Senator Mitch McConnell had a message for Americans increasingly concerned that the economy will collapse if the federal debt ceiling is not raised: Relax.
“Listen, I think everyone needs to relax,” Mr. McConnell, the Kentucky Republican and minority leader with extensive experience dealing with debt limits, told reporters earlier this week. “Regardless of what may be said about the day-to-day talks, the president and the speaker will come to an agreement. It will eventually go through a bipartisan vote in both the House and the Senate. The country will not fail.
That may be easier said than done. While Mr. McConnell, President Biden and Chairman Kevin McCarthy have repeatedly assured Americans that there will be no default, that guarantee looks a bit flimsier with just over a week to go. that the US Treasury runs out of money to pay. its obligations.
Even if negotiators agree to a deal soon – an outcome that seemed within reach but had still not materialized as talks continued on Friday – there is still a long way to go, including securing approval of the House and the Senate. This outcome is far from certain given growing unease – and some outright opposition – on both the left and right. At this point, no one can be absolutely certain that the United States will not fall over the cliff by default, even if no one wants that to happen. Hurry up.
“Nobody can guarantee there won’t be a default, if for no other reason than the clock is ticking fast enough here,” said G. William Hoagland, a longtime Republican budget guru on Capitol Hill, who is now senior vice president. at the Bipartisan Policy Center. “We are on thin ice to a large extent.”
Negotiators got some respite on Friday afternoon with the Treasury Secretary’s announcement that the default deadline had been moved four days later to June 5. But Congress will still find it difficult to act by then, and the brief extension could even be counterproductive, undermining some urgency to strike a deal.
“We’re in the window of being able to accomplish that, and we have to come on very tough terms in these closing hours,” said Rep. Patrick T. McHenry, a North Carolina Republican and chief negotiator. by Mr. McCarthy. “We’re coming back to final and important questions, and it’s just not resolved.”
Since the standoff began, Mr. Biden and congressional leaders have sought to allay fears that a default might occur, essentially saying it was unthinkable because Congress had narrowly avoided default before. After one of the high-level meetings at the White House, Sen. Chuck Schumer, Democrat of New York and Majority Leader, applauded the fact that the four leaders had said default was not an option.
Part of their motivation for offering these constant assurances was to bolster their own strength, calm the public, and prevent financial markets from collapsing as the talks progressed.
But President Biden changed his tune slightly during his visit to Japan last weekend, saying for the first time that if Republicans insisted on pushing the issue, maybe default was an option afterwards. All.
“I can’t guarantee they wouldn’t force a default by doing something outrageous,” Mr Biden told reporters. “I can’t guarantee it.”
Rep. Hakeem Jeffries, a New York Democrat and Minority Leader, expressed a similar sentiment when asked this week if he could still be sure the government wouldn’t default.
“Not with this group,” he said, referring to Republicans, some of whom he said wouldn’t mind the financial chaos resulting from a default if they thought it might help them politically in 2024. .
Mr. McCarthy, House Leader and a Republican from California, has also repeatedly said there will be no default and stressed on Friday that he believed a positive result would be the result.
“I’m a total optimist,” he told reporters as negotiations continued with no apparent breakthrough.
One way McCarthy said a default could be avoided is for the Senate to pass and the president to sign the measure passed by Republicans in the House, raising the debt ceiling while making deep budget cuts and reversing other Biden administration initiatives. But this is unlikely to happen even if the Treasury runs out of money. Mr McCarthy also ruled out a short-term emergency suspension of the debt ceiling.
Even a deal between House Republicans and Mr. Biden would not end the drama; in some ways, this would only be the beginning.
House Republicans have a 72-hour rule for the time between when legislation is made public and when it must be voted on, a timetable that brings the showdown ever closer to the deadline of the Treasury at the beginning of June.
Moreover, with far-right elements of the Republican conference joining progressive Democrats in expressing reservations about the deal taking shape, Mr. McCarthy and Mr. Jeffries may have to thread the needle to produce the necessary votes on both sides to get the deal approved. .
Mr. McCarthy and his leadership team will have to gauge with pinpoint accuracy how many Republicans are committed to voting for any final budget deal with a debt ceiling increase. Then they will have to tell Mr. Jeffries how many votes Democrats need to produce to ensure that at least 218 lawmakers will back the package.
A miscalculation could spell disaster. As the nation went through a severe financial crisis in September 2008, the House stunned the Bush administration by not pushing through its bank bailout package. In a chaotic turn of events in the House, the measure fell through as many Republicans refused to support it despite presidential appeals and some Democrats also backed down. The stock market fell in real time as the vote unfolded. Four days later, the shaken House members returned and approved the proposal with some changes.
Some think it might take a similar scenario now to push the debt containment plan through Congress — a failed vote and market drop that underscores the economic consequences of a default and motivates lawmakers to act. Others would prefer not to, given the potentially serious ramifications of even a brief default.
“I’ve been optimistic that it wouldn’t happen, but the longer it lasts the more likely it seems to me,” said Mr Hoagland, the budget expert. “Time is up for this to be done, but I just pray that a fault doesn’t happen.”
Luke Broadwater contributed report.