Analysis | For Biden, navigating the debt ceiling is an early test of his 2024 strategy

The focus of this drama so far has been on House Republicans, who charged into power in January with the slimmest of majorities. Yet, they are determined to hold raising the debt ceiling — which simply authorizes borrowing by the federal government to cover past spending approved by Congress — hostage to broader goals of cutting federal spending, which was a central part of their 2022 midterm campaign message.

On Wednesday, those House Republicans, by a margin of just two votes, approved a measure that would do just that. The bill calls for aggressive caps on spending that would reduce health, education and science programs while repealing Biden’s programs for climate change and canceling student debt. It also would add new work rules for recipients of food stamps and Medicaid. The measure has no chance of getting through the Senate or becoming law, but by passing it, Republicans both heightened their own political vulnerabilities and added to the pressure on Biden.

There are two ways to think about this. The first is in the context of Biden’s effort to brand the Republican Party as extreme, even radical. The opening video for his reelection campaign highlighted both the threats to freedom and democracy posed by former president Donald Trump but more broadly the threats posed by what Biden calls the extreme MAGA Republicans.

Republicans in the House seem content to play into Biden’s hands. Slashing popular federal programs and risking a default on government borrowing and the economic calamity that could occur are the kind of reckless politics that Biden would be happy to run against. White House officials and their outside allies have worked assiduously to shape this narrative throughout the early months of this year.

What is the debt ceiling and what happens if the U.S. hits it?

This puts House Speaker Kevin McCarthy (R-Calif.) in an increasingly difficult position. He managed to satisfy just enough Republicans in his conference to pass the debt and budget measure. Now he faces what likely will be a more difficult job of finding the formula to avoid default, extracting some concession from Biden and the Democrats who control the Senate, and then trying to sell that measure to his recalcitrant conference.

Another way to think about the ongoing debate is through the broader lens of the economy’s role in the 2024 election. The president wants the strongest possible economy in 2024. He needs that to bolster claims that he has been a careful and responsible steward in the face of various obstacles — and more successful at managing the economy than his predecessor.

As president, Biden must do everything he can to protect the economy. He has staked his reputation in part as a president who can bring about bipartisan compromise. He could suffer political fallout from a debt ceiling train wreck this summer, even if Republicans bear most of the blame for causing it.

The coming weeks will show what lessons Biden took away from the messy debt ceiling negotiations that took place 12 years ago when he served as vice president. The circumstances were similar: During the summer of 2011, as President Barack Obama was gearing up for his reelection campaign, his administration got caught up in a fight with House Republicans over raising the debt ceiling and tackling the budget deficits.

As the deadline for a default neared, he and Speaker John A. Boehner (R-Ohio) tried to produce a grand bargain on the budget that would have dealt with entitlements and other spending issues. The start-and-stop talks were full of acrimony and accusations hurled from both sides.

Ultimately, Obama and Boehner failed to reach an agreement on a big deal. The fallback was a compromise that raised the debt ceiling and eventually produced spending caps that left everyone dissatisfied.

Days after the agreement was approved, Standard & Poor’s downgraded the nation’s credit rating for the first time in history. Officials at Standard & Poor’s underscored the damaging effects of “political brinkmanship” and said in a statement: “The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge.”

Obama administration officials reacted angrily and claimed the ratings agency had made an important error in its calculations. Standard & Poor’s conceded the error but stood firm on the downgrade.

Obama’s analysis throughout was that the Republicans would be seen as the irresponsible party and that he would be judged as the adult in the room. If there was to be political fallout, it would all land on the Republicans. Instead, the immediate effect was to stain the reputations of all the participants.

Republicans saw their approval ratings decline, but so, too, did Obama. His approval rating stood at 51 percent at the start of the negotiations. By the time the deal had been done, he was down to 40 percent in Gallup’s regular measure.

The battle left Obama in a funk. It changed his attitude about trying to deal with Republicans but also left him weakened politically. His prospects for reelection appeared worse than at the beginning of the summer of 2011. It took him months and a new strategy to begin his climb back up.

Biden, of course, played a role in that battle, having led the early negotiations with Republicans and then again in helping broker the final agreement. He was part of discussions that clearly linked raising the debt limit with efforts to reduce spending and deficits. What he claims he will not do today — negotiate over raising the debt limit — is something he did as vice president.

How long Biden can decline discussions with congressional Republicans is a question that will become more intense in the coming weeks. Pressure is already building from the outside. After House Republicans approved their measure, Joshua Bolten, CEO of the Business Roundtable, issued a statement saying he hoped the House action would “jump-start bipartisan negotiations.”

Noting that both Republicans and Democrats have agreed that default is not an option, he added: “We urge both sides to act swiftly to secure a bipartisan agreement that takes default off the table and begins the hard work of dealing with our deficits and debt.”

Biden faces an unhappy choice. Today’s Republican Party is hardly the same as the party of 2011 — before the tea party morphed into Trump’s party. If Boehner’s hold on his conference was shaky, McCarthy’s is even more so.

William Galston of the Brookings Institution said that Biden will inevitably need to become directly engaged, given his responsibility and promise to protect the national economy. While underscoring that the president can have little confidence that talks with this Republican Party will produce an agreement, he added, “But it is important, as Bill Clinton often said, to be caught trying, even as the administration thinks through its break-the-glass options if talks fail,” Galston added.

The opening volley in Biden’s reelection campaign focused on threats to democracy posed by Trump and threats to a variety of freedoms — on issues from abortion and LGBTQ rights to what cannot be taught in schools and what books cannot be read — from the Republican Party. That is a part of the campaign. But some Democratic strategists say winning the economic argument remains a critically important component as well.

After Trump made claims about his economic record during a rally in New Hampshire on Thursday, the Democratic National Committee issued a blistering rebuttal, saying that Trump had “the single worst jobs record of any administration since the Great Depression” and casting the former president’s policies as beneficial to “ultrawealthy and big corporations” rather than middle-class families. The Biden team doesn’t want to give Trump any opening on this aspect of the campaign.

The presidency is about leadership and, when possible, producing results in a time of toxic politics. Biden has held the line on the debt ceiling and now faces no easy choices about what to do. Perhaps he can stare down McCarthy and the Republicans and emerge stronger politically with the economy undamaged.

The debt ceiling debate will be one of the first moments for the president to fully frame differences in economic visions and priorities. But brinkmanship over the debt ceiling that leads to an outcome that harms the economy, even if Republicans are the principal cause, could easily spill over onto the president.

Biden’s economic numbers are already weak. Navigating the debate over the debt ceiling to a successful substantive and political conclusion remains a major challenge for the president.