This moment of peril amid partisan rivalry
This was all completely predictable. The government is facing a massive fiscal crisis because House Speaker Kevin Mccarthy is a lethal combination of excessive ambition and extreme weakness.
He was so desperate to win the House’s top job that he sold his soul to a group of hard right-wingers — even fellow Republicans called them the “Taliban 20.” One critical price he paid for their votes, after 15 fruitless ballots, was to promise a showdown over raising the debt ceiling: the limit on how much the government can borrow to pay its bills.
Now that moment of peril has arrived. Treasury Secretary Janet Yellen has announced that the government will run out of money sometime in June, perhaps as early as June 1. Yet House Republicans insist they will raise the debt ceiling only if President Biden agrees to sweeping budget cuts. They’ve passed a symbolic bill that would slash federal spending by an estimated $4.8 trillion over 10 years while also imposing stringent work requirements on recipients of government aid and eviscerating Biden initiatives such as combating climate change and canceling student debt.
Biden in response insists he will not negotiate on budget measures until after the debt ceiling is raised. “We pay our bills and we should do so without the reckless hostagetaking from some of the MAGA Republicans in Congress,” vowed the president, referring to Donald Trump’s core supporters.
The White House has invited Congressional leaders for a May 9 meeting, and history suggests that somehow, some way, they will find a path out of this impasse. But the atmosphere in Washington is far more poisonous than in the past; the pragmatic dealmakers in both parties have lost much of their leverage, and the partisan rivalries are greatly aggravated by a looming presidential election in which Trump and Biden are likely to face off for a second time.
So failure is a real possibility, which makes the Republican brinkmanship so much more dangerous and irresponsible. The economy is fragile, growth has slowed, inflation and interest rates remain high, recession is a real possibility and a default on government obligations would, in Yellen’s words, cause “severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”
The Wall Street Journal described the stakes this way: “U.S. government debt is a safe-haven asset around the world, a bedrock part of the financial system that helps set interest rates across the economy. Doubts that the U.S. could pay back buyers of its securities could therefore have wide-ranging, dangerous financial and economic consequences, including a potential global crisis, analysts say. Missed payments on other U.S. obligations, including on Social Security benefits, could also cause economic pain across the country.”
Not only that. Republicans who now claim to be the saviors of fiscal sanity happily voted for the Trump tax cuts that added at least $2 trillion to the deficit. And they quietly voted several times to raise the debt ceiling during Trump’s tenure with no conditions attached. Their hypocrisy, even by Washington standards, is stunning.
Moreover, Biden is right to believe that giving in on the debt ceiling now would set a terrible precedent and weaken him for the rest of his presidency, however long it lasts. Paying off hostage-takers doesn’t reduce future threats, it increases them.
But the White House, too, is following a risky strategy by refusing to negotiate with Mccarthy, and they could be making a grave miscalculation. The problem is not the speaker’s strength, it’s his frustrating feebleness.
Democrats really seem to believe that Mccarthy will see the light — and the liabilities — and cave in, but he is far too frail to do that. The Taliban 20 would have his head — and quickly.
The economic risks lead to political risks. Biden is the president, and no matter how often he says the word “extremists” and blames others, economic turmoil would inevitably stain his record. And like McCarthy, the president enters this endgame on the debt ceiling in a severely diminished position.
Gallup reports that only 37% of Americans have a favorable view of Biden, the lowest score of his presidency. Only 35% express confidence in his handling of fiscal matters, and 19% say the economy is improving, while 75% say it’s declining.
Biden has been around a long time. He’s cut many deals and survived many confrontations. But this coming crisis will test every bit of his energy and experience.