The White House and Congress have not made much progress in their talks to avert an unprecedented, and potentially calamitous, national default that could occur as soon as early June. But on the most fundamental point of dispute, President Joe Biden has already caved: He’s negotiating with Republicans over the debt ceiling.
For months, the president’s ironclad position has been that the debt ceiling is not a bargaining chip. No longer would Democrats allow Republicans to hold hostage the nation’s creditworthiness and economic prestige. Paying the government’s bills by raising the U.S.’s statutory borrowing limit would be nonnegotiable. As recently as Friday, White House Press Secretary Karine Jean-Pierre declared without equivocation, “We are not going to negotiate over the debt limit.”
But Biden himself has dropped the pretense that his weeks-long budget discussions with the GOP have not revolved around the debt ceiling. Asked specifically about the debt ceiling on Sunday—in anticipation of a second White House visit by congressional leaders, planned for today—Biden told reporters, “Well, I’ve learned a long time ago, and you know as well as I do: It never is good to characterize a negotiation in the middle of a negotiation.”
[Read: This debt crisis is not like 2011’s. It’s worse.]
So there you go: It’s a negotiation. Exactly what the two parties are discussing is only starting to become clear. According to various reports, a deal to avert default could include some changes to permitting rules that would speed up domestic-energy production; a revocation of unused COVID funds; additional work requirements for some federal programs (although the president has ruled out any modifications to Medicaid); and, most significant, a cap on overall federal spending.
The Biden administration still claims to be haggling only over the budget, not the debt ceiling. “The president has been emphasizing for months that he’s eager to have budget negotiations,” a White House official, who requested anonymity to explain the administration’s somewhat tortured position, told me. “That’s of course different from avoiding default, which is nonnegotiable.”
Biden’s no-negotiation stance was born of past experience, when in 2011 Republicans dragged out debt talks with the Obama administration to the brink of default, resulting in a downgrade of the U.S.’s credit rating. But Biden’s approach this time is proving to be neither realistic nor sustainable, especially after Speaker Kevin McCarthy defied expectations last month by getting a budget-slashing debt-ceiling bill through his narrow House majority.
Crucially, Biden failed to win strong support for his strategy from House centrists. Democrats had been hoping to persuade Republicans representing swing districts to buck McCarthy and help pass a debt-ceiling increase. But those lawmakers have stuck by the speaker. Complaining about a lack of outreach from the White House, they instead criticized Biden over his refusal—until recently—to negotiate. With Republicans unwilling to budge, Democratic centrists began to lose patience with Biden’s approach and conducted their own bipartisan negotiations.
“We believe it’s very important in general that both sides sit down and try to work this out,” Representative Josh Gottheimer of New Jersey, the Democratic co-chair of the bipartisan Problem Solvers Caucus, told me before Biden’s first meeting last week with McCarthy and other top congressional leaders. “This can’t become a part of a political back-and-forth as the country drives off the cliff.”
[Read: “We used to be called moderate. We are not moderate.”]
Last month the Problem Solvers offered their own plan, which they presented as a fallback option that could win bipartisan support should Biden and McCarthy fail to strike a deal in time. The proposal would immediately suspend the borrowing limit through the end of the year to buy time for broader budget talks. If Congress agrees to unspecified budget limits and creates a fiscal commission to tackle the nation’s long-term deficits and debt, the plan stipulates that the debt ceiling would be increased through the 2024 elections.
The compromise has yet to gain momentum, but its release seemed to undermine the Biden administration’s insistence that Democrats would not tie a debt-ceiling increase to spending reforms. “We didn’t try to fill in every blank, but we thought this was a really good framework to become the meat of the deal,” Representative Scott Peters of California, a Democrat who helped write the Problem Solvers plan, told me.
It could still prove handy. Biden struck an optimistic note on Sunday, telling reporters, “I really think there’s a desire on [Republicans’] part, as well as ours, to reach an agreement, and I think we’ll be able to do it.” But McCarthy is sounding more dour. “I still think we’re far apart,” he told NBC News yesterday morning. The speaker said that Biden “hasn’t taken it serious” and warned that an agreement needed to happen by this weekend in order for the House and Senate to have time to debate and pass it by early June.
Whether a Biden-McCarthy deal could even get through the House is also in question. Democrats have largely stayed quiet on Biden’s evident capitulation to Republicans, and the talks initially did not stir a backlash. But that may be changing as the president openly considers concessions that would be anathema to progressives, such as the possibility of adding work requirements to social safety-net programs. Still, the lack of a credible primary challenge to Biden’s reelection has helped give him room to negotiate, as Democrats fret about the effect that a default could have on the president’s already tenuous public standing.
“As long as he continues to try to avoid default, and avoid the middle class having to pay the cost for it, then he’s in the position that the majority of the electorate wants him to be,” Jesse Ferguson, a longtime Democratic strategist, told me.
McCarthy has much more to worry about. He traded away his own job security to win the speakership in January, agreeing to rule changes that would make it easier for hard-right conservatives to depose him. A debt-ceiling deal that fails to secure deep enough spending cuts or policy concessions from Democrats could threaten his position. “Default can be avoided. The question is whether Kevin McCarthy could withstand putting that bill on the floor,” Ferguson said.
The speaker has secured no substantive commitments from Biden, nothing specific that he can sell to his party. But McCarthy has elicited one major concession from the president, which serves as a prerequisite for any others to come. Biden has come to the table with default in the balance, and he’s negotiating on the GOP’s terms.
