Sunday, May 26, 2024

Opinion | How the debt standoff might end

Opinion | How the debt standoff might end

After four months of posturing and finger-pointing, Washington might finally be getting ready to negotiate the bipartisan compromise needed to avoid a default on the national debt.

With the Treasury Department warning that default could be less than a month away, President Biden last week did what he vowed he wouldn’t, summoning congressional leaders to talk about a deal. The next day, Democratic leaders in both the House and Senate initiated complex parliamentary maneuvers to make it possible to overcome Republican opposition and bring some sort of debt ceiling bill to a vote.

Given the split control of Congress, and the slim majorities in both chambers, some sort of bipartisan compromise is inevitable if default is to be avoided. The right-wing zealots who control the House Republican caucus are never going to agree to raise the debt ceiling without deep spending cuts and the unwinding of other Biden-era initiatives — demands that even the most centrist Democrats are unlikely to accept. At the same time, leaders of both parties also know that default is a lose-lose proposition, given the economic havoc that would surely follow.

The endgame will be defined by two numbers: 60 (the number of votes needed to overcome a Senate filibuster) and 218 (a bare majority of the House). How will these numbers be reached? In both chambers, the answer is the same: from almost all Democratic members, plus a handful of moderate and pragmatic Republicans. This is the outcome that requires the least political risk to the fewest number. And based on conversations with members of both parties, it looks to me to be the only default-avoiding scenario that is politically plausible.

For most Republicans, the biggest risk is a primary challenge from the Trumpist right. Lacking the votes in the Senate to win total victory, their next-best outcome is one that allows them to claim credit for having forced Democrats to accept significant spending cuts and avoid blame for default while still voting against an increase in the debt ceiling.

For Democrats, who lack the votes in both chambers for a simple debt ceiling increase, the next-best outcome is one that allows them to avoid default while blocking most extreme budget cuts and raising additional revenue from rich individuals and businesses.

Any such compromise is unlikely to be hashed out by Speaker Kevin McCarthy (R-Calif.) and President Biden. Given his tenuous hold on his caucus, McCarthy can’t associate himself with a deal that most Republicans will vote against. Rather, the negotiations will be driven by the moderate Republicans willing to vote for it. And for them, the best negotiating partner is not the Democratic president running for reelection but the moderates from the other party with whom they’ve crafted bipartisan deals in the past, including last year’s landmark bill on infrastructure and semiconductors.

These “gangs” have developed a knack for coming up with compromises that have broad popular support while allowing both parties to declare some sort of victory. Quiet discussions about a debt ceiling deal are already underway among these members in both the House and Senate. All it would take is a quiet nod from the White House and congressional leaders to kick things into higher gear.

A deal will almost certainly start with a simple, short-term increase in the debt ceiling — anywhere from a few weeks to a month. That will provide time to write and pass a budget resolution mandating the broad outlines of future spending cuts and revenue increases. If Congress fails to follow through with necessary appropriations and tax changes — a not unlikely outcome — automatic across-the-board spending cuts and tax increases will kick in.

Mind you, votes of moderate Republicans for such a compromise won’t come cheaply. To defend their defection, they will demand that any deal produce the $120 billion a year in deficit reduction that Republicans were asking for back in January. The difference would be in how that deficit reduction is achieved: less draconian spending cuts combined with additional revenue from closing tax loopholes that benefit the rich and large businesses.

Senate approval of any bargain is likely to come first, particularly if Biden can convince his old friend, Republican leader Mitch McConnell (Ky.), to support it — or at least not actively oppose it. Much harder will be rounding up five to 10 Republican votes in the more partisan House. Any Republican breaking ranks will face the wrath of Fox News, Donald Trump and the right-wing social media mob. It is here that McCarthy might need to play a crucial behind-the-scenes role.

Moderate Republicans were among McCarthy’s earliest and most loyal supporters, and he has been careful to include them in his inner circle. Now they will be looking for assurances from their speaker that they won’t be punished for signing on to a bipartisan compromise. (Remember Liz Cheney?) McCarthy’s willingness to provide such protection, in turn, might depend on quiet assurances from Democrats to provide enough votes to allow him to survive any effort by members of his own party to oust him as speaker. Two previous Republican speakers, John A. Boehner and Paul D. Ryan, were driven from the chair after flirting with bipartisan compromise. To play a constructive role, McCarthy needs to be confident that this won’t happen to him.

What remains uncertain is not whether there will be a bipartisan debt compromise. The only question is whether it will come in time to avoid default, or as a panicked response after the economic Armageddon has begun. At the Capitol, members of both parties continue to harbor fantasies that the other side will cave. What passes for leadership is nothing more than self-righteous brinkmanship. The lack of urgency is appalling.

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