Why Biden Will End Up Negotiating on the Debt Ceiling
The politics of "no compromises" isn't as good as he thinks.
The biggest legislative fight in Congress this year is going to be over the debt ceiling — a technical-sounding term that really just means the maximum amount of money that the U.S. government is allowed to borrow.
Officially, we hit the current cap of $34.1 trillion last month. But the Treasury has accounting tricks it can use to keep us paying our bills until sometime in June. At that point, if Congress doesn’t pass a law to raise the debt ceiling, America won’t be able to make payments on things it’s already committed to: interest on loans, social security, military salaries, etc. Nobody knows exactly what the fallout from hitting the limit would look like, but the one thing that is certain is doing so would cause economic chaos.
To understand the thesis of this article, a bit of background on the politics of the debt ceiling is important. Because Republicans hold the House, Democrats aren’t able to unilaterally raise the cap. And so House Republicans are holding the debt ceiling hostage, insisting they won't raise it unless they get concessions from Biden. Republicans haven’t made their demands clear, but they’ll probably settle on some combination of spending cuts and entitlement program reforms. One idea Republicans are floating, for instance, is mandating work requirements for Medicaid recipients.
President Biden has staked out a clear position: under no circumstances will he negotiate with Republicans to get the debt cap lifted. Congress, he says, must pass a “clean” debt ceiling increase without any other conditions. Biden thinks that the politics are on his side, that he has Republicans hung out to dry, and that he has nothing to lose by holding fast and refusing to come to the negotiating table. But this is a misreading of history and of public opinion.
Even if he might not know it now, Biden will end up negotiating with Republicans to raise the debt ceiling.
2023 Is More Like 2011 Than 2013
This isn’t the first debt ceiling crisis in recent years. There were similar situations when Barack Obama was president in both 2011 and 2013. Those years teach very different lessons, and Biden’s biggest mistake is likely looking to 2013 as inspiration rather than 2011.
In 2013, Obama successfully executed the strategy that Biden is trying out now. He refused to negotiate at all with Republicans. In the end, Republicans raised the debt limit and Obama came away as the clear victor in that round of debt ceiling chicken.
But the thing that made Obama's refusal to budge work in 2013 isn’t a factor in 2023. That year, Republicans were demanding that Obamacare (The Affordable Care Act) be gutted in exchange for a debt ceiling increase. The problem with this from a strategic perspective is that the two things are unrelated, which made the Republican demand seem unreasonable and gave Obama the high ground and the power to just refuse to engage. In the end, Americans generally blamed Republicans for the crisis. All in all, 2013 was a solid victory for Obama, so it’s understandable why Biden might look at this history and see it as a reason to follow the “no negotiation” strategy.
But there’s a more apt comparison than 2013. Just two years earlier, in 2011, there was another fight over the debt ceiling that’s much more similar to the one Biden is facing today.
That year, Republicans had just taken control of the House of Representatives following the 2010 midterms which had brought a new ideological and hard-nosed generation of Republicans to power. These “tea party” Republicans campaigned on slashing the size of government and were willing to go to war to do so. In exchange for raising the debt limit, Republicans were demanding spending cuts to balance the budget.
If 2013 had been a bank-shot fight over Obamacare, 2011 was a much more direct debate over the size of government and the growing federal debt. And this time Obama had no real option other than to negotiate. In the lead-up to his 2012 reelection campaign, Obama wanted to be seen as a sensible moderate willing to work across the aisle. Refusing to engage Republicans on spending at a time when the debt was ballooning would give voters the opposite impression.
In the end, after months of negotiation, Obama and congressional Republicans did come to an agreement. In exchange for raising the debt ceiling, Obama agreed to cut spending by $917 billion without raising taxes at all. And though a good number of staunch conservatives were unhappy with the agreement (it included cuts in defense spending and didn’t include a mandate to balance the budget), the GOP had successfully leveraged the debt ceiling to force Obama to the negotiating table.
The political fallout from the 2011 game of chicken has been misunderstood in retrospect. The typical understanding is that Republicans took a major hit to their popularity, that Obama didn't, and that therefore holding the debt limit hostage is inherently a bad political play. In fact, the failure of the two sides to come to an agreement hurt Obama with swing voters nearly as much as it hurt Republicans.
