Here’s a periodic reminder: There is, as of now, still no plan to raise the U.S. debt ceiling, leaving open the chance of a potentially catastrophic blow to the global economy as soon as June.
In a letter to the White House on Tuesday, House Speaker Kevin McCarthy, R-Calif., tried to pin the lack of progress on President Joe Biden. From McCarthy’s point of view, Biden is “putting an already fragile economy in jeopardy” by refusing to link raising the debt ceiling to negotiations over federal spending. He claimed that “House Republicans are united” in their view that the only way to stave off disaster is through a deal that would “Limit Spending, Save Taxpayer Money, and Grow the Economy.”
Whether McCarthy realizes it or not, he will have to make a choice that will end either with his losing his speakership or with tanking the U.S. economy.
It’s a nice slogan and the closest McCarthy has come to laying out terms for a potential deal. But in reality, the House Republicans are very much not united on what they would support in a deal to raise the debt ceiling. And whether McCarthy realizes it or not, he will have to make a choice that will end either with his losing his speakership or with tanking the U.S. economy.
Among the provisions McCarthy tossed out as potential starting points for talks were rolling back nondefense spending to “pre-inflationary levels,” which I can only assume means around 2019, and “strengthening work requirements for those without dependents who can work,” a nod to a proposal that Rep. Matt Gaetz, R-Fla., has been shopping around. Translation: People without jobs would see cuts in government services like Medicaid and food stamps, which has been shown to reduce people’s health care but not actually boost employment.
Biden shot back with a letter of his own Wednesday, all but telling McCarthy to get his own ducks in a row before he comes back to the table. While the president dropped his budget plan this month, congressional Republicans have yet to offer their own. Biden, playing innocent, wrote that seeing the GOP’s “full set of proposals would be useful before we meet, so we can understand the full, combined impact on the deficit, the economy, and American families.”
The dig may rankle Republicans. After all, Democrats didn’t pass a full budget through the normal process when they last held the majority, as House Rules Committee Chair Tom Cole, R-Okla., grumbled Wednesday. But that doesn’t change the fact that Republicans haven’t coalesced around a spending plan, emphasizing the weakness of McCarthy’s position. Even the framing of his demand to cut spending goes beyond the Ways and Means Committee chair’s recent proposal to cap spending at fiscal year 2022 levels.
For years, it was far more common to see Republicans voting in lockstep, in contrast with the more fractious Democrats. That GOP unity has eroded over the last decade, especially after a disappointing midterm election last year. As we saw in McCarthy’s prolonged fight to obtain the speaker’s gavel, he is dancing on a knife’s edge with only four votes to spare from his caucus at any given time. To help keep the peace, he has taken to meeting almost weekly with chairs of the five ideological caucuses in the House GOP — nicknamed “the Five Families” in reference to the five Mafia families in “The Godfather.”
There’s little evidence McCarthy will be able to weave these disparate points of view into a cohesive position.
A fantastic graphic from The Washington Post this week illustrated the breakdown of the various factions and how even a minority of one of the smaller groups could upend any potential debt ceiling solution. The hard-liners in the Freedom Caucus, for example, have latched on to a plan from former Trump official Russ Vought that would take a machete to the budget via deep (and deeply unpopular) spending cuts. But any budget like that is unlikely to get votes of approval from the more moderate groups — for proof, look no further than the wheel-spinning we’re seeing from McCarthy.
Axios reported Wednesday that the lack of a budget has resulted in a spate of freelancing from each of the GOP’s factions to try to shape a deal. So while Republicans “agree with the sentiments” of McCarthy’s letter, the details are where things break down. The result is that as groups like the Freedom Caucus and the Republican Study Committee put out their own suggestions and the Main Street and bipartisan Problem Solvers caucuses work behind the scenes, there’s little evidence McCarthy will be able to weave these disparate points of view into a cohesive position. That helps explain why House Financial Services Chair Patrick McHenry, R-N.C., is feeling mighty pessimistic. “I don’t see how we get there. And this is a marked change from where I’ve been. I don’t even see a path” to a debt ceiling agreement, McHenry, a solid backer of McCarthy through the gavel fight, told Punchbowl News on Tuesday.
The leaves McCarthy with one clear option: find something enough Democrats can agree with to make up for any votes lost within his own caucus. Biden has said he wants a clean debt ceiling bill without any negotiations, but it would be hard for him or Senate Majority Leader Chuck Schumer, D-N.Y., to be the ones standing in the way of a deal that has the votes to pass the House at this point, especially with enough Democrats on board. There are even a few face-saving options, including rescinding roughly $150 billion in unspent Covid funding, that could serve as starting points for talks with moderate Democrats.
But McCarthy knows that by doing so he would essentially put his own head on the chopping block. The deal that made him speaker made it possible for a single member to put forward a motion to remove him. Cutting a deal with Democrats to spare so big a hostage would surely lead a member to trigger that provision. But not doing so would put the U.S. economy before the executioner, instead.
It remains a no-win situation for McCarthy. Time ticks away with no sign of a breakthrough that could both spare him and avoid an economic meltdown. And while he’s clearly angling to pin the blame for any fallout on Biden, the odds of that seem as fleeting as his speakership may soon prove to be. No, it’s far more likely that it would be seen as McCarthy’s hand letting loose the guillotine’s blade when other options are available, saving his own neck at a cost the rest of us would be forced to bear.