Assessing the Debt Deal
Terry H. Schwadron
June 4, 2023
We’ve had several days now of relatively empty worship at the altar of bipartisanship, even while learning that behind the scenes, there was a lot more interest in protecting political image than in setting a new standard for the federal debt or spending.
The popularized version of last week’s deal that kept the country from stepping over the brink of default and financial disaster is that President Joe Biden and Speaker Kevin McCarthy stared down both one another and all their intraparty critics and hammered out something that no party liked in the name of saving the country.
That did happen in a fashion, but the reporting emerging from behind the scenes in stories like that in The New York Times showed that — once again — we should listen only with one ear to what these competing politicians say, and look more closely at what they do.
I may be assured of receiving my Social Security check this week, but none of the basics here were changed much. What I saw was political infighting over an unnecessary, manmade deadline with a lot more smoke than fire, and solutions that were built around the election messaging that each party wanted to take away.
From many accounts of the deal, the McCarthy group won the day by getting a negotiation with a White House that didn’t want it. But the Biden team fairly outsmarted the spending challenges to use knowledgeable details of budget legerdemain to sufficiently blunt the worst effects of any spending limits. Indeed, there are portions of the deal that significantly push problems to the side, and new promises to have separate votes on adding to defense budgets, for example, that will bypass the deal altogether.
To hear Republicans talk, they pushed the White House to the wall — a win. To hear a purposefully more quiet Biden, the nation didn’t default, almost all of Biden’s spending plans were protected and “bipartisanship” reflecting America’s interest won.
The Takeaways
From where I sit, the only win here was to determine just how few votes in the House are controlled by an extreme right-wing. In the aftermath of the vote, we don’t even see that Freedom Caucus/MAGA group rising to dethrone McCarthy as speaker, as threatened.
Indeed, the question emerging from the pat-the-back crowd that declared it was holding the White House “hostage,” as if that is a good thing, was to show a weakened political hand.
McCarthy emerged stronger, not weaker, with his own caucus. At the same time, he and his group seemed to have been outplayed throughout by the knowledgeable White House negotiators.
The progressive wing of Democrats also seemed to emerge with their political tails between their legs. Even Sen. Bernie Sanders, I-Vt., was willing to say openly that he opposed the deal on the Senate floor only because he was assured that in sending a message about the bad idea of balancing deals on the most vulnerable, he was not putting the actual Senate approval of the deal at risk.
And Biden himself was so busy taking credit for what looked like bipartisanship that he was downplaying the fact that these fights with a split Congress are far from over.
For sure, Biden is not ready to make a commitment, forced this time by Republicans, to cap spending and commit to reducing federal debt. And Republicans will not relent on repeal of tax cuts for the wealthy for reasons that make sense only to their political selves, not to any version of fairness or looking out for the little guy.
We’ll be having exactly the same battle over budgets in the fall, with likely the same kind of outcome, with the same kind of aggravating uncertainty thrown at financial markets and monthly mortgage and Social Security checks. The only difference will be threats of government service shutdowns without the overriding debt default disasters thrown in.
The Debt Ceiling Itself
Possibly the most interesting question to be settled now is whether the government — regardless of party control issues — can remove this inane debt ceiling issue away.
There are ideas abounding: There is interest post-deal in getting a preemptive court view on the use of the 14th Amendment of the Constitution as to whether a congressional vote on annual debt ceiling votes is needed at all. Senators are talking about including a provision in every spending bill to automatically account for the debt ceiling.
Apparently, it would have been too much to ask for in these “negotiations” to get an agreement to avoid such political blackmail in the future. The parties are invested in conflict, not “bipartisanship.”
Then there are the questions arising around the deepening federal debt altogether. Just as any reasonable citizen would agree that it makes little sense to allow the debt to continue to grow without attention, it is just as obvious that running a government — never mind the largest in the world — is not like the household budget that politicians like to reference when they are in a mind to make a point.
Running an economy that affects the entire globe is not simple. And the traditional answers about always seeking to spur economic growth may not be the only answers. Climate, demography, population, immigration, education, and a variety of social movements are prompting new questions about running up against limits — and challenging us about adapting to limitations.
When Donald Trump was president, as with other Republicans, debt was considered good; Trump said so repeatedly. So were limits on regulation, isolation from the world, and policies that doubled down on inequities between rich and poor. Biden and Democrats at least hold allegiance to some opposite goals, but also express mixed views about debt. At least they seek to pay for their programs with additional taxes that they say will hit only the wealthiest.
We have a deal signed now that addresses none of the above. Politicians taking credit should be forced to explain exactly what we have bought through this moment of “bipartisanship” that they are spotlighting.
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