Politics

Is Congress About to Play Chicken With the Economy Again?

Senate Minority Leader Mitch McConnell
Does this face bluff? Kevin Dietsch/Getty Images

The summer of 2011 was an unpleasant time in Washington.

Congress, as it had routinely done many, many, many times before, needed to raise the debt limit, the law placing a cap on how much the government can borrow to meet its obligations. To raise the debt ceiling is not complicated legislation; it requires changing one number to a higher number in a one-sentence bill. But the House Republican majority, swept in the year before in the Tea Party wave, decided to apply conditions to raising the debt limit this time—and President Obama engaged with them.

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Had no deal been reached, that would have caused the Treasury to default on its obligations and sent the global economy into havoc. In the end, though, the two sides came to an agreement to cut spending over ten years. (Most of those cuts never materialized.) Everyone involved lost years on their lives due to the stress of negotiations and brinkmanship, and everyone involved came out worse politically. It sucked.

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So who’s ready to do it again?

The debt limit has, in fact, already been reached. Since July 31, Treasury has been using its array of “extraordinary measures” to pay the bills, which it can do until sometime this fall. Which is soon.

Republicans cared very little about the debt limit when they ran the government under President Trump and were burning through cash. It was routinely raised or suspended as part of broader deals around government funding bills. Since the last suspension in 2019, the government has racked up trillions in debt as a result of its COVID relief programs. With the notable exception of the $1.9 trillion American Rescue Plan passed earlier this year, all of the others were negotiated and passed on a bipartisan basis. They all agreed to this.

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But now that they’re out of power, Republicans are telling Democrats that they won’t agree to it anymore. They are refusing to help Democrats raise the debt limit at all, especially as Democrats tee up a new $3.5 trillion spending bill.

“Let me make something perfectly clear,” Senate Minority Leader Mitch McConnell said this week. “If [Democrats] don’t need or want our input, they won’t get our help. They won’t get our help with the debt limit increase that these reckless plans will require.”

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Could he be more clear?

“I could not be more clear,” McConnell emphasized. “They have the ability. They control the White House, they control the House, they control the Senate. They can raise the debt limit, and if it’s raised, they will do it.”

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McConnell is correct that Democrats have the ability to raise the debt limit on their own. Debt limit increases are allowed under reconciliation, the filibuster-free process by which Democrats plan to pass their $3.5 trillion spending bill. McConnell and other Republicans, even those who are occasionally helpful to the process of good-faith governing, are telling Democrats they should just tack the debt limit increase onto that package.

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Theyre the ones that are wanting to spend $3.5 trillion,” Utah Sen. Mitt Romney told reporters this week. “They’re the ones massively adding to the debt. Raise the debt limit, if that’s what they’re going to do, but they can do it on their own. Saying that we have to do it is threatening our economy and simply irresponsible.”

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You may wonder: Why is Mitch McConnell giving Democrats all of this advice? Just put it in your reconciliation bill, and get it over with? It’s not typically in McConnell’s nature to share useful tips with the Democratic Party. But McConnell wants Democrats to own a multi-trillion dollar increase in the debt limit, so that Republicans can then use it in attack ads during the 2022 campaign.

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There’s a whole separate debate to be had about whether voters still care about the debt. Members seem to believe they do. And so Democrats, according to Politico’s reporting this week, were leaning against raising the debt limit on their own as they prepare their reconciliation bill. Instead, they prefer to yoke it to the next government funding bill, due at the end of September. Democrats feel that they held Republicans’ hands in lifting the debt limit under Trump, so it’s only fair that Republicans hold theirs in lifting it under Biden, rather than plunging the country into the financial abyss.

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“The rules that existed under Donald Trump, that we weren’t going to mess with the full faith and credit of the United States of America, was the appropriate, prudent thing,” Virginia Sen. Mark Warner told reporters this week. “To create a fake crisis … at this moment with so much going on in the world, this much going on in this country, coming out of COVID and dealing with the variant, would be the epitome of irresponsibility.”

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Oregon Sen. Ron Wyden, chairman of the Senate Finance Committee, was blunt that Democrats wouldn’t engage with Republican demands as they had in that 2011 summer of hell.

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“Mitch McConnell is not going to be able to do to President Biden what, in effect, Republicans did to President Obama,” Wyden told reporters.

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Democrats think that Republicans will cave, as they would face blame for the twin crises of a debt default and a government shutdown by throwing a wrench in regular government business. Republicans, meanwhile, think they have the leverage, as Democrats are the party in control of government and hold ultimate responsibility.

So who is right? Unclear.  Maybe it’s all a bunch of huffing and puffing on both sides, and some face-saving arrangement will be made at the last minute. But betting that Mitch McConnell, who doesn’t typically make big decisions on the fly, has chosen to bluff on one of the most consequential items of business there is—that would be pretty risky for Democrats when they have another option available to them.

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