As the United States barrels towards an unprecedented default on our national debt, Speaker of the House Kevin McCarthy was finally able to pass a debt limit bill last Wednesday, shifting responsibility for avoiding economic catastrophe back to President Biden, who must now display presidential leadership, change his tactics, and come to the negotiating table.
Until now, Biden had been successful at laying the blame for a lack of progress on the debt ceiling on House Republicans, who had been unable to pass a bill to serve as a starting point in negotiations, and who have tied raising the debt ceiling to a wish list of partisan demands that are unlikely to advance.
Put simply, as the U.S. economy teeters on the brink of a recession amid persistent inflation, multiple bank failures, and record levels of economic pessimism, President Biden and Congressional Republicans have been locked in a dangerous game of political chicken, betting that voters would blame the other side for the economic devastation that a default would cause.
However, two recent developments should be a wakeup call to the president that he must come to the table and send a message to voters that the economy takes precedence over politics.
First, Republicans can now credibly tell voters that they did their part by sending the White House a proposal, so if the country defaults, it will be Biden’s fault for refusing to negotiate.
This is not to argue that Biden should give Republicans everything they proposed – McCarthy’s bill is certainly flawed – but to say that all efforts should be made to avoid a default, even if neither side walks away with everything they want.
This is familiar ground for Biden. During debt ceiling negotiations in 1995, then-Senator Biden pushed for restraining federal spending as part of a deal to raise the debt ceiling. In a 1995 column for the New York Times, Sen. Biden pushed for a tradeoff that would lift the debt ceiling, and protect vital social programs, while prioritizing a reduction in government spending – identical to the middle-of-the-road approach needed today.
It must also be said that, despite Biden’s insistence on unconditional negotiations, Republicans are equally to blame for weaponizing the budget and Biden’s low approval ratings on the economy to score political points. Raising the debt ceiling has historically been a procedural vote to allow the country to pay for past spending, and the full faith and credit of the U.S. government should never be used as political leverage.
Ultimately, both sides will have to find compromise, and in the absence of any other legislation, the McCarthy-backed bill must serve as a basis for a deal which stops the United States of America from falling off a fiscal cliff.
To that end, Democratic Senator Joe Manchin expressed hope that the passage of a bill would finally spur good-faith negotiations, saying, “I applaud Speaker McCarthy for putting forward a proposal that would prevent default and rein in spending…While I do not agree with everything proposed, the fact of the matter is that it is the only bill actually moving through Congress that would prevent default.”
Positively, there are signs that the president may agree with Sen. Manchin’s assessment. Last Monday, Biden invited the top four Congressional leaders – Sens. Chuck Schumer and Mitch McConnell, Speaker McCarthy and Rep. Hakeem Jefferies – to the White House for discussions on May 9.
At the same time, the administration’s messaging on the meeting is less than hopeful, as it does not appear that the president will substantially change his approach, despite having lost his leverage following the House passing a bill.
Addressing the upcoming meeting and GOP demands linking the debt ceiling with future spending, a senior administration official told reporters, “If you need to hear again that it’s your responsibility to address the debt ceiling without conditions and a ransom, then he can say that again.”
Second, Treasury Secretary Janet Yellen announced that the U.S. could hit its borrowing limit much earlier than expected, predicting an “X-date” of June 1. According to Sec. Yellen, after that date, the U.S. government “will be unable to continue to satisfy all of the government’s obligations.”
Making matters worse, there are just seven days between May 1 and June 1 where Biden, the Senate and the House are in session together, leaving very little time to forge compromise on a deal with immense ramifications.
Biden may believe that he benefits politically by standing his ground, and that voters will support his fight against the cuts that Republicans are proposing, but that belief is simply out of the mainstream.
In fact, nearly three-quarters (74%) of likely voters feel that Biden should negotiate with Republicans to find common ground on the debt ceiling, including modest reductions in federal spending, per Echelon Insights polling.
Fair or not, as President, Biden will receive an outsized share of the blame for any negative shocks to the American economy caused by a failure to reach a deal.
Throughout his presidency, Biden has struggled to soothe Americans’ concerns over the state of the economy, an issue which will certainly be at the top of voters’ minds in 2024. Having presided over an era of record-high inflation, and three of the top five largest bank failures in U.S. history, President Biden should take advantage of this opportunity to show voters that he can put politics to the side when the country needs common sense leadership.
In 2011 – the last time the country was this close to default – then-Vice President Biden skillfully oversaw the negotiations with Senate Republicans that staved off economic disaster. Twelve years later, it is imperative that Biden commits himself to finding a solution with House Republicans. Even if it is not perfect, the nation will be better off for it.
Douglas Schoen is a longtime Democratic political consultant. Saul Mangel is a strategist at Schoen Cooperman Research.