Lessons learned from the debt ceiling standoff more than a decade ago are spreading across Washington as the White House and Congress prepare for another standoff.
WASHINGTON. The debate around raising the debt ceiling sounds very similar: newly elected Republicans in the House of Representatives, eager to oppose a Democratic president in the White House, have refused to raise the debt ceiling without cutting federal spending.
Debt ceiling talks engulfed Washington in 2011, a pivotal showdown between the Obama White House and a new generation of House Republican tea parties.
“Now we’re getting to the really hard stuff: I’ll trade my bike for your golf clubs,” chief negotiator Vice President Joe Biden said at the time.
But that summer, weeks of tense negotiations between Biden and Republicans in the House of Representatives collapsed, sending Washington into a financial crisis. When Congressional Republicans refused to raise the debt ceiling, the government faced a catastrophic default and faced a catastrophic credit downgrade for the first time in the nation’s history.
Lessons learned from the debt ceiling standoff more than a decade ago are spreading across Washington as the White House and Congress prepare for another financial showdown that appears to be leading to a very similar outcome. Neither Republicans nor Democrats are willing to budge.
“All debate is a façade,” said William Gale, senior fellow at the non-partisan Brookings Institution, who wrote Fiscal Therapy: Curing America’s Debt Addiction and Investing in the Future about US debt.
“It was the peak of the tea party and they wanted to flex their muscles, but it’s such a stupid way to try to do it because you really don’t want to risk a good United States credit score. government,” Gale said. “I suspect most of these guys already knew that.”
The Treasury Department has notified Congress that it is time to raise the national debt ceiling again, now at $31 trillion, to allow more borrowing to pay off the nation’s accumulated bills. The Treasury said it could start taking emergency measures to keep paying the bills, but the money would run out by June.
Raising the national debt ceiling has historically been commonplace, the latest task after Congress authorized federal spending and provided the money needed to pay for the nation’s various programs and services.
But that all changed when the Republican tea party arrived in the city after the 2010 elections.
Claiming that Americans are “already taxed enough,” House Republicans arrived promising to cut federal spending using the debt ceiling vote as their political leverage.
Debt doubled during the presidency of George W. Bush and the overseas wars after 9/11, and under President Barack Obama after the Great Recession, it skyrocketed, hovering around $15 trillion.
At one point, the Republicans were looking for compromises of $1 to $1—a dollar of spending cuts for every dollar of new borrowing. They also wanted to use a “reduce, limit and balance” approach that would eventually rein in the deficit.
“We dated for several months,” Republican Eric Cantor, the former House Majority Leader who was assigned by Speaker John Boehner to negotiate with Biden, recalled in a recent interview with The Associated Press. “We all sat down. But this year, this time, President Biden is now refusing to negotiate.”
In the end, Republicans in the House of Representatives were unable to negotiate a deal with Obama in the White House.
When the deadline for raising the debt ceiling came in August 2011, it was only the 11th hour agreement reached with Senate Republicans led by Mitch McConnell and some Democrats instructing a “Super Committee” to recommend further federal cuts to ensure there was no default on the debt.
Frightened by the political crisis in Washington, the credit markets downgraded the country’s credit rating for the first time, raising the cost of future borrowing.
The Biden White House appears to have come to the conclusion that it is not worth negotiating with new Speaker of the House Kevin McCarthy, who won a slim GOP majority in last November’s midterm elections and who may — or may not — garner votes on any debt. ceiling deal.
“Look, reducing the deficit has always been a top priority,” White House Press Secretary Karine Jean-Pierre said Monday at the White House.
“He always said that he was happy to talk to anyone who wanted to solve this problem in a responsible way,” she said of the president. “But avoiding default is a separate issue.”
Biden is scheduled to meet with Democratic leaders at the White House on Tuesday and plans to invite McCarthy in the future.
McCarthy tried to push Biden to the table. “I think it’s arrogant to say, ‘Oh, we’re not going to agree on anything,'” an AP speaker said recently at the Capitol.
McCarthy has already shown how difficult it will be to lead his majority – it took 15 ballots just to make him speaker of the House of Representatives in the face of Republican right-wing resistance.
To defeat opponents, McCarthy promised his detractors that he would fight to bring federal spending back to FY 2022 levels — an 8% cut, or a 17% cut if military defense spending is maintained.
By pushing McCarthy for a hard deal in debt negotiations, Republicans in the House of Representatives may be learning a lesson from the Tea Party era: One way to impose a hand on their leader is to threaten him with resignation if he relents.
During his campaign to become Speaker, McCarthy also agreed to a far-right demand to reinstate a House rule that allows one MP to file a “vacation motion”, essentially a House vote to remove the Speaker.
Senate Majority Leader Chuck Schumer, DN.Y., almost dared McCarthy on Monday to put the GOP’s proposed spending cuts on the table. “If Republicans are talking about draconian cuts, they have an obligation to show Americans what those cuts are and let the public react,” he said.
But it’s unclear whether the proposed fiscal year 2022 spending cuts or any other will convince McCarthy’s far right to raise the debt ceiling.
One major difference from 2011 is that “Republicans haven’t united” around a common position, said Rohit Kumar, who was McConnell’s aide during the standoff.
“At this point, I think it’s not clear what could get 218 Republican votes combined with an increase in the debt limit, even as a first proposal,” Kumar, who now heads tax services firm PwC, said of the vote count. usually required to pass legislation in the House of Representatives.
McConnell is once again expected to play a key role in easing the debt ceiling standoff, and some have pointed to bipartisan Senate legislation that would revisit spending, in much the same way that the failed Super Committee was tasked with finding cuts after the debt ceiling was unveiled in 2011.
“Forget the Super Committee,” Rep. Tom Emmer, of Minnesota, the leader of the Republican Party, told the AP in a recent interview. “What a ridiculous result.”
Many Republicans in the House of Representatives were not in Congress during the debt ceiling debate in 2011. Rep. Bob Good, of Virginia, one of McCarthy’s opponents, said, “I’m certainly not focused on what happened 10 years ago.”