With debt limit, Biden tests GOP’s willingness to play with economic fire

CNN

By John Harwood

The Trumpist Republican Party has shown it will toy with democracy. Now President Joe Biden is testing its willingness to play with economic fire.

The test comes in the upcoming showdown over raising the federal debt limit, a painful political chore that periodically falls to Congress when the Treasury exhausts the amount of borrowing that lawmakers had previously authorized. Performing it is necessary for government to pay its bills and avert a destabilizing financial crisis.

The White House seeks cooperation from partisan adversaries as well as allies in Congress. So far, Republicans have vowed not to provide any. It’s a credible threat.

The danger represents a relatively recent development in American history. For decades, the statutory requirement that Congress authorize additional borrowing has provided a venue for harmless skirmishes in which the party out of power flays the party in power for irresponsible borrowing.

One example: March 2006, when it was President George W. Bush’s turn to ask Congress for a debt limit increases. First-term Democratic Sen. Barack Obama denounced the “failure of leadership” that made it necessary.

Obama and every other Senate Democrat opposed Bush’s request. But the Republican majority was large enough to approve it without threatening the economy.

By the time Obama reached the Oval Office, however, Tea Party Republicans had turned the customary political slap fight into a brass-knuckles brawl. Their initial refusal to raise the debt limit in 2011 triggered a political and economic crisis.

It made financial markets plummet and forced the first-ever downgrade in US government debt, costing taxpayers billions in higher borrowing costs. The ransom Republicans demanded to end it — deep federal spending cuts — proved so unrealistic that Congress repeatedly abandoned them.

Congressional Republicans dropped hostage-taking once their own party recaptured the White House. As much as Democrats loathed President Donald Trump, they did not stand in the way of debt limit hikes on his watch, including after winning the House in 2018.

Biden’s full-court press

That’s what Biden administration officials say must be done again. As with every White House, they note that a debt limit increase doesn’t authorize new spending but merely preserves America’s full faith and credit by permitting payment of debts already incurred.

“The economic consequences of failing to do so would be catastrophic, which is why that’s an unacceptable outcome,” National Economic Council Director Brian Deese told CNN in an interview last week. In a statement, Treasury Secretary Janet Yellen warned of “irreparable harm to the US economy and the livelihoods of all Americans.”

Senate Minority Leader Mitch McConnell insists that Democrats shoulder the burden on their own. They could do it by including a debt limit hike in the $3.5 trillion “human infrastructure” bill they seek under special budget rules that will sidestep a Republican filibuster.

At the Biden’s team behest, Senate Democrats decided not to do that. They fear it might fatally weigh down their social spending bill and want to defuse the debt limit as a dangerous partisan weapon.

The pattern of rising Republican aggression suggests that won’t be easy. When the “Republican Revolution” made Newt Gingrich the Speaker in 1995, the House scuttled a procedural maneuver Democrats had used to avoid debt limit headaches for the previous 16 years.

As they sought to thwart Obama, some congressional Republicans went so far as to argue falsely that a federal debt default could be managed by selective “prioritization” of government’s bills. In reality, the consequences would ripple throughout the American economy.

Of 50 Republican senators, 46 signed a letter last week promising not to help Biden raise the debt limit since “this is a problem created by Democrat spending.” In fact, tax cuts and spending increases boosted the national debt by roughly $7-trillion, or about one-third, during Trump’s single term as president.

“It is the Republicans who keep reinforcing misinformation for voters,” observed Tony Fratto, who served as a top aide in the White House and Treasury Department under President Bush.

A 2021 calling card for Republicans

In some ways, misinformation has become the GOP’s 2021 calling card. After tolerating Trump’s false claims that he won the 2020 election, Congressional Republicans have stood by while state-level GOP officials change voting and election administration rules.

Only six Republican senators voted to create an independent commission to investigate the January 6 insurrection, allowing that proposal to die by filibuster. That sounds auspicious for Biden’s ability to persuade 10 Republicans to overcome a debt limit filibuster this fall.

Yet the White House has reason to hope that “they’re not going to let us default,” as the President put it last week. Senate Democrats currently plan to attach a debt limit hike to a September spending bill that would keep the government running.

As his party has grown increasingly radicalized, McConnell has consistently shown an aversion to self-inflicted wounds. He displayed pragmatism last week in joining 18 Republican senators to back Biden’s popular “hard” infrastructure bill. The combination of GOP-triggered shutdown and debt crisis could jeopardize his hope of recapturing the Senate in 2022.

“I’d like to believe there are 10 Republicans who will vote for this,” said Fratto. “They need to find a fix.”

The-CNN-Wire
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