The Only Debt Ceiling Deal Is No Deal at All
Biden made a vow never to repeat the Obama administration’s worst mistake. His resolve is now being put to a test.
Days of relative calm were few and far between during President Trump’s chaotic reign, but there was one matter about which no one had to fret: For four years, whenever the debt ceiling needed to be raised, Congress made it happen in a fuss-free manner and without worrisome talk about the catastrophic economic impacts of a debt limit breach. But with Republicans in charge of the House of Representatives, the bad old days are here again. On Wednesday, President Biden and House Speaker Kevin McCarthy commenced budget negotiations with a debt limit “X Day” looming.
As CNN reported, Wednesday’s talks were something of a nonevent—precisely what political wags anticipated in the run-up to the meeting. McCarthy emerged from the White House confab with optimistic lines about the potential for common ground. Good news, then: We did not meaningfully lurch in the direction of doomsday this week. But there’s a palpable sense of déjà vu as we tee up what might be this year’s most loaded question for the Biden administration: Will the president keep his vow not to negotiate over the debt limit?
Biden, as vice president in the Obama administration, had a hand in creating the debt limit chaos by deciding in 2011 to seek a “grand bargain” with Republican lawmakers on deficits and long-term spending. Thus began an era in which the two parties were perpetually at an impasse over spending and revenue: a divide so obviously unbridgeable that connecting it to the debt limit only added to the potential for destruction. Still, the Obama White House spun its wheels, chasing a grand bargain through several standoffs, a government shutdown, a credit downgrade, and the sequestration budget cuts that went into effect after Congress’s “supercommittee” failed on its own terms to arrive at a shared set of budget cuts.
This troublesome past is now the ready-made prologue to Biden’s new wranglings with new Republicans. As NBC News’s Sahil Kapur reported last week, when Obama and Biden came to understand the folly of their ways, they made a pledge never to repeat their mistakes, agreeing that from then on “nobody can use the threat of default or not increasing the debt limit as a negotiating tool.”
The early signs are encouraging. Last Thursday, Biden said, “I will not let anyone use the full faith and credit of the United States as a bargaining chip.” The administration echoed that stance in a memo released Monday from National Economic Council Director Brian Deese (who on Thursday announced he was stepping down from that position) and Office of Management and Budget Director Shalanda Young. In it, the two economic advisers said that the president “intends to pose two questions to McCarthy on Wednesday when the two men meet: Whether McCarthy will commit to the U.S. not defaulting on its financial obligations and when McCarthy and House Republicans will release their budget.”
For what it’s worth, Republicans have seemed a little knocked back by the White House’s steadfastness. As Kapur reported in a previous dispatch, Republicans have been “struggling to identify” what to cut and “divided” over whether “Medicare and Social Security spending should be on the chopping block” or “military funding should be on the table.” According to The New York Times, these “internal divisions over how to reduce spending” have since spilled “into public view, underscoring the political challenge that Republicans face as they try to wield the specter of a default to extract concessions.”
If Politico’s reporting is any guide, this is more or less going the exact way the White House drew it up. “The White House strategy,” according to Playbook, “is patience.” The administration is of the belief that “McCarthy is unlikely to craft a budget plan that can secure 218 votes given the internal contradictions within his conference among libertarians, defense hawks, and moderates representing Biden districts.”
Still, it’s in this early stage that it’s easiest for Biden to keep his debt ceiling vow. It’s only going to get harder. With a new analysis from the International Monetary Fund pointing to the easing of inflationary pressures and a global economic rebound, there are going to be tremendous incentives for Republicans to crash the economy as the presidential election cycle gets underway. Push could come to shove, and Biden might have to reach for a parliamentary trick—or, yes, a platinum coin—to avert disaster. But that’s why these tools are at his disposal: to help Biden keep his promise, and keep the world spinning forward.
This article first appeared in Power Mad, a weekly TNR newsletter authored by deputy editor Jason Linkins. Sign up here.