The debt ceiling deal in context

The GOP punched at its weight or maybe slightly above

The debt ceiling deal, if it passes (as seems likely), should be evaluated both in political and substantive terms. Arguably, the politics deserve precedence because the negotiations that led to the deal were political theatre to a considerable extent.

Initially, I thought Joe Biden would come out the political winner. It seemed to me that either (1) he would get the debt ceiling raised with virtually no conditions attached or (2) he would be able to blame House Republicans for the absence of a deal by deadline day (whenever that actually is) and, fairly or not, put some of the onus for the weakening economy on the GOP.

But Biden lost his “win-win” when, seemingly against the odds, the House passed legislation to raise the debt ceiling. This placed the burden on Biden to negotiate.

True to form, Biden was slow off-the-mark and the public, which recognized that spending limits are a good idea, blamed him for the standoff. To avoid being the political loser, or at least minimizing his loss, Biden finally came to terms with Speaker McCarthy.

I agree with Ramesh Ponnuru that if the deal they reached passes, it will be a political victory for McCarthy and his party. However, the win won’t be a major one.

That’s partly because the Republicans didn’t win all that much substantively. As conservative critics have pointed out, the spending cuts aren’t large in the scheme of things.

However, the limited substantive gains should be viewed in context. Democrats control the White House and the Senate. Republicans control the House, but only by a very thin margin. When a party fares as poorly in elections as the Republicans have, it’s unrealistic to expect that party to overcome Democrat resistance to getting America’s fiscal status on a sound basis and rolling back the welfare state.

One might counter that in 2011, Republicans also controlled only the House, yet were able to extract bigger budgetary concessions. But in 2011, Republicans had a much firmer grip on the House than they do today. Moreover, back then, House Republicans were united behind the Tea Party’s budget-hawk agenda that swept them into power. Today’s GOP is more fractured.

Finally, although it might be a coincidence, I’ll note that the Republicans didn’t fare well in the election following the 2011 debt ceiling fight.

The way to slash federal spending and roll back the welfare state is to win elections. And, as a matter of fact, Republicans did win one in 2016. That election left the party in control of the White House and both chambers of Congress.

The time was ripe in 2017-18 to make the kind of changes some conservatives are complaining aren’t imposed by the 2023 debt ceiling deal. And even in 2019-20, the GOP was in a stronger position than it is now. But Republicans didn’t step up.

While running for president, Trump pledged to balance the budget and then pay off the entire national debt. He told Bob Woodward, “we’ve got to get rid of the $19 trillion in debt. . .I think I could do it fairly quickly. . .I would say over a period of eight years.”

Yet, according to a study by the Manhattan Institute:

Trump left the White House with the largest peacetime budget deficit in American history and a national debt exceeding 100% of the economy for the first time since World War II. . . .

When President Trump took office in January 2017, he inherited a growing economy and budget deficits that had gradually fallen to 3% of GDP in the years since the Great Recession. At this time, the Congressional Budget Office (CBO) projected that the $585 billion budget deficit from 2016 would dip to $487 billion by 2018, before the baby boomer–driven rise in Social Security and Medicare costs would gradually push deficits up to $1.4 trillion by 2027. Overall, CBO projected that $10.0 trillion in deficits over the 2017–2027 period would drive the debt held by the public to $24.9 trillion. . . .

Instead, as Trump left office, the 2017–2027 budget deficits were estimated at $13.9 trillion—$3.9 trillion higher than the inherited projection. During each of Trump’s four years in the White House, the actual deficit exceeded the original CBO’s projections by at least $100 billion. For the first time in American history, the deficit in fiscal year 2020—amid a massive bipartisan fiscal response to the pandemic—reached $3 trillion (accounting for 14.9% of GDP, a level that has been exceeded only during the height of World War II).

There are all sorts of excuses one could offer for this showing, including some that are valid. But on the whole, I think the excuse for failing to make more budgetary inroads through debt ceiling negotiations this year — the absence of political clout due to poor election showings — carries more force.

I’m not sure I agree with Rep. Mark Green (R-Tenn) who boasts that the GOP “kicked way beyond our weight” in negotiating this deal. But I believe the party kicked at its political weight, if not slightly above.