House Speaker Kevin McCarthy (R-CA) leads an unruly conference with a five-seat majority. President Joe Biden has an all-time low approval rating of 36%.
Both will enter their second meeting over the debt ceiling Tuesday with their hands tied and the two being politically vulnerable.
GOP RUNS UNITY PLAYBOOK TO WIN DEBT CEILING FIGHT
McCarthy, who is demanding spending cuts in exchange for a hike in the federal borrowing limit, strengthened his negotiating position last month by passing a debt ceiling bill through the House, proving he could unite a fractious conference around an opening offer to Biden. Yet his hold over the chamber is precarious.
The GOP hard-liners he appeased to get the votes balk at compromise and may jump ship if McCarthy agrees to water down the bill. Meanwhile, the White House, which refuses to negotiate over the debt limit, is nipping at the feet of centrist Republicans in blue districts in hopes they grow skittish and vote for a “clean” debt ceiling increase as a possible June “X-date” for default inches closer.
Biden faces 2024 liabilities of his own.
The president’s approval rating just two weeks into his reelection bid is weighed down by stubborn inflation and concerns about his age.
Biden risks eroding his base of support further — 58% of Democrats would prefer a new nominee, according to an ABC News/Washington Post poll — if he’s viewed as caving to McCarthy in debt ceiling talks. Yet he could very well end up shouldering the blame if the standoff becomes a financial crisis.
McCarthy risks the same for his party if government shutdown fights of the past are any indication.
Both are projecting resolve as they meet at the White House for the second time Tuesday afternoon, sticking to the battle lines they drew on day one of the debt limit fight. But behind the intransigence are two leaders with few good off-ramps to a brewing crisis.
“McCarthy’s boxed in simply because his margins are so small, and he just doesn't have much room to give in any direction,” GOP strategist Alex Conant told the Washington Examiner. “Biden is boxed in because his approval rating is so low, and he's less than two years from reelection.”
Biden has framed the House-passed bill, which would slash $4.8 trillion in deficits over the next decade in exchange for a $1.5 trillion hike in the borrowing limit, as a “ransom note” from “extreme MAGA Republicans” hell-bent on sending the nation into default.
The MAGA line must poll well: It has been adopted by Democratic leaders from the president to Senate Majority Leader Chuck Schumer (D-NY).
But by painting House Republicans as Trumpian boogeymen, Biden has made compromise with them that much harder. If he moves off his no-negotiations stance, he won’t just be accused of caving — he’ll be working with the very “extremists” he says will plunge the country into a recession.
“He wants to run against House Republicans, not work with them,” Conant said.
McCarthy, for his part, has staked his speakership on reining in the federal budget. He agreed to use the debt ceiling as leverage for “commensurate fiscal reforms,” one of many demands GOP hard-liners made in order for McCarthy to win the gavel in January. If he fails to bring home major concessions from Biden, those same conservatives could threaten a no-confidence vote.
The end result is that neither McCarthy nor Biden is as likely to budge. “The president and the speaker are under some pressure to accommodate, in the president's case, the liberal base, and in the speaker's case, the Freedom Caucus,” Democratic strategist Brad Bannon told the Washington Examiner.
“And so, it may be difficult for either to back down,” he added.
McCarthy insists he has the flexibility to negotiate a deal. If only Biden would sit down and talk, the two could take the risk of default off the table, he says.
The president refused to do so for months, calling on McCarthy to produce a budget first. The speaker's debt ceiling bill, which passed 217-215, was an answer to that challenge.
Yet Biden, who as vice president helped resolve a 2011 debt ceiling stalemate that led to the country's first-ever credit downgrade, maintains the borrowing limit must not be used as a bargaining chip.
For now, there’s no real sense of urgency to act despite the Treasury Department warning it will be unable to pay all of its bills as soon as June 1.
Conant believes the White House's decision to schedule a second debt ceiling meeting, this time with all four leaders of the House and the Senate in attendance, shows he’s under some pressure from the business community to act.
But real headway may not be made until Washington, or Wall Street, really believes it’s approaching a fiscal cliff.
“I mean, that’s how Washington works, right?” said Conant. “If the political solution was easy, we would’ve gotten there a long time ago.”
Democrats are signaling one possible off-ramp to the crisis. Although the president is unwilling to negotiate over the debt ceiling, he is open to talks over the annual budget, which Congress must pass before the fiscal year ends on Sept. 30.
If both sides can agree to a short-term extension of the debt limit, with Democrats dangling a deal-sweetener such as energy permitting reform, then Washington could buy time to negotiate over the budget, ostensibly separate and apart from the debt ceiling.
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Biden would save face, and Republicans would notch a policy win. The problem for both sides is there doesn’t appear to be the appetite for a short-term extension in Congress as things stand right now.
“The easier-said-than-done is a deal that allows both McCarthy and Biden to claim a victory,” Conant said.