Evan Vucci/AP Photo
Speaker of the House Kevin McCarthy listens as President Joe Biden speaks before a meeting on the debt limit in the Oval Office of the White House, May 9, 2023, in Washington.
For some reason, the commentariat was expecting a “showdown” on Tuesday afternoon in the Oval Office, at a meeting between the Big Four congressional leaders and President Biden about the debt ceiling. What actually happened, rather predictably, was that each individual restated their priors and agreed to meet again later.
But the shifts in the state of play have been visible for a little while now. We’re in a live hostage negotiation over what level of austerity will satisfy the hostage-takers. There’s this effort among Democrats to pretend that this isn’t happening, but I’m afraid I believe my lying eyes. And the reason why Democrats are dutifully playing the compromiser role dates back to the last hostage-taking, which Democrats also (enthusiastically) accepted.
In 2011, for the first time ever, Barack Obama knowingly used the debt ceiling as a way to begin negotiations on a “grand bargain” on deficits and debt. Most observers conclude that it didn’t work out, thanks mainly to Republican Tea Partiers rejecting tax increases. But we ended up with protracted austerity in the form of across-the-board sequestration cuts and the lowest level of public investment since Eisenhower, which prolonged the agony of the recovery from the Great Recession.
The sad spectacle accomplished something else. It set a precedent, among policymakers and especially the media, that the debt ceiling in divided government was a time for negotiation and compromise. It legitimized the hostage-taking event. The way the debt ceiling is covered now, chiding Biden’s previous stance of no negotiations as “increasingly untenable,” flows right from the 2011 standard.
Of course, that standard is only applicable when the divided government involves a Democratic president and Republicans in some leverage position in Congress. In 2019, under a Trump administration and a Democratic House, Democrats—proudly—did not demand the rollback of the Trump tax cuts, more spending on social programs, or new rules favoring renewable energy in exchange for enabling continued federal borrowing. That’s because Democrats in Washington like nothing more than being seen as respectable. And when Democrats have the White House, they’ll “do the right thing” by defusing the debt ceiling time bomb, which comes down to negotiating the terms of the ransom. Random Democratic frontliners have been calling for negotiations for several days now.
That’s clearly where we are headed. Senate Majority Leader Chuck Schumer (D-NY) has indicated that he wants to hammer out a bipartisan budget appropriations deal. This has to be done anyway, of course, and that’s the conceit that Democrats are using to say they’re not actually negotiating over the debt ceiling. But the budget deadline is nearly five months off, an eternity in politics. (Republicans will 100 percent ask for more cuts then, regardless of this outcome.) The reason the talks are starting now is that the debt ceiling needs to be raised now.
The idea is that Republicans can say to their members that they’re negotiating on the debt ceiling and Democrats can say to their members that they’re negotiating on the budget. I mean, whatever gets you through the night. But it’s clear that Republicans won the right to negotiate.
This was inevitable once Democrats got through the lame-duck session, while holding a trifecta, without dealing with raising the borrowing limit. Because Democrats have this insatiable desire to look like the reasonable ones, they were always going to make concessions. In fact, that’s why they didn’t raise the debt ceiling on their own terms.
Once you’ve established threatening the full faith and credit of the U.S. government for ideological ends as a normal political back-and-forth, you cannot go back. The extraordinary measures the president can use to defuse this time bomb (which we’ll get to in a minute) are “silly,” sniff the pundit class. However, the debt ceiling is also extremely silly; the idea that Congress can ring up a tab and then refuse to pay it should be met with loud howls of derision. But Obama made it justifiable. And here we are.
As for what this negotiation will lead to, my previous X-Date note on the potential areas of compromise was on target. The two sides, at least to start, are talking about rescinding unused COVID relief funds and enacting some permitting reform. As I said then, that gets you an exceedingly tiny amount of deficit reduction. So now we’re hearing about some form of discretionary spending caps, which would likely be worse than the 2011 sequestration, which fell equally on the defense and nondefense side, sharing the pain and at least minimizing the impact of cuts to social programs. That this is seen as the “responsible” path is madness.
That doesn’t mean this negotiation will succeed, of course. Any climbdown from fulfilling the far right’s desires will be rejected by the hard-liners. It could fall apart. And so Biden was asked at his press availability yesterday about the aforementioned extraordinary measures. There seemed to be a fair bit of excitement that he was “considering” invoking the 14th Amendment, which says that the validity of the public debt shall not be questioned. But he tempered that response right away, saying it needed to be litigated and that couldn’t happen in time.
Maybe the union lawsuit on constitutionality, or a hopefully imminent bondholder case, can force the issue from the outside and get that litigation done. But it’s clearly not coming from the White House. The fact that Biden uttered the words “14th Amendment” or “minting the coin” does not mean anything; these were actively explored under Obama too. The deus ex machina isn’t being rolled out in the Oval Office; it will have to come from outside litigation, if anywhere.
“I’ll be very blunt with you,” Biden added. “When we get by this, I’m thinking about taking a look at … what the court would say.” That at least shows some recognition that Democrats get routinely rolled with each debt ceiling one-way ratchet, and that litigating it out of existence is actually the best alternative. But that doesn’t help avoid the self-inflicted wound Democrats are about to impose on themselves.
