On Winners, Losers, and the Debt Ceiling
Horse race coverage in all the things.
Earlier in the week I noticed this piece by David Leonhardt at the NYT with the following headline question, The House Passed the Bill. Who Won? The question itself typifies a lot of the coverage I have seen on the debt ceiling debate and is maddeningly (IMHO) simplistic and all-too bothsidesy.
First, and foremost, I will answer the question by stating that we all won, because a major (and unnecessary) economic crisis has been averted and the price for its avoidance was not high. I think we all won as well because, despite a broader context of political dysfunction, this process was, at the end of the day, relatively normal.
Before (probably too late!) anybody gets upset and goes to the comments to accuse me of not being sufficiently outraged about hostage-taking and the absurdity of the debt limit, let me calm the waters a tad. I find the debt limit structure that we have in the US to be utterly absurd. Indeed, it is an example of American exceptionalism that we should not be proud of in the least.* And I agree that it is ridiculous and irresponsible (and also exceptional is the bad connotation of the word) to use this pivot point to literally threaten the global economy.
Having said that, I was pleasantly surprised that the deal that has emerged consisted largely of things that were relatively mundane in the grand scheme of things.
As such, if we have to play winners and losers, the winners are the world economy (and by extension the US economy), Biden, the Democrats, and Kevin McCarthy. The losers are the Freedom Caucus. And yes, there are some benefits cuts that will hurt vulnerable Americans.
Let me return to Leonhardt, under the heading “How Biden Lost.”
This background helps explain why Biden and his aides insisted — publicly and privately — that they would not negotiate over increasing the debt ceiling. Doing so, they explained, would encourage future ransom demands when the country again approached its debt limit. Congress should pass a straightforward increase to the limit, White House officials said, and Biden would then be happy to negotiate over the federal budget.
Instead, they abandoned this position and started negotiating with Republicans over the debt ceiling.
So, he lost because he had to negotiate after saying he wouldn’t? I have seen some version of this assertion several times and every time I think: stating that they wouldn’t negotiate was a negotiation strategy!
How can this not be obvious?
I mean, yes, the preferred Democratic position was a clean bill that raised the debt limit without conditions (and, for kicks, a pony and an ice cream cone). But given the realities of divided government and the stating starting point for House Republicans, this was never going to happen (but rumor has it Biden can get an ice cream cone without Congressional approval, so there’s that).
I mean, did anyone actually think that the Biden administration would literally not talk to House leadership at all?
Indeed, the degree to which the administration won (to stick with the theme) was knowing exactly what they were doing. See another NYT piece: Biden’s Debt-Deal Strategy: Win in the Fine Print.
The way administration officials see it, the full final agreement’s spending cuts are nothing worse than they would have expected in regular appropriations bills passed by a divided Congress. They agreed to structure the cuts so they appeared to save $1.5 trillion over a decade in the eyes of the nonpartisan Congressional Budget Office. But thanks to the side deals — including some accounting tricks — White House officials estimate that the actual cuts could total as little as $136 billion over the two enforceable years of the spending caps that are central to the agreement.
I think we should stress “nothing worse than they would have expected in regular appropriations bills passed by a divided Congress.” If that is the case, and it very much seems to be, then the administration won, hands down.
I will say that McCarthy is a winner here in the sense that he was able to come across as more Speaker-like than many thought would be the case and he helped avert a major economic crisis.
While I am on the subject of poor descriptions of this process, I agree with this piece from TPM: The False Equivalence Between The ‘Far Right’ And The ‘Hard Left’. There has been a narrative about how both parties have an equally frustrated set of extremists. But this narrative ignores several facts. The first is that the extreme wing of the GOP did, in fact, seem willing to tank the global economy. Moreover, is the responsibility of the majority party to run the chamber, and the luxury of the minority party to vote against measures for signaling purposes. But as I noted the night of vote in the House, there was a distinct difference between the way the right wing of the GOP voted versus the progressives in the Democratic Party.
A lot more can be said about this topic, but we simply need better political analysis in the American press. At a minimum, they need to stop making everything into a horse race.
*As the BBC noted recently (What Americans can learn from Denmark on handling debt ceiling crisis) the only other country with a similar mechanism is Denmark, and they handle it rather differently.
“It’s there so that the government cannot just write a blank cheque,” said Las Olsen, chief economist at Danske Bank.
