House Speaker Kevin McCarthy made the revealing comments last week after discussing the budget and debt ceiling with President Joe Biden in the Oval Office. “I want to see if we can come to an agreement long before the deadline,” he said.
McCarthy’s suggestion that he wants to avoid a protracted, anxiety-filled debt ceiling drama could be interpreted as an ill-advised attempt by California Republicans to claim a veneer of rationality before unleashing a flood of absurd demands. But I see this as an acknowledgment on McCarthy’s part that the debt is the limit no A valuable hostage, easily tradable for a tidy ransom. Loan limits are like hand grenades; You don’t want it in your hands when it explodes. McCarthy seems to want to put the pin back in.
If Republican leaders think they’ll benefit by acting as if they’re crazy enough to blow up the economy — scaring Biden as well as the financial markets — they’ll revive the crazy talk rather than dampen it.
Instead, before the meeting at the White House on Sunday, January 29, when Dr Face the nation Moderator Margaret Brennan asked McCarthy, “You avoid a default? You don’t let it happen on your watch?” McCarthy responded, “Look, there will be no default.” This tracked with Senate Minority Leader Mitch McConnell’s earlier declaration, “America should never default on its debt. It doesn’t and it never will.”
McCarthy’s low-key start to the debt ceiling debate is a little surprising given how he won the speaker’s wall. House Freedom Caucus holdouts, who complained about the December 2021 vote to raise the debt ceiling and the December 2022 passage of a $1.7 trillion public spending bill, blamed McCarthy for pandering to Democrats (although McCarthy voted against both measures). McCarthy won their support after supporting a House rule that allowed a single member to call a vote on ousting the speaker, informally supporting a budget resolution that eliminated the deficit in 10 years, and Any credit limit increase is blocked A budget-cutting deal. (Budget resolutions are not binding but are intended to guide the work of Congress’s annual appropriators.) If McCarthy moves to raise the debt limit without such a deal, a disgruntled Republican could cast a vote on his speakership, which he could lose if there were only five Republicans. error
However, at least at this early stage, McCarthy doesn’t seem to be feeling too much pressure from his right side. The fiscally tight Republican Study Committee—which includes most House Republicans and has pushed aggressively for spending cuts—has yet to articulate a clear demand.
On 1 February, during a private luncheon for RSC members, Representative Kevin Hearn, chairman of the group, presented a set “Principles for Debt Limit Negotiations.” Oklahoman’s vague demands lack hard numbers and don’t include a specific deadline for achieving a balanced budget. But some of his goals are vague enough to be theoretically achievable, including “to reverse the recent increase in discretionary spending,” “to place statutory limits on the level of annual discretionary spending,” and “to establish a long-term fiscal regime focused on reducing . spending to curb the growth of our federal debt as a percentage of the nation’s economy.” For example, “statutory limitations” can be set at higher levels with exemptions. “Moderate increases in debt” — a far cry from the RSC’s call in the proposed fiscal year 2023 budget to “reduce the federal debt” — could happen gradually.
The RSC list includes demands to “ensure reductions in expenditure commensurate with increases in the debt ceiling”. That’s similar to House Speaker John Boehner’s claim during debt ceiling negotiations in 2011, the last time a Democratic president broke with a new Republican-controlled House in his third year. However, Boehner went a step further than “proportionate,” saying “the debt should be less than the accompanying increase in authority.” He won, sort of. The final compromise raised the debt ceiling by $2.1 trillion, designed to last more than a year. It aims to cut costs by the same amount, but over a decade.
What happened in the next 10 years? Federal spending as a percentage of gross domestic product declined during the remainder of President Barack Obama’s tenure, from 23.1 percent in 2011 to 20.6 percent in 2016. That remained steady under President Donald Trump until 2020 when pandemic relief brought it to 31.1 percent, the highest since World War II. As of 2022, the number is 24.6 percent, a sharp decline from two years ago but higher than when the 2011 agreement was envisioned. Moral of the story: A rosy promise doesn’t tie the hands of future presidents and Congress to spread cuts over long periods of time.
As the RSC struggles to settle on concrete positions, so does the Republican Party as a whole. McConnell, who usually likes to flex his parliamentary muscles, deferred to McCarthy, saying, “I think the ultimate resolution of this particular episode is between Speaker McCarthy and the president.” yet McCarthy is speaking in general terms; He told reporters that he did not make any specific requests to Biden in their first meeting.
Why can’t Republicans sit down to a real negotiating position? The answer is that they are too divided to add up mathematically.
