What do you get when you cross a Republican Speaker of the House with a Democratic president? A debt-limit drama.
Bill Clinton and Newt Gingrich had one. Barack Obama and John Boehner had two. To see Joe Biden and Kevin McCarthy shadowboxing is hardly a surprise.
What is surprising this time around is the list of non-negotiable demands from McCarthy. There isn’t one. He now has a bill full of spending cuts with shaky prospects, but that’s not the same thing as drawing red lines.
In September 1995, Gingrich threatened to hit the debt limit—which would prevent the United States Treasury from meeting outstanding debt obligations, upending the global economy—on top of shutting down the federal government unless Clinton accepted Republican proposals to balance the budget. Gingrich said in a speech to bond dealers: “I don’t care if we have no executive offices and no bonds for 60 days—not this time.” The demands were not theoretical. Republicans controlled both congressional chambers and followed through on Gingrich’s threats. They sent budget bills to the president, cutting Medicare, Medicaid, education, and environmental protection, prompting Clinton to issue a series of vetoes. Gingrich shifted the goalpost after one of those vetoes. “All the president has to do is commit to a seven-year balanced budget with honest numbers,” said the speaker, by which he meant having the budget scored by the Congressional Budget Office numbers and not the White House’s Office of Management and Budget.
In 2011, Speaker Boehner laid out a specific demand to President Obama in advance of a debt limit deadline: The Republican House would not raise the ceiling without spending cuts that were “greater than the accompanying increase in debt authority.”
In 2013, Senator Ted Cruz instigated a government shutdown in an audacious attempt to pressure Obama to defund his signature Affordable Care Act. A debt-limit deadline loomed as well, which Cruz saw as an additional negotiating opportunity, telling CNN: “The debt ceiling historically has been among the best leverage that Congress has to rein in the executive.”
On Monday, McCarthy delivered a speech at the New York Stock Exchange. The speaker urged Biden to begin negotiating on a bill to raise the debt limit. But there were no demands and no hard numbers, just vague calls for a debt-limit agreement that will “reduce spending” and bring “spending under control.”
Yes, in that speech, McCarthy sketched out plans for a House Republican bill that would link a debt-limit increase with spending caps, and he released the legislative text on Wednesday. According to The Washington Post, the proposal “would slash the federal budget back to levels adopted in the 2022 fiscal year, which could amount to $130 billion in spending cuts for 2024” and “target federal health care, science, education, climate, energy, labor, and research programs.” The bill would also nullify key Biden administration initiatives, such as enhanced Internal Revenue Service enforcement and student loan forgiveness.
But McCarthy has not said that anything in that bill—which has no chance in the Senate and may not even have 218 votes for passage in the House—amounts to a non-negotiable demand.
Let’s take a step back and remind ourselves why Biden has ruled out negotiations over raising the debt limit. There are two reasons. One, Republicans have a history of using the debt limit as a hostage to extract radical right-wing policy changes from Democratic administrations. Two, Republicans have a history of backing down when they take the tactic too far.
Gingrich’s Republicans took a political beating for trying to cut Medicare, Medicaid, education, and environmental spending. After two government shutdowns, but before the debt limit was breached, Gingrich gave up on securing specific cuts. However, to end the standoff, Clinton did accept Gingrich’s fallback offer, promising to submit a seven-year balanced budget scored by the CBO.
Obama largely submitted to Boehner’s demand, but he was able to water it down. Their agreed-upon spending cuts matched the size of the debt-limit increase, but the increase was for one year, while the cuts were spread out over 10 years.
The Cruz scheme, coming two years after the Obama-Boehner deal, was a flop. Republicans hemorrhaged in polls during the Texan’s shutdown. Neither Boehner nor Senate Minority Leader Mitch McConnell were truly on board with Cruz, and they surrendered before the debt-limit deadline.
