Sunday, May 26, 2024

Opinion | It’s time for Biden to call McCarthy. A lot.

Opinion | It’s time for Biden to call McCarthy. A lot.

The biggest takeaway from the news that House Republicans narrowly passed a debt-limit bill this week is just how real the chance is that they will allow the nation to default for the first time in its history.

The bill is political theater. House Speaker Kevin McCarthy (R-Calif.) and his colleagues agreed to lift the debt ceiling to March 2024 — the middle of an election year — in exchange for sharp spending cuts and a slew of other GOP policy favorites, including clawing back IRS funding, putting more work requirements on welfare programs and rolling back green energy initiatives. In other words, House Republicans are saying that if Democrats give in on the majority of the GOP’s pet priorities, they will agree to lift the debt ceiling only until right before the next presidential election, when no one in Washington will want to compromise on another increase. This is recklessly unrealistic.

The United States has a debt problem. Biden’s budget won’t solve it.

In an ideal world, House Republicans would do their duty and lift the debt limit without exacting a ransom. This is about paying the money that Congress — in a largely bipartisan fashion — already committed to spend. This is also about reassuring a fragile world that the U.S. government can still do something as basic as pay its bills. A potential debt-limit catastrophe is lining up to hit just as the U.S. economy flatlines. The latest report on gross domestic product on Thursday showed a slowing economy in which businesses have already cut back sharply on spending in the face of high uncertainty. On top of that, China and Russia are making a push to get other nations to sign on to alternatives to the U.S. dollar. A U.S. default would enhance their cause.

It’s true that President Biden and Congress need to discuss spending. The nation is on a fiscally unsustainable course. Social Security and Medicare costs are rapidly escalating, along with interest expenses as the debt grows. But holding the debt limit hostage to impose blunt spending cuts would only backfire. A default — or even a near-default — would lead to higher borrowing costs. That’s exactly what happened in the 2011 debt-limit standoff.

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counterpointGoing where we’ve gone before

It would be best if Republicans agreed to raise the debt limit and Mr. Biden and Congress launched a separate, parallel process to negotiate how to stabilize the budget. Mr. McCarthy likes to tout that his bill would save nearly $5 trillion over the next decade. But here’s the catch: House Republicans do not specify where $3 trillion of those cuts in discretionary spending would come from. It’s far easier to talk about general budget cuts than to spell out how much less funding they want for roads, schools and the military.

Mr. Biden’s insistence that House Republicans pass a clean debt-limit increase without any strings attached is the morally and economically correct course of action. But reality has to sink in. It would be wise for Mr. Biden to start talking seriously with Mr. McCarthy. Budget talks can remain on a separate path, but they need to commence.

It’s wrong to think there is plenty of time before a crisis would hit. Although the latest read on tax receipts indicates default would not occur until July, a few months is hardly any time in Congress, particularly to craft a compromise when the two sides are so far apart.

Republicans and Democrats have staked out their public talking points on the debt limit. Privately, they need to find a way forward. More lawmakers should emulate Rep. Jared Golden (D-Maine) and start laying out compromise proposals.

This is not 2011. Investors around the world, even allies, are quietly diversifying away from U.S. debt. Meanwhile, borrowing costs are already high, and many economists forecast a recession on the horizon. The consequences of default — to the economy and the United States’ standing in the world — are even greater now. Politics cannot triumph over common sense.

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Editorials represent the views of The Post as an institution, as determined through debate among members of the Editorial Board, based in the Opinions section and separate from the newsroom.

Members of the Editorial Board and areas of focus: Opinion Editor David Shipley; Deputy Opinion Editor Karen Tumulty; Associate Opinion Editor Stephen Stromberg (national politics and policy); Lee Hockstader (European affairs, based in Paris); David E. Hoffman (global public health); James Hohmann (domestic policy and electoral politics, including the White House, Congress and governors); Charles Lane (foreign affairs, national security, international economics); Heather Long (economics); Associate Editor Ruth Marcus; Mili Mitra (public policy solutions and audience development); Keith B. Richburg (foreign affairs); and Molly Roberts (technology and society).

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