(CNN) Millions of Americans could face massive consequences unless Speaker Kevin McCarthy can get out of a debt trap he set for President Joe Biden, which instead threatens to trap Republicans in his House of Representatives.
The California Republican traveled to Wall Street on Monday to deliver a fresh warning that the GOP majority in the House of Representatives will refuse to lift a ceiling on government borrowing unless Biden agrees to spending cuts affecting his domestic policy effectively neutralize Agenda and neutralize his White House legacy.
But McCarthy also reassured traders that he would never allow the U.S. government to honor its obligations — a potential disaster that could halt Social Security payments, trigger a recession and trigger job cuts by the fall if the debt ceiling isn’t brought up.
This is where the risk for Americans comes into play. It is hard to imagine how an inexperienced speaker could achieve any of these results with a tiny majority and a conference filled with extremists.
Most countries do not require legislators to raise government borrowing thresholds. But the bizarre situation in the US has turned what was once a mundane duty into an opportunity for political mischief in a polarized age. Because the government spends more than it earns in revenue, it must borrow money to service its debt and pay for expenses that Congress has already approved. Getting more credit has no problem as the US pays its bills and has always had excellent credit, despite a previous downgrade due to an impending default.
At least that’s how it has worked so far.
McCarthy’s leadership team will up the ante by introducing legislation as early as Tuesday that would raise the debt limit for a year but would require a number of concessions from Biden. The plan appears to be to show GOP unity and intimidate the President into coming to the negotiating table. But it’s essentially an empty gesture, as it has no chance of passing the Democrat-led Senate.
Indeed, McCarthy will be severely testing his leadership as there is no guarantee he can pass the measure in a House where he can only lose four votes and where there is little evidence that it is changing the recalcitrant GOP can agree on which programs to cut and by how much. And even if the measure does squeeze through the House in the coming weeks, it will likely be an idealized Republican product that Biden and the Democratic Senate will never bite. Any subsequent package that popped up would almost certainly contain concessions that could affect its GOP support.
Still, the spokesman was typically optimistic when he predicted on Monday that he would have the votes to pass his first law.
“I think we have 218 to raise the debt ceiling,” McCarthy told CNN. “We have a lot of consensus within the conference. We will sit down and work on it.”
His reassurances may not be very reassuring, however, as his similarly buoyant predictions that he would have the votes to win the oratorium in January degenerated into an absurd process, in which he made major concessions to the most radical members of his party and required 15 ballots , before finally competing won the job of his dreams.
But with the debt ceiling, American livelihoods and the global economy will be more at stake than McCarthy’s immediate political ambitions.
Republicans have yet to agree on their own demands
So far, Republicans seem to be having trouble negotiating with themselves, let alone Biden. Republican Rep. Dusty Johnson of South Dakota, who is helping to shape the GOP’s position, said that while the party hopes to pass the original law next week, challenges remain.
“I think the hardest thing is that there’s an unlimited number of conservative political victories, which of course we all want to see incorporated,” Johnson told CNN’s Manu Raju. “The reality is that you never get everything you want in a negotiation. And so I think our biggest problem right now is how do we squeeze those thousands of requests into a manageable and credible number of requests?”
To make matters worse, some members of the Republican Conference have said they would never vote to raise the debt ceiling no matter what. In a powerful Republican majority, such holdouts could be ignored. In McCarthy’s narrow majority — secured after a 2022 midterm election that fell short of GOP expectations — they have real impact. And Democrats have little incentive to help McCarthy in the event of a GOP exit, since they would likely have to vote for huge cuts that Biden has opposed in every final GOP bill. And the Speaker probably couldn’t risk using Democratic votes anyway, having agreed to a rule allowing each individual member to vote on his ouster while fighting for his job.
The upcoming debt ceiling showdown may be the defining moment in the two-year tense period of troubled coexistence between the Democratic president and Republican speaker. Neither Biden nor McCarthy can afford to lose, and the result will mark their legacy.
Republicans may have less clout than they think
There is nothing wrong with Republicans trying to use the influence they have gained in Democratic elections to try to further their policy goals of cutting public spending. There are some GOP MPs who are seriously concerned about debt and deficits – even if their party is in government. Many economists worry about the ever-rising national debt, which has shrunk to $31 trillion. And Biden’s big spending on Covid relief packages, infrastructure, climate action and health programs sparked debate over whether he’s exacerbated the inflationary crisis.
But will Republicans pick the right hill for this fight when jobs, market-linked pension plans and the economic well-being of millions are at stake? The absolutist nature of McCarthy’s position pays little heed to a delicate balance of power. Democrats control the White House and Senate, so voters looked for compromise rather than confrontation when they ceded the House to Republicans, albeit narrowly.
Republicans also face accusations of hypocrisy, having had little trouble raising the debt ceiling when Donald Trump was president, who rarely worried about making a big splash in spending. The 45th commander in chief is also on videotape from his time in the White House and says he couldn’t believe anyone would use the debt ceiling as a “bargaining wedge.” Republicans notoriously turn fiscal hawks when Democrats are in office, but often look the other way when one of their own is in the Oval Office.
McCarthy needs to reverse the debt equation
To prevail in this fight, McCarthy must somehow shift the political dynamics, blaming Biden for any defaults and economic tensions that could unfold before the country tumbles over a fiscal cliff.
He attempted to do so on Monday, insisting that the biggest threat to the US economy is not a default but a rising national debt.
“Without exaggeration, America’s debt is a ticking time bomb that will explode unless we act seriously and responsibly. But how did President Biden respond to this problem? He didn’t do anything. In my opinion and I think the rest of America is irresponsible,” he said.
Previous fiscal showdowns between GOP-controlled Congress and Democratic presidents have often worked out badly for Republicans. Presidents Bill Clinton and Barack Obama, for example, branded their opponents in the House of Representatives as economic arsonists and thereby gained political clout.
McCarthy needs to invert the equation, which is why he’s trying to portray Biden as stubborn in refusing to negotiate concessions on raising the debt ceiling. The two men have not met in 75 days and the White House maintains its position that the place for talks is on a budget — which House Republicans have yet to present — rather than with full confidence and credit the US government is at stake and America’s reputation as a financial haven is at stake.
So McCarthy is in a bind. Congress, not the President, has the authority to raise the government’s borrowing limit. However, the spokesman is asking Biden to give up his store over a duty only McCarthy and his lawmakers can fulfill. No one would benefit from a default – especially a president who is likely to be headed for re-election. But it’s hard to imagine how McCarthy can emerge victorious from this dilemma when he triggers an economic meltdown.
The White House twisted that very knife on Monday.
“There is a responsible solution to the debt ceiling: address it immediately, without Brinksmanner or hostage-taking — as Republicans did three times in the last administration and as Presidents Trump and Reagan argued in office,” said spokesman Andrew Bates.
Senate Republicans have so far tried to avoid the mess. But Republican Senate leader Mitch McConnell gave his colleague in the House at least some moral support on Monday as he returned to the Capitol after recovering from a fall.
“President Biden must not put his fingers in his ears and refuse to listen, to speak, or to negotiate. And the American people know that. The White House needs to stop wasting time negotiating with the Speaker of the House,” McConnell said, although he notably did not volunteer.
McCarthy’s speech on Monday only reinforced the impression that a damaging political crisis surrounding the debt ceiling is nearing a boiling point after months of simmering.
As Senate Majority Leader Chuck Schumer of New York put it Monday, “He went all the way to Wall Street and gave us no more details, no more facts, no new information, and I’ll be blunt: If Speaker McCarthy continues In this direction we are heading towards a default.”
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