Think of the budget as three different pots of money: entitlements—like Social Security and Medicare—military and everything else. Republicans were fairly united on cutting entitlements and funding the military. No more. As I wrote earlier, Representative Michael Waltz, a Green Beret who succeeded Ron DeSantis in Florida’s Sixth Congressional District, argued that we should focus on entitlements and not balance the budget “behind our troops and our military.” Trump then announced that Social Security and Medicare should be cut. Shortly thereafter, McCarthy sided with Trump, saying Face the nation“Let’s take them off the table … Social Security, Medicare, you name it.”
If so, what about the military? The GOP’s less hokey, Russia-friendly America First faction is growing, especially in the House, and is more open to cutting military spending. Old-school Reaganites are more common among Senate Republicans. Point case: Senator Lindsey Graham said recently Fox News, “To my House Republican colleagues: You send a bill over the Senate that cuts defense, I will try to kill it.” An Air Force veteran, Graham was defending his vote for the $1.7 trillion omnibus, even though he said “it was bad,” because it included a generous 10 percent increase in military spending. McConnell will likely be behind Graham, considering he made the same case for Universal, arguing that the bill “equips our armed forces with the resources they need while they can cut non-veteran costs in defense, real dollars.”
That’s right, this supposedly big government monster of a public bill to cut Costs, subject to inflation, in the “everything else” container. Growth in nondefense, nonveteran spending was 5.5 percent, while inflation in 2022 was 6.5 percent.
The mathematical problem for wannabe budget balancers is that once you leave Social Security, Medicare and the Pentagon alone, there isn’t enough money left to cut. The Committee on a Responsible Federal Budget explained the deficit by saying, “To achieve balance within a decade, all spending would have to be reduced by . . . 85 percent if defense, veterans, Social Security, and Medicare spending were off the table. These cuts would be so large that balance would be would require the equivalent of ending all defense appropriations and eliminating the entire Medicaid program.” Goodbye FBI, National Parks, and Head Start. (Remember that Medicaid is also an entitlement program.)
The only way is to admit, clearly or implicitly, that it is neither possible nor desirable to balance the budget in 10 years. Lo and behold, the 10-year marker was not set by McCarthy or repeated by the RSC.
Even if Republicans have a consensus position, wildly waving around the debt ceiling hand grenade would be unwise. They don’t have to play reckless games to force Biden to negotiate. They have other advantages: a September deadline to pass spending measures to keep the government running in the next fiscal year. Control of the House gives Republicans inherent leverage to enact those measures.
However, the deadline for crossing the debt ceiling is estimated to be June. It’s about three to four months before the end of the fiscal year, and Republicans seem to have a consensus: The debt limit shouldn’t be raised without some kind of budget deal. Bloomberg reported on January 26 that “House Republican leaders are considering proposing a short-term extension of the federal debt ceiling to delay the risk of a default until September 30,” effectively setting the debt ceiling on the schedule of the spending bill (unless the short-term extension passes). But it’s not clear whether far-right House members will accept the summer debt ceiling repeal. (asked Face the nation If he supported pushing the debt ceiling deadline to September, McCarthy shrugged: “I don’t want to sit here and discuss it.”)
So, when McCarthy said, “I’d like to see if we can come to an agreement long before the deadline,” he probably meant it. For McCarthy, debt limits and spending deadlines are not opportunities to be seized but death traps to be avoided. If the speaker can pull off a springtime budget deal before the doomsday deadline and right-wing demagoguery shifts into overdrive, he might hold his post until 2024.
The question for Biden and the Democrats is: Should they help McCarthy? Is it better to forge a quick deal and a much less anxious summer and fall? Or should they bide their time, force Republicans to take unpopular positions, and let McCarthy sweat?
That’s a tricky question to answer. But in all likelihood, the result will be the same: modest budget cuts, not enough to break even in about 10 years, and no damage to Social Security and Medicare. But some are cutting back on civilian spending. A Republican-run House is not going to give Democrats a status quo budget. After Republicans took over the House in 2010, President Obama had to cut some spending. After Republicans took over Congress in 1994, President Bill Clinton had to cut some spending.
Today, even the most moderate House Republicans — who used a discharge petition to block McCarthy and entertained passing debt ceiling increases with predominantly Democratic votes — would do so only with conditions. “We have to have some commitment from President Biden to cut costs for us to consider making a discharge petition,” said Rep. Don Bacon, a moderate Republican who represents Omaha.
Biden will have to assess in future talks with McCarthy how badly the speaker wants to address the debt ceiling issue. If keeping the minimum cuts is bad enough, Biden should make a preliminary deal, keep the markets calm and let the economy hum along.