Liberals grow fearful Biden may reward GOP for weaponizing debt ceiling
WASHINGTON - The White House’s liberal allies are increasingly worried that negotiations with House Republicans over the budget risk rewarding the GOP for threatening the U.S. economy with default, even as Biden administration aides insist the talks have nothing to do with the looming debt ceiling deadline.
Since last week, Biden aides have been in talks with staffers representing leaders in Congress about a deal to fund the federal government next year that would also raise the nation’s debt ceiling, which must be lifted by as soon as June 1 to avoid potential economic catastrophe. President Biden is to host House Speaker Kevin McCarthy (R-Calif.) and other top congressional leaders again on Tuesday for more discussions.
The fresh talks follow months in which Biden and his top aides insisted that the White House would not entertain making any trade-offs to raise the debt limit, saying that would set a dangerous precedent that encourages GOP brinkmanship. And yet, to some critics, the administration appears to be doing exactly that - following unrelenting pressure from the business community and even some moderate Democratic voices to enter bipartisan talks after the House passed a spending and debt limit bill last month.
Publicly, Biden administration officials are adamant that they are working with House Republicans on a deal to fund the federal government in the next fiscal year - not to raise the debt ceiling. Privately, however, even some Biden aides recognize that the negotiations appear to be in part about the debt limit. Behind the scenes, negotiators are clear that any deal on the budget must resolve the debt ceiling deadline, as well. Democratic negotiators also acknowledge that they will have to agree to more spending cuts if they want to secure a longer extension of the debt ceiling - an implicit recognition that lawmakers are bartering over the full faith and credit of the U.S. government, an approach Biden has repeatedly disavowed.
“The issue here is principle: If you accept the idea that you can, in essence, be held to blackmail with the debt ceiling, it will be done again and again. Not to be crass, but it’s essentially negotiating with terrorists who have taken hostages,” said Dean Baker, a liberal economist at the Center for Economic Policy and Research, a left-leaning think tank. “More and more people in progressive circles are becoming concerned with it.”
The debt limit is the maximum amount the federal government can borrow under the law, currently about $31 trillion. That limit must be raised by as soon as June 1 to avoid a potential economic catastrophe, Treasury Secretary Janet L. Yellen warned lawmakers again on Monday.
The emerging deal with Congress could extend the debt ceiling by two years - crucially, past the 2024 presidential election - in a victory for the Biden administration, while also potentially setting the government’s total spending through then. In exchange for avoiding the economic instability of a default, the White House would agree at least in part to GOP demands to set new limits on spending, while also rescinding unused covid funding and, potentially, approving a permitting deal to encourage energy production. The president on Sunday also appeared to express openness to hearing GOP proposals to impose new work requirements on federal programs - measures likely to be fiercely opposed by the left, and which the administration has for months criticized.
Biden’s surrogates have maintained that they are not negotiating over the debt ceiling, even as they express optimism that the negotiations on Capitol Hill will lead to an increase in the limit. Deputy Treasury Secretary Wally Adeyemo told CNN on Sunday that “conversations are constructive” over the federal budget and said lawmakers are simultaneously aiming to resolve the debt limit.
“As we have that conversation, there is no reason we shouldn’t raise the debt limit,” Adeyemo said.
White House National Economic Council Director Lael Brainard similarly told CBS News on Sunday that Congress would avert a default “even as we continue to have parallel discussions” on the budget.
If the cuts are not too dramatic in the final deal, the administration can emphasize that it was always going to have to compromise on spending levels in an era of divided government, and that the timing of the debt ceiling increase was largely coincidental.
The White House has made clear that it has some red lines in talks despite the threats to the debt limit, ruling out a deal that pares back Biden’s Inflation Reduction Act or cuts many government programs by more than 20 percent, as House Republicans have sought.
“A key part of this is whether the White House will be able to credibly say the elements that get negotiated are ones that would have been on the table this year anyway,” said David Kamin, who served as Biden’s deputy director of the White House National Economic Council earlier in the administration. “I think the White House is focused on trying not to reward Republicans for irresponsibly using the debt limit as a focal point for negotiations.”
Still, concern is building on the left about an agreement, especially as Republicans appear more emboldened on issues around work requirements. Talking to reporters on Tuesday, McCarthy said it would be “ludicrous” to fail to reach an agreement and default because of resistance to negotiating on work requirements. Asked in another exchange whether work requirements on certain federal programs were a “red line,” McCarthy responded “yes.”
The president’s liberal allies in Congress have thus far supported the administration’s approach to the debt ceiling, and many are wary of publicly criticizing the administration until a deal becomes public. But that could change as the contours of a deal come into focus.
Speaking to reporters on Tuesday, Sen. Richard J. Durbin (D-Ill.) said work requirements for federal food stamps programs were “ridiculous.”
“We have work requirements,” Durbin said, adding that if Republicans want “to impose work requirements on disabled people and children,” they should say so.
“There’s a number of things I’m hearing about that would cause me concerns, but I know there’s Democrats in those discussions who are also concerned about that,” Sen. Tim Kaine (D-Va.) told reporters on Monday.
Speaking to reporters on Monday, Sen. Elizabeth Warren (D-Mass.) said that the “debt ceiling is not something that should be negotiated in the ordinary political process.” She also said that she was “very concerned” with the direction of the talks and that liberals’ unease had been communicated to the White House, according to Politico.
On Monday, Rep. Barbara Lee (D-Calif.) led a group of lawmakers in sending a letter to Biden urging the White House not to accept new work requirements in discussions. Even some Democrats from more Republican-leaning areas balked, with Sen. John Fetterman (D-Pa.) excoriating GOP work requirement plans for food stamps, in an implicit warning to the administration.
Ahead of the meeting on Tuesday, House Republicans emphasized that they view work requirements as critical.”Look: You saw the president himself say over this weekend he voted for these work requirements; why would you back away from them today?,” said Rep. Garret Graves (R-La.), a top House Republican in the debt ceiling discussions. “I’ll say it again: then-Senator Biden voted for this.”
Liberal lawmakers have in prior years called for the White House to resolve the debt ceiling by unilateral means, such as by minting a $1 trillion coin or having the president invoke the 14th Amendment to disregard the borrowing cap. Even allies who agree that those measures are risky say that encouraging what the administration sees as GOP “hostage-taking” would be worse, since it gives Republicans an incentive to continue to weaponize the debt ceiling for concessions. While the details of a deal are unclear, liberal allies are also worried about broad cuts to programs that millions of Americans depend on - and are particularly wary of re-creating the budget cuts similar standoffs over the debt ceiling forced during the Obama administration, which many economists believe slowed the economic recovery.
“There are uncertainties and risks involved in unilateral measures like invoking the 14th Amendment or minting a coin at Treasury in the face of this economic hostage taking,” said one senior congressional Democratic aide, speaking on the condition of anonymity because liberal lawmakers have not yet been public about this position. “But the short-term uncertainties in permanently neutralizing this threat are far preferable to the alternative of a deal that certainly imposes years or even a decade of crippling austerity and the precedent of surrendering to Republican blackmail.”
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Video: House Speaker Kevin McCarthy (R-Calif.) pushed President Biden to agree to work requirements for millions of low-income Americans ahead of debt limit talks on May 16.(The Washington Post)
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