the debt ceiling lift got tacked onto it.
The areas where Biden unambiguously had to give up ground are 1 and 4. I am sure the left is going to absolutely howl about the SNAP work requirements but compared to what the GOP was trying to force through it is peanuts. It’s ironic that the other big policy “win” the GOP got is IRS funding cuts which will increase the deficit but, as usual, all that truly matters to the GOP is larding benefits onto their wealthy backers not actual deficit reduction and in theory funding cuts to the IRS will help the wealthy cheat more on their taxes. On the other hand, Biden gets 70 billion through to the IRS still and that is a lot of scratch. Sure, he got a 12.5% haircut off it but the Dems lost congress. A 12.5% cut off an 80 billion dollar funding boost for the IRS isn’t a win but as losses go it’s basically a dent in the car. This theme echoes through the whole deal- the Dems got really big funding levels for stuff they wanted when they had the trifecta and the cuts that are being forced through here are pretty modest. Also the left isn’t the right- we shouldn’t want spending increases just for the sake of spending increased and macro-economically reining in the general numbers is a good prescription for cooling off inflation more.
Biden’s obviously going to point at the budget deal and say “this is how I didn’t pay ransom”. Whether the media fish-faces play ball on this or not it is a modest “win” for the Dems for it to go down this way. On the face of it one can say “oh no, spending cuts if a budget isn’t passed” but that’s a facile reading. The previous status quos were “if the government doesn’t pass a budget or a continuing resolution then we have a government shut down.” Now the new status will be “if the government doesn’t pass a budget or a continuing resolution a continuing resolution with a 1% cut kicks in automatically.” That’s a significant improvement from Biden’s pov because it means no further market roiling fooferaws before the election along with a very small spending trim that is, again, not terrible medicine in our current macro-economic environment. This isn’t 2011.
So, did Biden “knuckle under”? I would argue “no” because he got more than a debt ceiling lift in exchange for the cuts he agreed to.
Did the GOP “win”? I’d concede “yes” but can we be real here? Do we think a deal along these lines wouldn’t have been obtained had the GOP raised the debt ceiling and then fought in a normal budgeting process in the fall? The only reason the GOP has resorted to debt ceiling extortion attempts is because they’ve realized that they get blamed if the shut the government down. I just don’t think the GOP got anything more from this conflict than the policy spoils they are entitled to for winning congress (barely).
Permitting reform didn’t make it into this deal- not because both sides didn’t want it but because it’s too complicated and big to stuff into a bill that needs to be written at lightning speed. That’s a pity but also a correct decision. The parameters that have been discussed can very plausibly pass through a bipartisan bill independent of the debt ceiling/budget dealings.
Will McCarthy be able to hang onto his job with this bill? Who knows? It’ll depend on where the talking heads within the right wing media bubble decide to go. But moreover, who fishin’ cares? I don’t. If the winger nutbars come for him Jeffries can provide enough votes to keep Kev afloat long enough to ink the deal- after that? Let him roast.
The moment the Dems get a trifect again the debt limit has to go. This is two times now the GOP has used it for extortion attempts and you can literally see the Dems getting sick of it in real time. The debt limit survived last time by the skin of Sinmanchin’s teeth and neither of them are rising lights in the party. When the opportunity comes- they will kill it and good riddance when they do.
Big picture- not a horrible outcome for Biden considering that the GOP took congress. If they can land this turkey it’ll be some solid government work and eliminates a lot of potential drama before the 2024 campaign.Report
I’ll be interested to see if Schumer can deliver 50 votes for a bill that the Senate got no say in.Report
Right? The turtle may have to pony up more than ten.Report