WASHINGTON — Last week, amid a monthslong standoff pitting GOP demands to cut federal spending in exchange for agreeing to pay the government’s bills, President Joe Biden invited congressional leaders to meet at the White House.
The effort followed a warning from Treasury Secretary Janet Yellen that the U.S. government could run out of money as soon as June 1 if lawmakers don’t raise the nation’s borrowing limit.
The players in this high-stakes game of chicken are Biden, who has called on Congress to pass a “clean” debt ceiling increase without conditions, and House Republicans led by Speaker Kevin McCarthy of California, who are using the threat of default in an effort to roll back Democratic policies they oppose.
While both sides have been talking tough, they will need to compromise if they want to prevent an unprecedented blow to the U.S. economy.
“The American economy right now is heading, for a cliff and last week the House Republicans voted to drive it off, full speed ahead,” Sen. Patty Murray said in a Senate Budget Committee hearing Thursday. “This should not be hard. When you are heading for a cliff, you turn the wheel. You don’t say, ‘Well, I’ll turn the wheel if you let me cut the breaks, or disable the airbags, or trash the engine.’ But that is essentially what the House Republicans are offering us.”
Murray is no stranger to arguments about the federal debt limit, having played a central role in resolving similar disagreements in 2011 and 2013. But in an interview in her D.C. office on Thursday, the Washington Democrat said she worries this time could be different, because she isn’t sure enough Republicans “really understand the consequences” of defaulting on the nation’s debt.
National governments routinely borrow money to fund programs by issuing bonds to investors, but the United States is the only advanced country — with the exception of Denmark — where legislators must vote to increase the amount of debt.
For most of the nation’s history, Congress approved more borrowing with little drama. Both parties have contributed to the $31.4 trillion national debt, with Republicans decreasing revenue by cutting taxes while Democrats have favored more spending on social programs. Both parties chose to finance the wars in Afghanistan and Iraq by taking on more debt.
Members of both parties have opposed raising the debt ceiling over the years. As a senator, Biden explained his vote against a debt limit increase in 2006 as “a statement that I refuse to be associated with the policies that brought us to this point.” But Congress voted to raise the debt limit unconditionally and with bipartisan support three times under former President Donald Trump, who told reporters in 2019, “I can’t imagine anybody ever even thinking of using the debt ceiling as a negotiating wedge.”
Republicans have upped the ante since 2011, when the populist tea party movement helped Republicans retake the House. Those newly elected GOP hardliners demanded sharp spending cuts in exchange for raising the debt limit. While the parties reached a last-minute deal to avoid default, the near miss caused the rating agency S&P to downgrade the United States’ credit rating.
As part of that 2011 deal, Murray was appointed co-chair of a bipartisan “supercommittee” tasked with reducing budget deficits. She said that effort fell apart after her Republican counterpart rejected a compromise. Although a default was avoided, the failure to reach an agreement resulted in sharp cuts across the board. Murray said that experience taught her important lessons about negotiating.
“When you’re under that duress,” Murray said, referring to the looming June 1 deadline, “you can make some really bad decisions.”
“Nobody in this country wants to be spending Memorial Day weekend wondering which crash we’re going to go into here, so I really hope that there is an adult in the room from the Republican side that stands up.”
In past fights over the debt ceiling, Murray said, that role was played by people like Senate GOP Leader Mitch McConnell of Kentucky and former House Speaker Paul Ryan, a Wisconsin Republican who negotiated a deal with Murray in 2013 to end budget wars that began with the 2011 debt limit crisis.
In contrast to past GOP leaders, McCarthy has a tenuous hold on the slim majority of House Republicans, a fact that was underscored by a marathon week in January when he made numerous concessions to an antiestablishment faction of the party to gain the support he needed to become speaker. One of those moves lets a single lawmaker file a motion for the speaker’s ouster, which then requires only a simple majority in the House.
On April 26, House Republicans passed a bill that would cap discretionary spending at the level Congress approved in 2021 — despite the dollar’s value falling more than 10% since then due to inflation — in exchange for suspending the debt limit for less than a year. That bill could represent an opening bid in budget negotiations — or, some fear, a final offer from GOP hardliners who would oust McCarthy if he compromises with Democrats to avert a default.
“House Republicans are determined to make their mark, and some of them are in favor of weakening institutions, so the politics are much more treacherous,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, a nonpartisan think tank in D.C. “More than ever before, the speaker knows that he doesn’t have a firm hold on his job, which makes it hard for him to negotiate.
The GOP bill would limit future spending increases to 1% each year and repeal several of Biden’s signature legislative accomplishments, including tax credits to promote renewable energy and funding intended to help the Internal Revenue Service crack down on tax-dodging by corporations and the wealthy.
It wouldn’t cut mandatory spending, which includes programs such as Social Security and Medicare. Some Republicans have signaled they also wouldn’t touch funding for defense, which represents roughly half of discretionary spending. That would mean deeper cuts to the remaining programs, which include things like scientific research, transportation safety and some veterans’ benefits.
Democrats have zeroed in on those hypothetical cuts, projecting the impact they could have on programs Republicans haven’t taken off the chopping block. Meanwhile, Republicans have accused Democrats of misrepresenting the GOP proposals.
“House Republicans already passed a bill to responsibly raise the debt ceiling without making a single cut to veterans benefits,” Kyle VonEnde, a spokesman for Spokane Rep. Cathy McMorris Rodgers, who voted for the bill along with nearly all her GOP colleagues, said in a statement.
“All it does is set a topline budget number and bring us back to the same spending levels we had four months ago, which Democrats didn’t seem to have an issue with when they put them in place,” he said.
He noted that the Republican proposal would return federal spending to where it was at the end of 2022.
“What have the Democrats done other than fearmonger and sling mud from the sidelines? Actions speak louder than words,” VonEnde said.
Republicans point out that they haven’t suggested cuts would be applied across the board, and that most veterans’ benefits would be off limits because they receive mandatory funding. In the current fiscal year, discretionary spending accounts for about 44% of the Department of Veterans Affairs’ $303 billion budget.
Wessel said Democrats and Republicans alike have shown they don’t care about reducing the nation’s debt as much as using it as a cudgel against the other party’s policies, all the while avoiding politically risky efforts to reform the biggest parts of the budget, such as Social Security, Medicare and the Pentagon.
“It’s all about talking points — that’s what’s so frustrating about this,” he said. “We do have some big fiscal problems, and they’ve taken off the table everything that could solve it, so they’re arguing about this stupid stuff.”
While Biden has insisted Democrats won’t negotiate over the debt limit, Wessel said both parties will need to come to the table and compromise on the budget, because that’s the reality of divided government. A more vocal and assertive left wing of the Democratic Party could make that more difficult, he said.
“The ideal solution here would be one of these things where each side can claim victory,” he said. “The problem is it’s really hard to figure out how to do something that saves face for both sides and doesn’t have huge, devastating economic implications.”
Asked whether she thinks McCarthy would strike a deal to avert a default even if it means losing his position as speaker, Murray was cautious.
“I don’t know him,” Murray said. “I hope that he understands that the economy of our country — for families, for businesses, for everybody — is more important than his speakership. I mean, we all have to understand that, at some point in our careers, we have to make some decisions because we know the consequences.”
Orion Donovan-Smith’s reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper’s managing editor.