The GOP Conditional Debt-Limit Increase Bill Should Not Open Biden-McCarthy Budget Negotiations
Allowing weaponization of the debt-limit will permanently damage the national interest
In Perilous Times, I have advocated for bipartisanship and institutional changes to make American government work more effectively and align more closely with the aspirations of the citizens. Thus, it may seem contradictory that I disagree with today’s zeitgeist that the GOP’s passage of a debt-limit increase together with massive spending cuts and policy changes should lead to the opening of Biden-McCarthy negotiations on the budget.
There is a short explanation for my position: There should be no negotiations at this point because doing so would institutionalize the dangerous practice of taking the creditworthiness of the American government hostage for legislative leverage.
Obama unfortunately set a precedent for doing this 2011 and paid the price through implementation of a damaging, unnecessary, and unpopular sequester of federal funding on both defense and non-defense programs. He learned his lesson and would not bargain over the debt limit again during his presidency.
Biden has taken up this mantle.
His position is correct – Congress should raise the debt-limit without conditions because maintaining the full faith and credit of the United States is in the national interest. Period. The debt has been caused by spending authorized by Congresses in the past when each party held power, thus paying the debts we have incurred is a bipartisan responsibility. One party should not believe it is entitled to a “reward” – in the form of obtaining policy outcomes that could not otherwise be achieved through the normal legislative process – for fulfilling its institutional responsibility to raise the debt limit.
If this tactic is ratified by Biden, even by the mere opening of negotiations, then it will become a normalized feature of American politics. Indeed, the GOP signaled its intention to continue using this extortive tool by only raising the debt limit yesterday for one year. That means they intend to come back for more policy concessions next year and for every year they hold a House majority.
Putting American creditworthiness on the chopping block on an annual basis is dangerous business. Ultimately, doing so will erode the global reputation of the American financial system and damage the position of the U.S. dollar as the default currency of the global economy. Xi Jinping is certainly rooting for Kevin McCarthy and laughing at our self-destructiveness all the way to the Bank of China.
GOP leaders argue that because it controls one branch of Congress, Republicans are entitled to have at least some of its policy preferences reflected in newly enacted laws. Using the debt limit is legitimate, they would argue, because it is only tool the House GOP has to ensure that this fairness occurs.
But this premise is deeply flawed.
The way that American politics works in the era of deep polarization, it turns out that getting control of just one chamber of Congress does not entitle a party to substantial influence over policy outcomes. Even a party that has control of the entire Congress and the presidency – as Democrats did in 2021-23 -- cannot enact much of its policy agenda unless it can overcome a Senate filibuster. That is what occurred with the defeat of most of Biden’s “Build Back Better” legislation last year. Issues such as voting rights and criminal justice reform also fell by the wayside due to GOP filibusters.
There is one narrow exception to this practice, and that is the arcane practice of budget reconciliation, which allows a bill to be enacted with a bare majority in both the House and Senate. Reconciliation rules are complicated, but, by and large, they allow items to be included in filibuster-proof legislation if they have a budgetary impact. Both parties have tried to broaden reconciliation practices to impact policy in recent years. And this practice was used twice by Democrats in the last Congress to pass major legislation – first the American Rescue Plan and then the Inflation Reduction Act. But this loophole can only be used when a party has won majority control in both Houses and the presidency. The GOP does not have that power now, so it is not entitled to have large parts of its policy agenda enacted into law during this Congress.
What does having control of the House get the GOP?
First, to the extent the Biden Administration could get parts of its agenda through a GOP Senate filibuster, Kevin McCarthy’s crew can simply ignore that legislation. So, the House GOP has veto power over the Biden agenda and even over bipartisan legislation from the Senate. That is significant.
Second, the government must get funded every year through passage of appropriations bills. So, the GOP is entitled to a seat at the table to determine the amount of spending on both defense and non-defense discretionary spending. The GOP’s leverage here is that if it doesn’t approve spending bills, parts of the government close. Government shut-downs are now an unfortunate permanent feature of American politics that occur primarily during periods of divided government. But we have demonstrated the capacity to survive temporary shut-downs without too much damage to the national interest. The American public has also shown, however, that it will only tolerate government shut-downs for a short period of time. So, there is pressure on the parties to resolve their differences and take contentious, unresolvable issues (which are usually large-scale policy disagreements) off the table.
Once the House passes a budget that sets a spending cap and then puts this cap into effect through draft appropriations bills, that will be an appropriate time for Biden-McCarthy negotiations over government spending. There may be a government shut-down that will place political pressure on both sides. When that pressure gets high enough, there will be some compromise that re-opens the government and allows big policy disputes to be decided by the people during the 2024 elections.
McCarthy would argue that the House did lay out its fiscal priorities in the bill it passed last night, so negotiations should now begin.
But that is incorrect.
First, as noted above, the quid-pro-quo dynamic of the debt limit is still in play, so this gambit must be rejected.
Second, the House has not shown that it truly has support for the massive spending cuts that this bill proposes (about $5 trillion over 10 years). Some of its members were promised defense won’t be touched, others were told agriculture subsidies won’t be touched, and so on. So, the vote was on spending cuts in the abstract, not spending cuts to particular programs. To get a seat at the bargaining table over domestic spending cuts, the GOP has to show it has majority support for cuts to specific programs, like Food Stamps, or law enforcement, or aviation security, etc. This only happens when a party passes a budget resolutions and appropriations bills. It is worth noting that the House GOP abandoned trying to pass a budget resolution (which sets spending levels in broad areas like “defense” or “health care”) because it could not reach an intra-party consensus.
Finally, it is worth noting that the House cobbled together its bare majority to pass the legislation by including partisan agenda items like cutting IRS enforcement funding and changes to climate change policy. Again, these Democratic priorities were put in place when it won electoral victories that gave them control over the entire Congress and the presidency. There is no reason why Democrats should even begin to negotiate with the GOP over these achievements just because the GOP won a 9-seat majority in a single chamber in 2022.
President Biden should invite the Speaker to the White House to discuss the debt limit situation in light of the House passing a conditional debt limit increase yesterday. Biden should tell McCarthy that getting his members to vote to fulfill their constitutional duty to honor the payment of our debts was a good first step. And he should say he is ready to negotiate over fiscal issues when the House passes a budget and appropriations bills in response to the budget that Biden sent to Congress in March.
But he should stick to his position that there will be no linkage between the debt limit and fiscal negotiations.
“See you later, Kevin.”
Thanks for being such a close reader of Perilous Times. I aim for perfection in my usage, but sometimes fall a bit short. You are correct, I meant "intraparty consensus."
As you know, in recent years, there is very little effort to obtain inter-party consensus on very much. The House is a majority rule body, so the majority can pass pretty much anything once it has intraparty consensus.
My point is that I don't think that intraparty GOP consensus has occurred on the topic of budget cuts. Thus to negotiate with McCarthy will be like trying to nail jello to the wall as I said in a prior post. Even if Biden offers to cut program X, McCarthy will not be able to say his caucus is for that or against it. Some of it will and some will not. They are attracted to the idea of less spending in the abstract, but then come to grips with reality that most of this spending is popular with various of its constituencies.
The last sentence of the 19th paragraph. Do you mean "inter-party consensus" an agreement between
the Republican and Democratic Parties ; or , "intra-party consensus" an agreement among the members of the Republican Party? Inquiring minds want to know.