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Why the Debt Limit Talks Spell Doom for Kevin McCarthy

The policy outcome may prove terrible, but whatever it is, it will likely end McCarthy’s speakership in the near future.

House Speaker Kevin McCarthy
Kevin Dietsch/Getty Images
House Speaker Kevin McCarthy

The common wisdom is that President Joe Biden has let House Speaker Kevin McCarthy run circles around him in the debt limit negotiations. “Anxiety is growing in some Democratic circles,” write Time’s Brian Bennett and Nik Popli, “that Biden is falling into his old placating ways, ultimately handing Republicans too much for raising an arbitrary ceiling to pay bills on spending already approved by Congress.”

I’m not saying that anxiety is misplaced. Biden really has given away too much. The American Prospect’s David Dayen, whose daily analytic dispatches on the talks have been indispensable, points out that Biden backed into supporting $1 trillion in cuts over the next decade (against a Republican demand for $4.8 trillion). That isn’t good.

Still, I think my TNR colleague Alex Shephard goes too far in concluding that “The Democrats Have Already Lost the Debt Ceiling Fight.” Shephard’s gloom is defensible to the extent that he’s talking about policy (as, to be fair, he mostly is). But politically, Biden will be the victor and McCarthy will be the loser. That’s been virtually predestined from the start. All possible outcomes spell near-certain doom for McCarthy, and I don’t see how any blunders on Biden’s part can change that.

When this debt ceiling mess is concluded, Biden will stay president at least until January 20, 2025. McCarthy, I predict, will be gone by Christmas, and possibly before Labor Day. Should he somehow hang on to his speakership, he’ll be so diminished that you’ll barely notice he’s still there. He won’t be able to get anything done. So either way, McCarthy is toast.

Allow me to present this political conflict as a game theory problem known as the stag hunt, invented in 1754 by Jean-Jacques Rousseau. Two hunters are in the forest. Each has two options. He can catch a stag, which has a lot of meat, or he can catch a hare, which has very little. The difficulty is that to catch a stag you need both hunters to cooperate, and neither hunter knows in advance whether the other will do so. It’s safer just to catch a hare and settle for less. The worst outcome is if one hunter opts to cooperate on catching a stag and the other opts mistrustfully to go it alone and catch a hare. In that scenario, the co-operating hunter gets nothing, and the mistrustful hunter gets very little.

Biden and McCarthy both started out as hare hunters—mistrustful refusers. Then Biden shifted to stag hunter—cooperator. If McCarthy remains a hare hunter when the debt limit “X-date” arrives (Treasury Secretary Janet Yellen says June 1; Goldman Sachs says June 8 or 9) then the United States will go into default and the stag-hunt matrix, diagrammed conventionally, will designate Biden the loser. If McCarthy becomes a stag hunter before the X-date arrives, then the U.S. will not go into default and Biden and McCarthy will both be winners. As this went to press on Thursday evening, Reuters was reporting that McCarthy was starting to look more like a stag hunter, i.e., both parties were getting closer to a deal; still, there’s many a slip twixt cup and lip.

I said that, diagrammed conventionally, McCarthy’s remaining a hare hunter would designate Biden the loser. But this is not a conventional stag hunt. Two factors complicate the game and require us to tinker with the Rousseauian diagram.

The first factor is that whoever is perceived as a hare hunter will lose, because he will take the blame for whatever financial calamity results from default. That’s why Biden and McCarthy both claim to be stag hunters. Logically, though, the real stag hunter is whoever offers a debt ceiling solution that can actually become law, and that’s indisputably Biden. Biden can almost certainly get whatever debt limit hike he favors through the Democratic Senate.* In the House, where Democrats hold 213 seats to the GOP’s 222, Biden can probably pick off the necessary five Republicans to pass a debt ceiling bill, assuming McCarthy brings it to the floor. If McCarthy refuses to bring it to the floor, McCarthy will be branded the hare hunter who caused the default.

McCarthy claims that he’s the stag hunter and Biden the hare hunter because Biden won’t accept much of the debt ceiling bill that he, McCarthy, pushed through the House. But McCarthy’s good-guy posture is undermined by the reality that he got his bill passed only by promising fellow Republicans that it would never, ever become law. McCarthy’s fellow Republicans would never accept anything close to the 27 percent cut in discretionary spending that his bill requires next year (including, yes, to the Veterans Administration; if the VA is exempted, the cut will have to be 33 percent, according to the nonprofit Center on Budget and Policy Priorities). Also, McCarthy has within his caucus a MAGA-nutters element that’s demanding additional concessions from Biden on immigration and food-stamp work requirements, obliterating any notion that McCarthy’s debt ceiling bill is a serious negotiating document. Real negotiations consist of swapping concessions, not one side offering concessions while the other side increases its demands. Consequently, McCarthy (assuming no imminent agreement) is the hare hunter and any financial catastrophe his hare hunting creates will pretty obviously be his fault.