While it is true that the public disapproved of Republican Speaker of the House Boehner’s handling of the situation and was generally ambivalent about Obama’s (72% of the public disapproved of Boehner while 47% disapproved of Obama), those numbers don’t tell the whole story. Because Boehner’s disapproval numbers were inflated by the many conservative Republicans angry that he had not been more rigid in his demands, the number of actual swing voters who disapproved of Boehner was actually much closer than the topline approval ratings suggest. Second, while more Americans said they approved of Obama’s handling of the crisis, his overall approval rating still took a serious hit. Between May and July, the height of the crisis, Obama’s approval fell from 56% to 44%.
In other words, the common understanding that Boehner and congressional Republicans lost the public opinion battle is incorrect. Voters, it turns out, blamed both sides for the deadlock and near economic catastrophe it caused. Had Obama adopted a “no negotiation” strategy, he would have been seen as intransigent and would have taken an even greater hit in popularity.
The impending debt ceiling debate is much more similar to 2011 than 2013 on two important fronts. First, Republicans are framing this dispute as an opportunity to get our fiscal house in order by cutting spending. This is much more similar to 2011 when Republicans were demanding spending cuts, than in 2013, when the fight was over the tangential issue of Obamacare. Second, like Obama in 2011, Biden is facing reelection next year. He can’t afford to look intransigent and definitely can’t be seen as responsible for an economic calamity.
In the coming months, Biden will face the same pressures that Obama did during the 2011 crisis. Because of that, and because Biden is a relatively canny political operator, he will end up responding in a way that looks much more like the Obama of 2011 than the Obama of 2013.
The Political Incentives Today
Beyond reading the historical tea leaves, we can look at the political incentives facing Biden today — all of which point to the conclusion that Biden will end up negotiating.
First, Americans like compromise. In polling from the 2011 crisis, 68% of Americans said that they wanted a compromise even if it meant striking a deal they disagreed with. A big part of the reason that Obama fared nominally better than Boehner in approval polls is that Democrats led Republicans by a massive 25-point margin when it came to being seen as willing to work with leaders from the other party. If Biden refuses to even talk with Republicans, he’ll be on the wrong side of the “willing to compromise” seesaw. The fact that some congressional Democrats are already saying publicly that Biden needs to sit down with Republicans to negotiate would only make Biden’s refusal to do so look even more obstinant.
Second, most Americans have no idea what the debt ceiling is or does. The Republican message of “if we’re going to incur more debt we should get spending under control” sounds perfectly reasonable on its face. Technical arguments about why linking the debt ceiling to spending is imprudent won’t persuade the vast majority of Americans who pay passing attention to politics. For example, when asked if they “favor or oppose raising the U.S. debt limit,” 40% of Americans say oppose and 28% support. That changes when people are given more context about the consequences of a debt ceiling breach, but good luck getting most Americans to pay attention long enough to fully explain what the debt limit does.
Third, Republicans really do seem unlikely to pass a clean debt ceiling bill without compromises from Biden. In his struggle to get the Speaker’s gavel, McCarthy gave away a lot to his right flank — including a promise to link the debt limit to spending cuts. If he gave in to Biden and accepts a clean increase to the debt ceiling, it’s almost a guarantee that some Republicans will demand his head. Moreover, moderate Republicans who were initially open to passing a clean increase to the debt ceiling have changed their tune, saying that “Biden must make compromises.” This shuts down Biden’s chance at sidestepping McCarthy, and means that his only real option is to engage with the Speaker.
In other words, the current understanding of the politics of the debt ceiling is wrong. Most pundits seem to believe that Biden has the upper hand and that Republicans will have no option to come to the table if the president holds firm to his “no negotiating” tactic. But that view is based on a faulty reading of history and of the polls.
Eventually, two things will become clear:
The correct historical parallel to his year’s debt ceiling fight is 2011, not 2013.
Biden taking a “no negotiating with terrorists” position would be incredibly unpopular, especially if it led to a debt ceiling breach and economic catastrophe.
In the end, Biden is going to have to come to the negotiating table. The only question is whether he realizes this now or a few months down the line.
Subscribe to Brain Candy and get the latest on American elections, campaigns, and politics in your inbox every Tuesday and Friday. Thanks for reading — Seth
I had completely forgotten about both 2011 and 2013. Thank you. Warren Alderson
Interesting and well-supported argument. Nonetheless, I must disagree. To me it comes down to whether the GOP is crazy enough to actually fail to raise the limit and crash the economy. They may be! But I believe a large portion of the voting public will blame R’s for the fallout, and McCarthy can’t risk that a year before a presidential election.
Is there a risk to Biden in deciding against negotiating? Sure. But I think he will be motivated by 2013 and decide it is more important to not be held hostage by a slim GOP House majority.