Bill Clark/CQ Roll Call via AP Images
Speaker of the House Kevin McCarthy (R-CA) talks to reporters in Statuary Hall in the Capitol after announcing his debt limit increase plan on the House floor, April 19, 2023.
House Speaker McCarthy has reportedly assembled a budget scheme that he plans to bring to the House floor next Wednesday. In exchange for an increase in the debt ceiling of either $1.5 trillion or for a one-year period (whichever comes first), McCarthy’s plan is said to call for deep cuts in previously appropriated funds for the Inflation Reduction Act and the IRS, as well as work requirements for Medicaid and other social programs, and a ten-year limit in federal spending increases of 1 percent per year from a 2022 base.
He may well add more demands. The specifics keep changing daily as McCarthy tries to assemble 218 votes, with cuts and other conditions draconian enough to attract hard-right members of his House caucus but not so extreme that they scare off traditional Republicans or ones who have to run in swing districts.
He has only four votes to spare and will attract no Democrats. Press accounts keep quoting members of his caucus expressing skepticism.
McCarthy may yet pull off this part of his caper. He was willing to take 15 votes making incompatible deals in order to get elected Speaker. Even so, getting Republicans to pass his budget, though still a long shot, would be the easy part.
Biden, sensibly, will negotiate on none of this. Wall Street seems to believe that one way or another a crisis of debt default will be averted. But Wall Street has also been warning Republicans not to play this game.
As the deadline for default approaches (supposedly seven weeks or less), even if McCarthy manages to persuade his caucus to pass some version of his plan, it is Republicans who will have to blink first. Their demands are unprecedented. And should the U.S. actually default on its debt, even for a few days, financial markets would tank and Republicans would reap the blame.
The only person who could save McCarthy from himself is Joe Biden. If Biden, against his own instincts and the counsel of his advisers, began a process of trying to find some token cuts to give Republicans, that would muddy the waters and create pressure for more cuts.
Biden fell into that trap when he was Obama’s vice president and occasional budget negotiator. The Third Way crowd will be clamoring for such a compromise. But once bitten, twice shy. Biden, mercifully, shows no sign of caving.
In the endgame, if Republicans want a murder-suicide pact, with the economy as victim, Biden could well invoke Section 4 of the 14th Amendment, which provides that the debt of the United States “shall not be questioned.” The custom of requiring separate votes to increase the national debt only dates to 1917.
Let McCarthy and company take Biden to court. Even this Supreme Court would think twice before ordering the United States to default on its debt.