Though the American and Danish laws appear similar, they work rather differently.
“[Danish] politicians consider it to be more of a formality. It’s not a political issue,” Mr Olsen said.
“They [parliament] have already passed all the laws requiring spending and they have also passed the laws about how much tax to collect,” he added.
“So it would be a little strange not to allow the government to borrow the difference.”
Indeed.
I try to limit my social media interactions (dropped twitter, etc.) because it brings out the worst in me. One person I do follow is my Representative, Chip Roy, of the “Freedom” Caucus. Why? Because he is my congressman and I want him to know what I think. I call him occasionally also. Do I think he cares about my opinion? Nope, not a lick.
Another thing I noticed is that most commenters have no clue about the federal budget, the size of the various categories of spending, and are totally out of touch with fiscal realities.
Anyway, I follow his Press Office Facebook feed and comment regularly. I want to tell you that this deal has elicited the most amazing and satisfying wailing and gnashing of teeth by the MAGA crowd. It is glorious. I have noticed that during the negotiations, Chip was everywhere (except as part of the negotiations). After the results, Chip is taking a minor beating by the regular Republicans. Again, satisfying.
Agreed. Like Leonhardt’s, most other commentary I have seen has the same flavor. Which side won and which lost. And further why isn’t Biden or McCarthy or some other participant rubbing it in. As if childish point scoring is the only thing that matters.
I think Kevin lost, too, as he made a big show of 1) Biden being unreasonable, and 2) HUGE cuts in wasteful spending.
Neither was true, nor can the results be spun as to being in line with what was implicitly promised.
I agree. Pretty much on all points. Including McCarthy, who managed to keep things on the rails as speakers, and didn’t even violate the Hastert Rule, since a majority of his caucus supported the final deal.
It’s the kind of deal one expects when the House is controlled by Republicans and the Presidency by Democrats. They negotiate, and come up with something.
This isn’t necessarily zero-sum.
Well if you look at comments here from certain factions and at that TPM:
Yes some did.
This arising it would appear from simplistic ideas that an assertion of 14th amendment or one of the other “This Weird Trick” sort of magical solutions would avoid the chaotic damage that the straight default would do, out of magical thinking and inattention to and/or ignorance of bond markets.
@Kathy: Well he seems to have won in terms of his internal power and reputation in respect to the House as the doubts as to his ability to deliver the result were ironically quite bipartisan and widespread. So by an internal power calculus he may have in fact achieved a certain internal goal from a fiasco one can say was forced upon him.
@Jay L Gischer: indeed leaving aside the quite unnecessary and harmful drama (minor as compared to default but illustratively harmful as real money was spent in anti-default protection), an otherwise normal result.
Thank you for writing this. It nicely articulates something that I find so very [frustrating, silly, disappointing, etc].
Indeed. And I’m struck by the parallels between the political “analysis” of the American press and the political “analysis” of the American public. Including, nay especially, among the public who fancies themselves informed, intelligent, and incisive.
Chicken, egg, at this point it doesn’t really matter. [Insert obligatory Gandhi (mis)quote here.]
@stevecanyon:…
I’m guessing that this is not the first time anyone asked you this, is your father’s name Milton?
@Mister Bluster: Ha! Well only if I was the real Steve Canyon instead of some wanna be.
@stevecanyon:..
Will the real Steve Canyon please stand up!
When I was very young my dad would read me the Sunday Comics. He would not read me Terry and the Pirates another Milton Caniff creation and others like Dick Tracey and Flash Gordon. He told me that they were too violent. When he would leave the Sunday Comics section laying around I would pick it up and try to figure out the words to the forbidden strips.
Maybe dad was on to something.
@Mister Bluster: Dick Tracy et al too violent? Wow times have changed. I remember reading Steve Canyon when it was on the first page of the Sunday Comic section along with Peanuts. Never did read Terry and the Pirates though.
@stevecanyon:..times have changed…
I guess. I was born in 1948.
It would take a lifetime to explain my parents so all I can say is that they never spanked or hit or used any type of corporal punishment on me or my siblings. (one bro, one sis).
There were never any firearms in the house. Not like they were Quakers or pacifists.
I don’t know what my father was thinking when he told me that. He never took the paper away from me when he saw me trying to read the offending comics.