Obama was also firm, telling House Democrats during the government shutdown that he would negotiate, but “not with a gun at my head.” That’s the fundamental point. Good faith negotiations are necessary to pass budgets in a divided government. Reckless hostage-taking is not. And when Republicans have gotten too reckless, Democrats have been able to call them out and force them to stand down.
This year we face not only a debt-limit deadline, but a deadline to keep the government open beyond the current fiscal year. We know that funding for government operations must be approved by September 30, but we don’t know exactly when the debt-limit deadline is. Earlier this year, Treasury Secretary Janet Yellen had estimated June but also said that her department would reassess after the April tax filing deadline, which we just passed. The Congressional Budget Office projected a default range between July and September, the Bipartisan Policy Center similarly says summer or early fall, and Moody’s Analytics estimated August.
That means that regardless of the debt limit, Biden and McCarthy must agree on Fiscal Year 2024 spending levels to keep the government open. Biden is correct to insist those negotiations happen without a gun to his head. But they have to happen, and they will take some time.
So far, McCarthy’s finger is not on a trigger. An insistence on unspecified cuts is not reckless hostage-taking. And let’s face it: with a Republican House and a Democratic president, it will be impossible to avoid cuts altogether. But since McCarthy holds a weak hand—a paper-thin Republican majority reliant on 18 members representing Biden-won districts—those cuts need not be deep.
Of course, McCarthy’s position is so tenuous that a small revolt from the far right of his conference could sink his speakership. But Biden should not welcome that scenario since McCarthy’s successor could be far more nihilistic and willing to default on the national debt. Biden should want McCarthy to bend but not break.
Therefore, what is the advantage of further dragging out this cold-shoulder period? Biden has smartly pressured the Republicans to put a detailed proposal on the table, giving Democrats an opportunity to take their pot shots and further weaken the GOP’s standing with the public. But once the House votes on it, whether or not McCarthy hits 218, what’s the upside for more delay? All I see is a potential downside, an angrier right flank that might start making unreasonable demands, squeezing McCarthy, and complicating everyone’s ability to land the plane.
“They say they’re going to default unless I agree to all these wacko notions they have,” said Biden after McCarthy released his proposal. That may be politically canny, but again, McCarthy hasn’t said take it or leave it. He said on Wednesday that with a Republican plan in hand, Democrats “have no more excuse to refuse to negotiate.”
Biden also said McCarthy should “take default off the table and let’s have a real serious conversation.” McCarthy is unlikely to do that, especially since even the most moderate Republican members have said a clean debt-limit increase is off the table. Plus, the bipartisan House Problem Solvers Caucus is drafting a fallback plan in which a debt-limit increase is tied to unspecified Fiscal Year 2024 spending controls, as well as an independent commission tasked with formulating a long-term debt reduction plan to be voted on by February 2025. In other words, even some moderate Democrats may refuse to support a clean debt-limit increase. Biden’s hand is stronger than McCarthy’s, but it’s not without constraints.
How can Biden get to the table and adhere to his stated principles? By saying he’s ready to talk to McCarthy about the budget now, they can comfortably meet their September 30 deadline to keep the government open. However, he will not discuss the debt limit. If McCarthy brings the debt limit up, then the meeting is over. The eventual agreement could even be voted on before a debt-limit vote, so the latter is technically clean. McCarthy could still characterize the process to his Republican conference as one that addresses the budget and the debt limit in tandem. It wouldn’t be Washington without a bit of kabuki.
In certain respects, Biden and the Democrats have already won. McCarthy is not in a position to emulate Gingrich, Boehner, and Cruz, brandishing the debt limit as a hostage to trade for radical right-wing proposals. The New York Times reported McCarthy’s “plan amounts to a significant watering down from some of the party’s objectives outlined earlier this year, including balancing the federal budget in 10 years,” which, you may recall, McCarthy had promised to push for in order to win the gavel.
Starting negotiations now is not a concession to Republicans but an acknowledgment that the current power dynamics are about as favorable to Democrats as they are going to get.
