Debt-Limit Terror” Is No Way to Run a Superpower

On the latest round of the Republicans’ dangerous game.

What can you say about a week in American politics when the major breakthrough was that the two parties agreed to stop talking about talking, in order to actually start talking? In Washington, where, for months, President Biden and congressional Republicans have been hurtling toward a confrontation over the G.O.P.’s refusal to raise the debt ceiling without major concessions from Democrats on federal spending, the beginning of formal negotiations aimed at averting a disastrous government default counted as big news. For the rest of the world, it was merely a sign of the capital’s extreme dysfunction, and a reminder that America’s messed-up politics constitutes a geopolitical crisis as well as a domestic one.

On Tuesday, Biden reinforced the point by announcing that he would cut short an important overseas trip to the Pacific region in order to return to Washington for the debt talks. With default looming – coming, perhaps, as soon as early June, according to the Treasury Department – this seemed like a politically advisable course, but the optics were nonetheless terrible. The President will still attend the G-7 meeting in Hiroshima, Japan, but skip his planned stops in Australia and Papua New Guinea. Both visits had been designed to showcase the U.S.’s top foreign-policy priority – shoring up American alliances in the region as part of the growing confrontation with China.

The change in Biden’s plans did not go over well. Papua New Guinea had scheduled a national holiday for this coming Monday to celebrate the first time a sitting American President would visit the suddenly strategic island nation. Oops. Party cancelled. In Australia, Biden’s decision was seen as a significant political embarrassment for the Prime Minister, Anthony Albanese – “a disappointment, a mess, and a gift to Beijing,” as a headline in the Sydney Morning Herald put it. Albanese, who had announced, a mere nine hours before the White House pulled out, that Biden would address a special joint session of the Australian Parliament, ended up scrapping a planned summit of leaders from Australia, India, Japan, and the U.S., a coalition of countries known as the Quad. He complained about “the blocking and the disruption that’s occurring in domestic politics in the U.S., with the debt-ceiling issue.” Back in Washington, even the President’s supporters were embarrassed. Although Biden had to put himself “in the center of action,” Representative Jake Auchincloss, a Democratic up-and-comer from Massachusetts, said, “it’s painful to see a public-relations gift for the Chinese Communist Party.”

Sending a message to the rest of the world about American leadership has clearly not been the foremost concern of Republicans on Capitol Hill. Never mind that some of these same Republicans are the loudest voices demanding more and tougher confrontation with China. For months, the brewing debt-ceiling fight has been the capital’s equivalent of background noise, some weeks louder, some weeks quieter, but always there, waiting for the inevitable moment when the U.S. would come close to default and the real politics would begin. It was merely a coincidence, albeit a highly symbolic one, that Biden was at the G-7 summit, in Japan, the same week that he finally gave in to Republican demands to negotiate spending cuts as a price for a debt-ceiling increase and named a team – the White House aide Steve Ricchetti and the Office of Management and Budget director Shalanda Young – to do it. The official spin from Democrats is that the White House has not actually capitulated, since the talks are about the budget, not the debt limit itself. “We have not budged from our position that default should not be used as hostage-taking,” the Senate Majority Leader, Chuck Schumer, said. Except, of course, that is exactly what is happening.

Biden arrives at the Marine Corps Air Station in Iwakuni, Japan, ahead of the G-7 summit in Hiroshima. Photograph by Susan Walsh / AP

One of the problems is that we’ve been here before, in 2011 and 2013, when, just like today, a Democrat was in the White House and Republicans controlled the House. The script is all too familiar: there were dire warnings, talks about talking, and then frantic last-minute negotiations. Each time, a default was averted, but only barely. (In 2011, a deal was reached two days before the predicted date of default, after financial markets went crazy and Standard & Poor’s downgraded the U.S. credit rating for the first time in history.) Few observers believe a default will happen this time, either. Which makes the present crisis a very artificial one indeed, manufactured by Republicans who now see a ritual act of economic self-sabotage as a surefire way to extract concessions that they could not otherwise secure.

This, alas, was always the G.O.P.’s plan if it managed to win back the House in this past fall’s midterms—as early as last October, weeks before the election, leaders of the extreme Freedom Caucus faction said openly that they were looking forward to using the debt ceiling as “leverage.” “Debt-limit terror,” as the former Treasury Secretary Larry Summers called it in an interview with Politico last year, was both foreseeable and foreseen. But, like the return of Donald Trump as the 2024 Republican front-runner, the fact that a political crisis was entirely predictable has not in any way prevented it from happening.

Democrats “made a horrible mistake” by agreeing to negotiations in 2011, the Democratic senator Chris Murphy, of Connecticut, told Punchbowl News this week, arguing that, this time, the Democrats should call the G.O.P.’s bluff and run out the clock. That way, Republicans would either have to cave and agree to raise the debt ceiling without attaching extraneous provisions, or they would take the country into default and own the political consequences. Other Democrats, concerned that the White House will eventually agree to Republican demands – which include strict budget caps, work requirements on federal assistance to the poor, and the rollback of key provisions in Biden’s signature legislation, the Inflation Reduction Act – are publicly pushing the untested legal theory that the Fourteenth Amendment allows Biden to bypass Congress and act unilaterally to secure the public debt. “Get rid of the debt-limit hand grenade forever,” Senator Sheldon Whitehouse, a Rhode Island Democrat, urged the President in a video he posted on Twitter. “This blackmailing has to end,” Senator Jeff Merkley, of Oregon, another supporter of invoking the Fourteenth Amendment, said.

Joey Bite-Me!

But that is not the path that Biden has chosen, nor, despite his recent bluster that he was thinking of going that route, did it ever seem like a serious possibility. Talks were inevitable, and the suspense now mostly lies in the details of whatever deal is reached. Part of the Democratic skepticism is the almost palpable fear that the White House will concede too much. A deal is still not a foregone conclusion. Uncertainty remains. It could all blow up. And so success is measured, once again, in the usual small Washington increments, in which a decision to allow the talking to begin counts as progress. Smelling victory, House Speaker Kevin McCarthy does not even seem to mind being called a terrorist. “I see the path,” McCarthy told reporters on Thursday. Of course he did.

The unravelling of a superpower’s credibility does not happen in an instant but over time and as a result of repeated crises. That the crises plaguing Washington are often self-inflicted has not made them any less damaging. Biden is right to fly back to his embattled capital. The greatest threat to the international order is right here.

Written by Susan B. Glasser for the New Yorker ~ May 18, 2023

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