A live grenade with the power to blow up the U.S. economy is rolling into Washington in slow motion: sometime next year, lawmakers must once again extend the federal government’s borrowing authority or else risk a catastrophic default on its debt.
Lifting the so-called “debt ceiling,” once a quietly accomplished bipartisan task, has now become a routine drama of brinkmanship in which congressional Republicans leverage the threat of economic ruin to make demands on policy.
But the coming debt-ceiling battle could be the most explosive one yet. The new crop of House Republicans in the majority next year could make the Republicans who forced a debt-limit crisis over a decade ago look like spineless RINO squishes by comparison. Already, conservatives are demanding that Rep. Kevin McCarthy (R-CA) take a hard line on the debt ceiling in exchange for their support for his speakership bid, and he very well may acquiesce.
An eleventh-hour push by some Democrats to forestall a debt-ceiling crisis before the House GOP takeover is all but toast. With a standoff next year looking likelier by the day, one top Senate Democrat is laying down a marker.
Lifting the debt ceiling, said Sen. Brian Schatz (D-HI), must be non-negotiable.
“In exchange for not crashing the United States economy, you get nothing,” Schatz said in an interview with The Daily Beast. “You don't get a cookie. You don't get to be treated like you're the second coming of LBJ. You're just a person doing the bare minimum of not intentionally screwing over your constituents for insane reasons.”
The moment Democrats invite Republicans to the negotiating table over a debt-limit deal, Schatz argued, is the moment the situation gets dangerous.
“We have to tell them there is no table,” he said. “The one thing that is more dangerous than staring these guys down is not staring these guys down. Because if this becomes a tactic that works, it will never, ever end.”
The idea that Democrats should not entertain any compromise on the debt ceiling is not a new one.
But with President Joe Biden and Majority Leader Chuck Schumer (D-NY) yet to speak in detail about this particular looming debt-ceiling standoff, Schatz—an influential senator on matters of messaging and tactics—is one of the first leading Democrats in Congress to outline what should be the party’s opening bid.
Most Democrats agree with Schatz’s general view that the debt ceiling is a fatally flawed concept and that lifting it should be nonnegotiable.
When they last really negotiated with House Republicans over the debt ceiling, in 2011, the result was the decade-long spending slashes known as budget sequestration. Last year, when Senate Minority Leader Mitch McConnell (R-KY) played hardball over the debt limit, Democrats pursued a strategy of forcing him to blink first—which he did, giving the party confidence ahead of a future fight.
But the denizens of the House GOP are a different breed than their Senate counterparts, and the House GOP of today is far different than it was a decade ago. Within the party, the influence of Tea Party fiscal orthodoxy has eroded—but their zero-sum political outlook and hatred of deal-making has only grown more potent.
With just weeks left before a volatile and tenuously governed Republican conference takes control of one half of Congress, some Democrats are wondering how they lost the political will to avert the situation while they controlled all of Capitol Hill. In the last year, lawmakers have adopted a variety of plans to forestall another debt limit crisis in the short term—or permanently.
“We’re crazy not to do it before the next Congress,” said Rep. John Yarmuth (D-KY), the retiring chairman of the House Budget Committee.
Earlier in the year, Schumer said he viewed the so-called “lame duck” post-election session as an opportunity to address the borrowing limit. But last week, the New York Times reported that leaders had essentially given up on the push, with a separate challenge—funding the government past Dec. 16—on the front burner.
For Democrats, getting 10 Republicans to vote on a debt-ceiling measure before the end of the year would have been a serious challenge. Many Senate Republicans, even those more inclined to work with Democrats, have signaled they see the debt ceiling as leverage to force a debate on spending.
For his part, Schatz said he was still trying to persuade some Republicans. “We’re having conversations, but I would say it’s not overly encouraging,” he said. “I just don’t know if I can count to 10 over there.”
The stage, then, is all but set for a standoff that could make last year’s battle between Democrats and McConnell look quaint. While Republicans haven’t explained in detail what specific concessions they might want, it’s no mystery they want to force an opportunity to demand them.
In an interview with Punchbowl News before the November election, McCarthy indicated that no target was off the table—including Social Security and Medicare.
“You can’t just continue down the path to keep spending and adding to the debt,” McCarthy said. “And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, OK, we’ll provide you more money, but you got to change your current behavior.” House Republicans’ narrow majority and handful of vocal moderates would handcuff the ability of McCarthy, or any GOP Speaker, to stand strong in a debt ceiling standoff.
But in a divided Congress and a Democratic-controlled White House, raising the debt limit is a rare must-pass bill. The catastrophic implications of not passing it—as opposed to even a government shutdown—make the debt limit a powerful but dangerous hostage that Republicans have been glad to take.
Despite how some Republicans frame the debate, the debt ceiling is not an authorization of federal spending. It’s an acknowledgement that the federal government will pay what it already has borrowed.
But there’s an added incentive for McCarthy, who is currently struggling to earn the 218 votes needed to become Speaker. The ultraconservative critics he is trying to win over are pushing him to take a hard line on deep spending cuts, CNN reported.
In the Senate, where some GOP cooperation will likely be needed on the debt limit, some conservatives aren’t exactly rushing to embrace a hardline strategy. “I am not looking for sequestration,” said Sen. James Lankford (R-OK). “But I am looking for ways that we actually change the trajectory of our spending and our debt and deficit.”
Lankford suggested that Democrats wouldn’t discuss that issue in a fundamental way unless forced to. “It's always, ‘I will negotiate that sometime, but not around the debt ceiling, the debt ceiling is non negotiable,’” he said. “OK, but the reality is, when is that sometime? When's the deadline?”
Although Republicans have been clear about their approach, several Democrats approached by The Daily Beast said it was too early to discuss a strategy about how to respond.
Sen. Chris Coons (D-DE), a close ally of Biden, said it was a “ludicrously premature question” to ask if Democrats would engage with a GOP faction demanding spending cuts in exchange for lifting the debt limit.
“After they take a hostage, will you be willing to pay ransom?” Coons said. “I’m not going to answer your question.”
But there may not be unanimity within the Democratic ranks behind the non-negotiation strategy Schatz outlined. Sen. Joe Manchin (D-WV), a swing vote who frequently expresses concern about the federal debt, did not rule out talking to Republicans when the issue comes up next year.
“We need a serious conversation concerning the debt of this nation and the direction we’re going, OK? We all ought to come together as adults and try to figure a pathway forward,” he told The Daily Beast. “I consider any way I can to get the financial house in order. Right now, we’re on a trajectory that can’t be sustainable.”
Democrats like Schatz say they are not opposed to a conversation on spending, but the idea of doing so with a sword of Damocles—a government default that could easily spark an economic depression—hanging over their heads is “going to reward the hostage taking.”
“I want to make sure that our negotiating stance is, we’re always open to bipartisan deals,” he said. “But if the opener is, ‘Hey, what would you do in order to prevent me from crashing the American economy?’ we should not show up at the table at all. We should say, ‘Let us know when you want to talk about passing a law.’”
Ultimately, Schatz expects that despite the hard-edged nature of the new GOP, most conservatives will determine the debt limit is “not the hill to die on” because the issue doesn’t motivate their base in the same way that other political fights and culture-war battles do.
But while he believes his approach to be the one of fewest risks, Schatz says it’s still risky.
“I’m not cavalier about this,” he said. “I just think all the other choices are super dangerous, and this one is likely to work. But I’m still not certain.”