How Past Debt Limit Crises Shaped Biden’s No-Negotiation Stance

How Past Debt Limit Crises Shaped Biden’s No-Negotiation Stance

With the onset of a debt limit crisis in 2011, Vice President Joseph R. Biden Jr. he described the initial negotiations with the Republicans as civil, suggesting at one point that the process consisted of figuring out who was willing to trade his side’s bicycle for the other side’s golf clubs. .

The gentle chatter stopped that summer when House Speaker John A. Boehner backed out of a deal because he wasn’t able to challenge the Republicans in their caucus. Months later, congressional leaders agreed to raise the debt ceiling and cut trillions in federal spending to avoid default.

The acrimonious deal convinced Biden of two things, according to half a dozen current and former advisers: Don’t negotiate with a speaker who can’t reach a deal — Boehner’s caucus was arguably less radical than the current bloc of House Republicans. – and don’t turn the process of avoiding government default into a budget discussion.

“It was a bit of a scary transition, because all of a sudden you’re negotiating whether or not you’re going to default,” Jacob J. Lew, President Barack Obama’s treasury secretary, recalled of the 2011 saga.

Lew added: “It left you with a real feeling that this could have easily failed, and that was terrifying.”

Twelve years later, the government is again in danger of defaulting on its debt for the first time, and House Republicans are again demanding spending cuts in exchange for agreeing to raise the debt limit. After his presidency and left with a smoldering memory of Obama-era struggles, Biden has been adamant that discussion of raising the $31.4 trillion debt limit must take place separately from spending negotiations, aides say.

It wasn’t always like this. Republicans have pointed out in recent weeks that, as a senator, Biden has been critical of budget deficits during the Reagan presidency. In 1984, he introduced a proposal to freeze federal spending for one year. He said his plan would “shock the hell out of everyone in the US Senate”, but it came to nothing.

And as vice president, Biden tied the debt ceiling and budget issues in 2011 when negotiating for the Obama administration. In comments to reporters on Tuesday, Biden suggested he only did this because he was told to cut a deal.

“I received a call that morning, at 6 am, saying that the Republican leader would only speak to me and there was no more time,” he said. “And so I sat down and got instructions from the White House to resolve this. And that was my job. But I wasn’t warned.

In the spring of 2011, Biden and a bipartisan group of Congressional leaders met frequently to discuss their differences. In early meetings, the group met at Blair House, where foreign dignitaries stay when they visit Washington. That summer, Boehner broke off negotiations, largely because rank-and-file Republicans couldn’t agree to raise taxes on the rich. A complex deal was reached weeks later, leaving Obama to explain to Democratic voters why he was unable to raise taxes and agree to at least $2.4 trillion in spending cuts.

According to Biden’s aides, the scar tissue remains.

The second debt ceiling battle of Obama’s presidency in 2013 was another test of divided government: Obama categorically refused to negotiate, and Republicans, reeling from slumping polls and the political price of a downgrade of the country’s credit, ended up retreating.

Biden has since argued that there should be no restrictions on raising the federal debt limit, which is the limit on the amount of money the United States is allowed to borrow to fund the government and meet its financial obligations, including paying for programs. of a social safety net and financing of armed forces salaries.

Biden’s aides point out the obvious: Relations between Republicans and Democrats have become even more strained over the past decade. The last time a divided government threatened to push the debt-limit talks to the brink, Twitter was still in its infancy, and the idea of ​​a President Donald J. Trump was little more than a sideshow.

Now, in an era when a large group of House Republicans remain loyal to Trump and would like to inflict pain on Biden as a matter of political principle, there is little compromise to be found on important issues, including the budget.

“When your demand is to keep the economy from crashing, and their demand is everything else, how do you meet the middle ground?” Dan Pfeiffer, a former senior adviser to Obama, said in an interview. “My recollection is that everyone believed we would never go down that road again.”

Republicans argue that rather than taking the country’s debt obligations hostage, they are responding to Democrats who have long overlooked the rising interest costs that come with debt.

In a meeting with House Speaker Kevin McCarthy on Tuesday, several aides said, the president tried to emphasize the consequences of default and get leaders to agree that it should be avoided at all costs. But Biden administration officials recognize that even if everyone agrees that default is to be avoided, working from there will be the painful part.

“There’s a very big gap between where the president is and where the Republicans are,” said on Monday Treasury Secretary Janet L. Yellen, who warned that the United States could default as early as June 1.

Biden said he had asked the group to reconvene on Friday and that team members would meet during the week. Two councilors said they expected similar meetings to take place regularly. Still, officials on both sides are not very optimistic that a painless deal will be reached in the short term.

On Tuesday, McCarthy said he found “no progress” at the meeting and criticized the president’s suggestion that he might consider invoking a clause in the 14th Amendment that would oblige the federal government to continue issuing new debt if the government runs out of money.

“I think you’re a failure working with people across the aisle or working with your own party to get something done,” McCarthy said.

Biden and Senator Mitch McConnell of Kentucky, the minority leader, are in regular contact, aides say, but the president’s aides are reluctant to pin hopes that McConnell will find a way out of the debt-ceiling quagmire.

The president also has an untested Democratic ally in Representative Hakeem Jeffries of New York, the House Minority Leader, who would need to muster the necessary votes to carry out any deal. (Mr. Pfeiffer pointed out that during previous debates, Mr. McConnell came in at the last minute, “when he has more influence, he comes to some agreement that is basically enough for him, passes, and then he leaves town.”)

There will be little common ground on the budget. Biden wants to expand federal spending and reduce future debt by taxing corporations and high-income earners, a plan his administration argues could reduce deficit growth by about $3 trillion over the next decade. Republicans want to extend Trump-approved tax cuts, which would expire at the end of 2025.

Late last month, McCarthy passed a spending bill that would deeply affect the president’s domestic agenda and curb discretionary spending, though Republicans have not outlined what might be cut and why. Since then, the Biden White House has been happy to fill the void, accusing Republicans of wanting to cut everything from veterans’ health spending to Social Security. (Mr. McCarthy called this a “lie.”)

Ahead of the next meeting, the president’s aides said they didn’t expect Biden’s message to change, but suggested that both sides would have to make concessions. Biden’s comment on Tuesday that he might be willing to support rescinding unspent coronavirus relief funds — and meeting a Republican demand — could be the kind of compromise that would keep the talks from calcifying.

But Biden’s aides also expect him to stress the political stakes for Republicans in coming weeks if they refuse to budge on the debt limit. He will do this not just in the White House, but in congressional districts as well.

On Wednesday, the president was in New York’s Hudson Valley region, where Rep. Marc Molinaro, a Republican whose district includes parts of the area, accused him of playing a “chicken game.”

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