The second factor that complicates this stag hunt and requires us to tinker with the Rousseauian diagram is that McCarthy’s House Republican caucus hates stag hunters at least as much as the general public hates hare hunters. Consequently, if McCarthy switches to stag hunting, he will become its prey.

In the House they have something called the Hastert rule. It isn’t a formal rule—more of a Machiavellian principle—but it commands a preposterous degree of respect among the Republicans in Congress. The Hastert rule says that when you’re House speaker you should never bring to the floor any bill opposed by “the majority of the majority”—opposed, that is, by the majority of your own caucus. Those who judge the Hastert rule political gospel are compelled to overlook a few inconvenient facts. One is that Dennis Hastert, the former Republican speaker for whom the rule is named, went to prison for financial improprieties in connection with buying silence from a former student he molested back when he was a high school wrestling coach. That should diminish reverence for any rule named after him. Another inconvenient fact is that, except for Paul Ryan, every House speaker in recent memory has broken the Hastert rule multiple times. To quote Dr. Peter Benkman in Ghostbusters, it’s really more of a guideline than a rule. Hastert himself violated it at least a dozen times.

The point is that, should McCarthy turn stag hunter and bring a compromise debt limit bill to the House floor, he may have to violate the GOP-cherished Hastert rule. In 2011, the last time Congress flirted this seriously with default over the debt limit, there was a Democrat in the White House (President Barack Obama) and Republicans held a House majority. Yet despite vigorous lobbying by House Speaker John Boehner, nearly one-third of the Republican caucus voted against the final deal. Two years later, when Congress again flirted with default (less seriously that time), there was still a Democrat in the White House and Republicans still held a House majority. Yet more than 60 percentof the Republican caucus voted against the final deal, requiring Boehner to violate the Hastert rule to secure passage.

Boehner was disliked by his caucus’s right flank, which two years later pressured him into retiring. McCarthy is disliked much more, as we learned in January when this dislike managed to deny him the speakership on 14 consecutive ballots. (No House speaker contest had gone that long in 164 years.) Even if McCarthy isn’t compelled to violate the Hastert rule to push a final debt limit bill through, a substantial portion of his caucus will hold it against him.

The recriminations have begun already. “My conservative colleagues for the most part support Limit, Save, Grow [i.e., McCarthy’s debt limit bill],” Representative Matt Gaetz, a Florida Republican, complained to The New York Times earlier this week, “and they don’t feel like we should negotiate with our hostage.” Setting aside Gaetz describing himself as a kidnapper (“our hostage”), he was signaling that he’ll likely vote against a final debt ceiling bill. But that’s hardly surprising, given that he previously voted against McCarthy’s earlier, pre-compromise bill.

Just as many Republicans conditioned support for McCarthy’s deep spending cuts on these being a mere negotiating ploy, many of the same Republicans conditioned support for increasing the debt limit on its not actually getting increased by McCarthy’s bill. “Most [House] Republicans have never voted for a debt ceiling increase,” Representative Bob Good, Republican of Virginia, told The New York Times. He meant before McCarthy’s bill, and even so that’s probably an exaggeration, since most House Republicans were fine with raising the debt ceiling for President Donald Trump. But he may be right that most Republicans serving in the House today have never voted to raise the debt limit for a Democratic president. If the House has enough Democratic votes to pass a McCarthy-Biden compromise, these Republicans may see little point in voting for it.

Even if McCarthy isn’t compelled to violate the Hastert rule, he’s going to have a lot of defections, and the defectors will have their knives out for him. These aren’t nice people—they don’t hesitate to describe themselves as kidnappers! In negotiations for the speakership, McCarthy agreed to allow any House member to compel a vote to “vacate the chair,” that is, remove McCarthy as speaker. Under House Speaker Nancy Pelosi, it took a majority of either party to compel a vote to vacate the chair. Before Pelosi, the rule was as it is now—any member could compel a vote to vacate—and Boehner’s resignation was prompted by such a request from then-Representative Mark Meadows, Republican of North Carolina. Boehner resigned before the vote was held. It’s very easy to imagine that happening to McCarthy after Congress increases the debt limit.

Let’s review. McCarthy is screwed if he plays hare hunter because he’ll have caused a default. McCarthy is also screwed if he plays stag hunter because he’ll be a ratfink compromiser. The stag-hunt matrix is pretty much rigged against him no matter what he does. Hélas!

Will this strengthen Biden’s hand in negotiations? That depends on whether it’s easier or harder to persuade a condemned man to do the right thing. I like to think it’s easier, but it’s doubtful that McCarthy, who’s never been the sharpest tool in the shed, has yet figured out how badly this will likely end for him. Even if he has figured it out, he may prefer to go down a martyr to the cause of government shrinkage.

In short, nothing I’ve written here will help Biden figure out how to resolve the debt ceiling crisis. (I offered my advice already, and he didn’t take it.) But at least Biden can enjoy the satisfaction of knowing that when this is all over, his antagonist in these talks will be in very deep trouble. McCarthy doesn’t get out of this thing alive, and we can all take some comfort in that.

* This article originally mischaracterized the Senate rules.