Five things debt deal tells us about the future
Now that President Biden has signed into law the debt-ceiling deal, what can we expect in the next 17 months leading up to the 2024 election?
1. House MAGA Republicans will be less of a force.
It was supposed to be their ace in the hole, their single biggest bargaining leverage. But in the end, House MAGA Republicans got surprisingly little out of their agreement to increase the debt ceiling.
Yes, they acted irresponsibly. They manufactured a debt crisis out of whole cloth. They played a reckless hostage-taking game. They could have wrecked the full faith and credit of the United States. They demanded spending cuts that would have hurt lots of vulnerable Americans.
Yet in the end, they got almost zilch. They’ve been shown to be paper tigers.
The final deal leaves Biden’s economic agenda mainly untouched (except for a limited rollback of some IRS funds and the ending of a pause on federal student loan payments expected to expire anyway).
And although it imposes new work requirements for the beneficiaries of some federal aid, including childless adults who receive food stamps, it increases spending in the program (and is expected to cover more people) while sparing Medicaid.
I very much doubt that Kevin Mccarthy has suddenly discovered the virtues of compromise and bipartisanship. His speakership continues to depend on the support of MAGA crazies in the House like Marjorie Taylor Greene, Jim Jordan, Scott Perry, and Lauren Boebert.
I expect that in coming months the House MAGAS will do all sorts of outrageous things to demonstrate fealty to their Republican base: try to impeach Biden, drag Hunter Biden through muddy hearings, pass bills prioritizing freedom of religion above all other values, even flirt with a national abortion ban.
Their hearings will get lots of play on Fox News and Newsmax, but they’ll lead nowhere, and their bills will die in the Senate.
2. Biden’s quiet diplomacy is working, at least for now.
Biden didn’t try to rally the public behind him. He might have told the nation why the very existence of the debt ceiling was an affront to both the Constitution and the nation’s standing. He could have threatened to use the 14th Amendment and publicly invited the Supreme Court to rule on it.
But this was not Biden. In his 50 years of public service, he has never delivered a speech with the power to alter the public’s understanding of a major issue.
Over the next 17 months, Biden won’t take on MAGA Republicans openly and vociferously, no matter how outrageously they act. Instead, he’ll quietly work away at implementing his infrastructure, technology, and climate legislation.
3. The Trump factor wasn’t in play, but it will be.
As in Sherlock Holmes’s mystery “The Dog That Didn’t Bark,” silence was a big part of the story — in this case, that of Donald Trump during the critical final weeks of negotiation.
Had Trump weighed in loudly against it, House Republicans would not have gone along.
Biden’s behind-the-scenes strategy of compromise will work less well closer to the election, as America is subjected to full-bore Trump. And it’s certainly no match for a growing White Christian Nationalist movement that Trump has enabled, which threatens the very essence of American democracy.
Some commentators argue that the debt-ceiling deal begins to “reestablish a broad bipartisan political center.”
Rubbish. There can be no center to American politics as long as most Republican voters support Trump and most Republican lawmakers follow Trump’s lead. There’s no “center” between democracy and authoritarianism.
4. The debt will continue to soar, but that may not be a problem.
The debt agreement will cut expected increases in federal spending by $1.5 trillion over a decade, mainly by freezing some funding and limiting spending to 1% growth in 2025.
Yet the national debt as a percentage of the total economy will continue to grow.
This is largely due to the inevitable demographics of baby boomers — who will be retiring and collecting Social Security and Medicare.
Republicans will almost certainly take their debt savings as an invitation for more tax cuts on the wealthy and big corporations, just as they turned savings from their 2011 deal into the 2017 tax cut.
Democrats should resist this and continue to demand that the rich pay their fair share of taxes. Democrats must also advocate for more generous safety nets and public investments.
There’s no good reason the
U.S. remains the only rich nation without paid family leave, paid vacations, universal health care, affordable college, child and elder care. These are all hugely popular with voters. Make them issues for 2024.
As to the debt itself, neither party really cares about it. Although it has doubled from $15 trillion in 2011 to $31.4 trillion now, it has not had any obvious negative effect on the economy.
5. The federal budget will become little more than Social Security, Medicare, and defense.
Perhaps the biggest single shift in Republican strategy as revealed in the debt deal is the GOP’S newfound willingness to protect Social Security and Medicare.
Think how far we’ve come from 2005 when George W. Bush tried to privatize Social Security. This time around, MAGA Republicans went out of their way to wall off these popular programs. (Trump warned MAGAS not to touch them.)
In a few years, if present trends continue, the federal budget will essentially be Social Security, Medicare, and national defense — with a few odds and ends tacked on. Non-defense discretionary spending has been falling as a share of the economy for several years, and it will now fall even farther.
I don’t want to minimize the significance of what just occurred. America has dodged a lethal bullet. Biden played it about as well as it could have been played, given who he is and who they are. Had the debt ceiling not been lifted, we’d be facing economic Armageddon within days.
But in terms of the factors contributing to that lethal bullet, little has changed. The MAGA Republicans have been stymied for now, but they’re still dangerous as hell.