Look at the last 36 hours and it should be clear why Congress and President Biden didn’t deal with raising the debt ceiling 36 days ago, or more.
In the past 36 hours, Republican leaders like House Speaker Kevin McCarthy and his deputies said they were close to a deal where the Republican-led House would go along with the Democratic Senate and White House to raise the nation’s debt ceiling, while also enacting some spending cuts.
According to polls from CNN and Fox News, also from the past 36 hours, that is what the American people want: to raise the debt limit and make some spending cuts.
Without getting into the particulars, this looked like good news. After all, the first-ever default by the American government — and with it an unprecedented financial crisis — had likely been averted. Analysts say defaulting on the debt would cost millions of Americans their jobs and potentially plunge the nation, if not the world, into recession.
But as soon as the contours of a deal emerged came threats to tear it all down. House progressives felt Biden got played and conceded too much, and they were questioning whether the deal should pass.
Then on Thursday, the House Freedom Caucus, made up of staunch conservatives, announced a three-point ultimatum of what must be added to a deal, or they’d walk away. One of their ideas is simply to scrap unspent COVID relief money, a pot both parties are fine with jettisoning. If that happens, the Freedom Caucus estimates the default date, estimated to happen next week, would get pushed out by weeks.
Then we do this all over again. The White House certainly doesn’t want that; they just want it over. But at the same time, all the leaders involved know the only way a deal happens is to wait until the deadline looms, announce a deal, and quickly vote.
Americans are right to look at this last-minute chaos and be perplexed and upset. The nation remains on the brink of an unprecedented fiscal crisis. One agency has warned the US credit rating is at risk of a downgrade, even as the deadline approaches.
Unlike a natural business cycle or decades of complicated regulatory neglect leading to depression, this crisis is wholly manufactured for political ends.
Republicans have decided that when they control the House and there’s a Democratic president that spending cuts must accompany the lifting of the nation’s debt ceiling. This scenario doesn’t happen when a Republican is president. The debt ceiling was raised three times under Donald Trump with zero fanfare.
So when Republicans took over the House in the midterm elections and it looked as if the nation would hit the debt limit sometime in 2023, the GOP demanded of Kevin McCarthy that, should they make him House Speaker, he would force President Biden to make spending cuts part of a debt ceiling deal.
McCarthy was elected speaker and immediately told the White House that he wanted to negotiate.
For 93 days the White House refused to meet with him. Their position was that raising the debt ceiling shouldn’t be negotiated. It should be raised, they maintained, since it is about paying off past debts, not about new spending.
But there was something else at work here, too. In order to secure the speakership after 15 grueling votes, McCarthy gave away a lot of power that House speakers have traditionally had. McCarthy knew it and so did Biden. Further, neither McCarthy nor Biden are ideologues, but deal-makers who want to stay in power.
Getting to yes on a deal was never going to be hard when you look at what was on the table to negotiate. Apart from those details was the political gamesmanship. Republicans wanted to be respected and feel like they got something in the deal. Democrats didn’t want to look as if they gave away the farm.
Instead, the whole situation is like a parent with a toddler going to an ice cream stand. Agree to buy ice cream before checking out, and the toddler might demand two scoops. Agree to buy two scoops, and the toddler might negotiate to add sprinkles.
The lesson: agree to nothing until the order is being placed.