WASHINGTON — It was July 2011 and Representative Kevin McCarthy was looking for votes to avoid a first-ever government default. The rebellious Tea Party conservatives were balking at a deal endorsed by GOP leaders and McCarthy, then the No. 3 House Republican, needed something to draw in just enough lawmakers to get it over the line.
So, in a closed-door meeting of Republican lawmakers, he cued up a scene from the 2010 Boston heist movie “The Town.”
“I need your help. I can’t tell you what it is. You can never ask me about it later and we’re gonna to hurt some people,” Ben Affleck’s character says to his friend, played by Jeremy Renner, in the clip McCarthy played. Renner doesn’t hesitate. “Who’s car we gonna take?” is all he says.
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McCarthy’s role as the House Republican leadership team’s motivator and chief vote counter in that first major debt limit confrontation was largely on the periphery of the 2011 negotiations, which ended with Congress raising the limit at the last minute before the government defaulted on some of its obligations. The delay led to the first-ever downgrade of the nation’s AAA credit rating and higher government borrowing costs.
A dozen years later, Republicans and Democrats are on a similar collision course with potentially disastrous implications for the US economy. The United States officially hit its $31.4 trillion debt limit on Thursday and Treasury Secretary Janet Yellen began using accounting maneuvers known as “extraordinary measures” to allow the federal government to keep borrowing to pay all its bills for several more months.
This time, McCarthy moves to center stage as House speaker, a job he narrowly won by promising far-right lawmakers he would not agree to a debt limit increase unless it was paired with significant fiscal reforms — changes that most likely would include major cuts to entitlement programs such as Social Security and Medicare. He’s no longer just a salesman who needs to unite his troops. He’s the top negotiator and required to master the policy details as well as the politics, a role that doesn’t play to his strengths, said former Illinois Republican representative Joe Walsh.
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“Kevin was the rah rah guy, the cheerleader, the motivator. He’d show movie clips. He’d put Vince Lombardi quotes up on the wall. He’d do a ton of [stuff] like that. And those of us who were committed in opposition would just laugh at it,” said Walsh, who was a freshman Tea Party member in 2011. “To anybody committed to an issue, Kevin can’t move them.… It’s just not his strength. He’s not a policy guy.”
McCarthy also has less room to maneuver. Republicans had a 49-seat House majority in 2011 under then-House Speaker John Boehner. Now, it’s just 10 seats. In addition, House Republicans overall are far more conservative and combative than they were 12 years ago and intent on using the debt limit — their greatest point of leverage with Democrats controlling the Senate and the White House — to reduce federal spending.
It’s a perilous path, said Dave Camp, a Republican who chaired the House Ways and Means Committee in 2011.
“There’s only so much leverage with regard to the debt limit,” he said. “There’s a point where if there is no agreement in the negotiations, what’s the alternative other than extending the debt limit? ... At the end of the day, default is not an acceptable outcome.”
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But Democrats and Republicans appear to have taken different lessons from the 2011 fight.
Republicans were able to get about $900 billion in spending cuts over 10 years and additional deficit reduction measures in exchange for agreeing to raise the debt limit. Now, with the national debt more than double what it was back then, Republicans say it’s even more imperative to negotiate a deal that cuts spending.
“Why wouldn’t we sit down now ... set a path to get us to a balanced budget and let’s start paying this debt off and make sure the future generation has as many opportunities as we do?” McCarthy told reporters this past week.
Democrats, who watched as months of wrangling in 2011 ended with a credit downgrade even though the debt limit was raised just in time to avoid a default, have declined to cede any early ground. White House officials have been adamant they won’t negotiate now over raising the debt limit, which they point out simply allows borrowing for spending Congress has already authorized.
“There will be no hostage-taking,” White House press secretary Karine Jean-Pierre said this month.
Others predicted that just as in 2011, the need to raise the debt limit will eventually fuel the effort to reach a deal to reduce spending. President Biden in particular should understand the need to negotiate, said former representative Eric Cantor, given his key role in talks back then as Barack Obama’s vice president.
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“It is unreasonable, at the very least, for this administration, especially for President Biden ... to refuse to sit down with Republicans,” said Cantor, who was majority leader in 2011 and is now vice chairman and managing director at investment bank Moelis & Company. “Maybe they think that’s a better negotiating posture, but I think it’s pushing the whole thing closer to default.”
The 2011 credit rating downgrade by Standard & Poor’s altered the dynamics of subsequent debt limit debates, said Camp, now a senior policy adviser with accounting and consulting firm PwC. Although a downgrade was seen as possible back then, people weren’t very worried about it, he said.
Another stalemate could lead to downgrades by the other two leading credit rating companies, Fitch Ratings and Moody’s Investors Service, which would add to the already increasing interest costs on the federal debt.
“The whole thing was uncharted territory,” Camp said of 2011. “The credit downgrade was certainly one of the possibilities. But I think many felt it wasn’t likely, and now we know that it’s a very real potential outcome of a failed negotiation.”
But even if McCarthy can persuade the White House to negotiate and strike a deal, it might be difficult to get most House Republicans to approve it.
He probably would have to agree to cuts in defense spending, which some of his own members would oppose. Donald Trump on Friday warned Republicans not to cut Social Security or Medicare, so any changes to those popular programs could cost votes from some of the former president’s supporters as well as Republican moderates. And failure to secure enough spending cuts could lead the most conservative House members to push for McCarthy’s removal as speaker if he brings up a debt limit bill that relies mostly on Democrats to pass it.
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“This is a difficult vote for Republicans, because the argument is that, the money’s already been spent, you need to raise the debt limit,” Camp said. “On the flip side, Republicans are saying, look, we’re spending too much, our debt is over $30 trillion, what can we do to make some of these programs sustainable for the long term?”
In 2011, McCarthy and House leaders were able to persuade most Republicans to vote to increase the debt limit. The bill passed 269-161, with 174 Republicans in support and only half of the Democratic members. Many Democrats were unhappy that the agreement did not include tax increases on the wealthy in addition to spending cuts. On the Republican side, 66opposed the bill, including some Tea Party members such as Walsh, who thought the deal didn’t reduce spending enough.
“We were true believers back then. We would have not raised the debt limit and been absolutely fine,” said Walsh, who was defeated for reelection in a redrawn district in 2012 and ran a short-lived campaign for the Republican presidential nomination in 2020. “I don’t believe the extreme MAGA folks are true believers in the policy end of this. It’s about the power, it’s about control, it’s about going after the Democrats.”
But that difference provides an opportunity for McCarthy to cut individual deals with House Republicans to support a debt limit increase, Walsh said. Although policy arguments aren’t his strength, McCarthy’s experience as the House whip — the job he held in 2011 — should have taught him how to secure votes.
“I think he’s smart enough to know that he’s got different members of his caucus now much more open to horse trading,” Walsh said, noting that Congress no longer has a ban on pet projects known as earmarks that Republicans had put in place in 2011. “That’s what he was born to do.”
Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him on Twitter: @JimPuzzanghera.