‘Shrink the room’
How Biden and McCarthy struck a debtlimit deal and staved off a catastrophe
WASHINGTON – It was advice that Mitch McConnell had offered to Joe Biden once already: To resolve the debt-limit standoff, he needed to strike a deal with House Speaker Kevin McCarthy – and McCarthy alone. But after a first meeting of the top four congressional leaders with the president in early May, the Senate minority leader felt the need to reemphasize his counsel.
After returning from the White House that day, McConnell called the president to privately urge him to “shrink the room” – meaning no direct involvement in the talks for himself, Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries.
That, McConnell stressed to Biden, was the only way to avert a potentially economy-rattling default.
A week later, Biden and McCarthy essentially adopted that path, tapping a handful of trusted emissaries to negotiate a deal that would lift the debt limit. It was a turning point in an impasse that until then, seemed intractable.
Having lived through the debacle of a 2011 debt-limit fight, Biden would not entertain any concessions for a task that he viewed as Congress’ fundamental responsibility. But McCarthy, prodded by conservatives insisting on sweeping changes to federal spending, was intent on using the nation’s borrowing authority as leverage even if it edged the U.S. closer to default.
The scramble that ensued showed how two of the most powerful figures in Washington – who share a belief in the power of personal relationships, despite not having much of one between themselves – jointly staved off an unprecedented default that could have ravaged the economy and held unknown political consequences. It’s a tale of an underestimated House speaker determined to defy expectations that he couldn’t address a complex debt-limit fight, and a president who tuned out the noise from his own party to ensure a default would not happen on his watch.
But it was also a standoff largely instigated by Republicans who argued they needed to use the debt limit threat as a cudgel to rein in federal spending. And even with a resounding 314-117 House vote, the episode is testing the durability of McCarthy’s speakership and his ability to tame a restive hard-right flank.
“HOW YOU FINISH”
McCarthy, now emboldened, is unfazed.
He reflected back on his election as speaker after the House passed the debt-limit package, referring to his long battle to claim the gavel in January. “Every question you gave me (was), what could we survive, what could we even do? I told you then, it’s not how you start, it’s how you finish.”
This account of the weeks-long saga of how Washington defused the debt-limit crisis is based on interviews with lawmakers, senior White House officials and top congressional aides, some who requested anonymity to discuss details of private negotiations.
Perhaps most critical to clearing the blockades were Biden and McCarthy’s five negotiators who came to the discussions armed with policy gravitas and empowered by their principals. Particularly comforting to Republicans was the presence of presidential counselor Steve Ricchetti, who speaks on behalf of Biden like no one else, and Shalanda Young, now the director of the Office and Management and Budget, who cut her teeth as a beloved senior congressional aide managing the complex annual appropriations process.
Young and Rep. Patrick McHenry of North Carolina, one of McCarthy’s negotiators, grew so close that they checked in each morning by phone as they did their respective day care dropoffs. Meanwhile, she and the other GOP negotiator, Rep. Garret Graves, who represents the south central part of Louisiana where Young hails from, ribbed each other over who had the better gumbo recipe and squeezed in debt-limit talks during a White House celebration for the national champion Louisiana State University women’s basketball team.
The five negotiators – Graves, McHenry, Ricchetti, Young and legislative affairs director Louisa Terrell – met daily in a stately office on the first floor of the Capitol, under frescoes painted by the 19th century muralist Constantino Brumidi. Inside, they would home in with seriousness on priorities and red lines to figure out how they could reach a deal.
THE PAUSE BUTTON AND A ‘REGRESSIVE’ OFFER
By May 19, the negotiations were getting shaky.
Republicans were losing patience as the White House didn’t appear to be budging on curbing federal spending. For the GOP, anything short of that was a nonstarter.
During a morning meeting that Friday, White House officials pushed McHenry and Graves to put a formal offer on the table, but by that point, the frustrated Republicans decided to take it all public.
Republicans told reporters the talks had momentarily stopped. Graves, in a ball cap and blue button-up shirt that looked more apt for a fishing trip than highstakes dealmaking, said as he walked briskly through the Capitol: “We decided to press pause because it’s just not productive,”
“We were not going to play games here,” Graves recounted later of his and McHenry’s frustrations.
The friction wasn’t about to ease. When the negotiations reconvened that night, McHenry and Graves put forward a fresh proposal to administration officials: It not only revived more of the rejected provisions in the GOP’s debt-limit bill, but also included the House Republicans’ border-security bill for good measure.
One White House official called the offer “regressive.”
The White House went public with its own frustrations as the negotiations seemed to be going awry, first with a lengthy statement from communications director Ben LaBolt and then from Biden himself at a news conference in Hiroshima, Japan, where he was attending a summit of the world’s leading democracies.
“Now it’s time for the other side to move their extreme positions,” the president said. “Because much of what they’ve already proposed is simply, quite frankly, unacceptable.”
OPTIMISM, LATE NIGHTS AND GUMMY WORMS
Even as the public rhetoric sharpened, there were signs that the talks were starting to take a better turn.
As Biden left Japan, he called McCarthy from Air Force One, and the speaker emerged appearing more optimistic than he had in days. Sustained by coffee, gummy worms and burritos, the negotiators worked grueling hours, mostly at the Capitol but once at the Eisenhower Executive Office Building, where they noshed on Call Your Mother bagel sandwiches sent over by Jeff Zients, the White House chief of staff.
One session lasted until 2:30 a.m. Graves, at another time, showed reporters an app on his phone that tracked his sleep, which showed he was averaging three hours a night during the final stretch.
Still, McCarthy sent lawmakers home over the Memorial Day weekend, which McHenry said helped.
“The tone of the White House negotiators became much more serious and much more grounded in the realities they were going to have to accept,” McHenry said.