A debt default would be catastrophic for the US – and Biden’s re-election chances
The favored metaphor on the left is to compare the trumped-up debt-ceiling crisis to hostage-taking by the House Republicans.
But in a true hostage situation, both sides have something major to lose. The perpetrators risk not getting a payoff or, worse, spending decades in prison. For the families of the victims and the police, the danger is that the hostages will be killed during the negotiations or in the midst of a botched rescue mission.
For Kevin McCarthy and the defaulters (which, incidentally, is a promising name for a band), there is no downside. If Joe Biden ultimately hands over his sword in surrender, the Republican incendiaries will be lionized as conquering heroes from the Fox News green room to the dining room at Mara-Lago.
Sure, the reviled liberal media will grumble if Republican intransigence forces America into default, guaranteeing higher interest for years to come, and jeopardizing the world economy. But that crazed toughness would prove that the House speaker is not a “Republican In Name Only” (Rino) squish like his deal-making predecessor John Boehner, who at the last minute helped avert default in 2011.
Marching off the fiscal cliff like lemmings will also inoculate House Republicans against a rightwing primary challenge – which, in Republican circles, is a fate worse than death. And since members of Congress can trade stocks, every smart Republican can personally prosper during the coming cataclysmic economic downturn by adroitly shorting the Dow Jones Average.
In contrast, the consequences of debt-ceiling brinkmanship are dire for Joe Biden. In the best conceivable case – one that will prompt dismay among liberals – the president would reluctantly agree to tight spending caps that will limit his domestic agenda and penalize the poor. But, at least, that option would avert default.
At the end of his Sunday press conference in Hiroshima, Biden publicly acknowledged the devastating political consequences for him if America were unable to pay its bills. Channeling the thought process of House Republican zealots as they head towards the abyss, Biden said: “Because I am president, and presidents are responsible for everything, Biden would take the blame. And that’s one way to make sure Biden is not reelected.”
Sad, but true.
A default might well mean that Biden would be running for reelection with the economy in a Republicancreated tailspin. And it wouldn’t matter politically that, as Biden said, “On the merits, based on what I’ve offered, I would be blameless.”
But if Democrats believe that they can win the messaging wars about a default, they’re deluding themselves.
An Associated Press/NORC poll, released last week, found that only 20% of Americans say that they understand the debate over the debt ceiling “extremely” or “very well.” That number is significant because it is often hard for political insiders to remember that most Americans do not watch cable TV news or obsessively follow political machinations in Washington. The danger for Democrats is that many of these low-information voters will be persuaded by the implicit one-sentence Republican message: America defaulted because Biden wouldn’t agree to cut government spending to deal with the national debt.
In order to appreciate the folly of that glib Republican argument, a voter both has to understand the draconian nature of the Republican budget proposals and to grasp that raising the debt ceiling merely authorizes borrowing rather than new spending. Good luck making that complex case to anyone who doesn’t devotedly read the New York Timesor listen to National Public Radio.
In an era of streaming and thousands of channels, Biden does not have the option of commanding national attention with an old-fashioned Oval Office address. Moreover, there is no guarantee that Biden, with his rambling asides and workmanlike delivery, would convince anyone with a televised speech. To illustrate that point, here is the awkward way Biden highlighted the dangers of the Republican budget plan in his Sunday press conference: “I’m not going to agree to a deal that protects, for example, a $30bn tax break for the oil industry, which made $200bn last year – they don’t need an incentive of another $30bn – while putting healthcare of 21 million Americans at risk by going after Medicaid.”
The harsh reality is that Biden has little choice but to grub for the best deal he can. While there is a strong legal argument that the debt ceiling is unconstitutional under the 14th amendment, no one at the treasury department or anywhere else knows how the global markets would react if Biden thumbed his nose at Kevin McCarthy and his wingnut caucus.
With the continuing danger that Donald Trump’s comeback tour will end in the Oval Office, there are more important matters on the table than punishing Kevin McCarthy for his hostage-taking. In fact, the best revenge would be a sweeping Biden reelection that brings with it a Democratic House majority. Then, in 2025, without a presidential election on the horizon, Biden would be free to blow up the dangerously irrational debt-ceiling law.
Walter Shapiro is a staff writer for the New Republic and a lecturer in political science at Yale