Debt limit differences remain large as time runs low
This week on Facing the Future, we kept our focus on the debt limit.
With time quickly running out before the nation faces a default on its obligations, there was some glimmer of hope this week that a crisis can be avoided. Following a high level meeting at the White House on Tuesday (May 16th), the second such meeting this month, House Speaker Kevin McCarthy said that a deal is possible by June 1, when the Treasury Department says it might run out of money to pay its bills in full and on time if no deal is struck. As of early Friday afternoon, however, a House Republican negotiator said the talks were paused. A few hours later, the negotiations were back on. We are watching these developments hour by hour, minute by minute.
For his part, President Biden canceled the tail end of a trip to attend the G-7 summit in Japan so he can be back in Washington by the weekend.
At this point, negotiations are in the hands of top Biden and McCarthy staffers. So I turned to my top staffers, policy director Tori Gorman and chief economist Steve Robinson, both former congressional staffers, to get their perspectives on how it might play out.
They were encouraged that the number of negotiators in the room has been limited but expressed some concerns about how much actual progress has been made and whether any deal Biden and McCarthy agree on can be sold to hardliners in their respective camps.
“I don’t think there has been any meaningful progress at this point and I think that’s why they made the room a little smaller.” Gorman said. “When you have too many people in a room, it’s really impossible to make forward progress. So by uninviting [Senate leaders] McConnell and Schumer the House and the president are basically saying to the Senate ‘you’re going to have to take whatever we put together.’
Robinson agreed, but added that, “you still have the problem of selling the deal. That’s the dilemma that both the president and Speaker McCarthy have. I have no doubt that the two of them could cut a deal.They could go in a room and be done in an hour. The problem is, when they walk out of the room, they’ve got to get 60 votes in the Senate and 218 votes in the House and I’m not sure that whatever Biden and Mccarthy come up with has got the votes in the House and the Senate. They’re going to have to come up with something that crosses party lines because McCarthy is going to lose some Republicans and Schumer is going to lose some Democrats.”
In that regard, Gorman noted that a major sticking point is adding tougher work requirements for Medicaid, which Republicans are insisting on and Democrats are strongly opposing.
“Look at this like a Venn diagram from geometry. Are there policy circles that intersect that both parties like that get you to the numbers you need?,” she asked. “Right now, that Venn diagram is pretty empty. It’s the null set. I’m hoping that between now and June 1 they’ll begin to populate that venn diagram but it’s going to require some significant leadership and crafty gamesmanship.”
Regardless of the substance of any deal, it will be important for both sides to claim victory. Biden will need to claim that he was negotiating a budget deal, not a debt limit deal, and McCarthy will need to claim that the deal was about raising the debt limit.
Gorman floated the following scenario: “What you might see in the House is a rule that creates two independent pieces of legislation; one on the debt limit and one on all the spending cuts House Republicans are asking for. Those move through the House independently. Then the rule, when it’s adopted, says when those two pieces of legislation have passed the House they will be married together and sent to the Senate as a single package. Then the Senate approves it and [sends it] on to the president.”
Even if a crisis is avoided this time, which is by no means assured, we can expect more such crises in the future. As Robinson put it, “We’ve seen this regular ongoing practice of using these leverage points – shutdown of the government and default on the debt – as a way to get something that you would not be able to get through the [normal] process. It’s a problem of divided government. The political parties have moved farther apart and politicians at the federal level are more likely to lose in a primary than in a general election. As a result, when they get to Washington they are not able to compromise.
“It’s not a good way to run the government,” Robinson added.
Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join our guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
