Panic button

Why Biden isn’t hitting the panic button on the debt ceiling — yet

With the deadline looming, the White House is starting to ramp up pressure on Republicans.

By CHRISTOPHER CADELAGO

As the nation barrels toward fiscal catastrophe, President Joe Biden is intent, for now, to keep his powder dry.

Senate Republicans are rebuffing an effort by Democrats to lift the nation’s debt ceiling through a government funding bill that would require 60 votes. And they’re doing so while relying on the unusual argument that while members of the GOP wholeheartedly want to see the debt limit raised or suspended, they just don’t want to be the ones to do it.

That’s left Biden with few options: Plow forward with the plan and risk default, find an alternate route to raise the debt limit through reconciliation, or convince Republicans — either through badgering or enticing them — to get on board with Democrats.

So far, he’s settled on another approach: show no signs of panic.

Biden has largely deferred to Democratic leaders to drive the process on Capitol Hill, while the White House and administration officials avoid talk of fallback options and ramp up the pressure on Republicans to fold.

The administration is working behind the scenes to arrange phone calls between Treasury Department officials and recalcitrant Republicans, appealing to powerful business groups to issue stern warnings of their own and collaborating with progressives to amplify their messaging around the debt limit and implications for the broader economic recovery. They are also coordinating letters and statements from conservative-leaning organizations as well as state and local elected leaders and former government officials.

Biden himself has remained mostly mum on the matter, even though he played a central role in debt ceiling negotiations as vice president, working for a boss — Barack Obama — who eventually pledged never to negotiate over the debt ceiling again.

Instead, the face of the effort to get the debt limit raised or suspended has been Treasury Secretary Janet Yellen, who warned that the country will hit its breaking point next month and be unable to pay its bills. On Wednesday, six former Treasury secretaries wrote to Congress urging action on the issue in the face of “serious economic and national security harm.” Yellen has made several similar appeals in letters beginning in July, a recent Wall Street Journal op-ed and remarks and conversations with Republicans and Wall Street tycoons.

But those institutions who have sway within Republican ranks and want to see the debt ceiling raised or suspended have not yet taken a hammer to GOP leadership for their insistence that Democrats act alone. Many of the business leaders and groups that Democrats are counting on to help convince Republicans have stuck only to declarative statements about the need for swift action.

“The United States of America defaulting on its obligations is not an option,” said Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce. “We are counting on Congress to take the necessary steps to address the debt limit.”

Other industry organizations and companies have issued public letters and statements focused on how such votes have long been bipartisan, another point stressed by the Biden administration.

Inside the White House and among allies, there’s an overarching belief that there is still time to resolve the matter and that Americans care far less about the process of raising the debt ceiling than whether it gets done. A POLITICO/Morning Consult poll released on Wednesday showed that 67 percent of respondents had not seen, read, or heard about Yellen’s comments urging the debt ceiling be raised. Asked which party would be to blame if it wasn't raised, 33 percent said Democrats, 16 percent said Republicans, and 42 percent said both.

“I think there’s no real messaging way out of this,” said Josh Bivens, director of research at the Economic Policy Institute, a left-leaning think tank.

Democrats, Bivens said, just need to find a way to raise, suspend or outright abolish the debt ceiling “and then the public will stop thinking about this issue.”

But as administration officials try to game out ways through the standoff, they are also chafing at the idea of establishing a new precedent whereby the minority party can pass off responsibility of handling the debt limit even after their own members added to the debt. The White House argues that Congress has addressed the debt limit nearly 80 times in the last 60 years and that Republicans and Democrats alike supported the spending that has contributed to the current need to raise the limit.

“Senate Republicans are playing politics with the prospect of economic calamity and a government shutdown by pledging to vote for a catastrophic default,” said White House spokesperson Mike Gwin. “America cannot afford to let political brinkmanship put our economic recovery at risk, and blocking a simple vote to lift this uncertainty off our economy would be inexcusable.”

Elected Democrats are not holding back on launching broadsides at Republicans over the situation — with the national party already unloading on Senate Minority Leader Mitch McConnell. Some see danger in treating the sustained Republican threats as a fixed obstacle for the opposing party rather than something rooted in bare-knuckled political calculus or norm-shattering nihilism. Rep. Jackie Speier (D-Calif.) suggested “There's going to be blood on their hands” if Republicans don’t acquiesce.

“Are we hostage to Republicans who are threatening to blow up a part of the economic system because they want to do that for politics?” Sen. Elizabeth Warren (D-Mass.) asked reporters Wednesday. “That is just not where we should be as a nation.”

McConnell has accused Democrats of being the ones who are playing chicken with the debt limit, warning that they are playing “Russian roulette with our economy.” And Sen. Rick Scott (R-Fla.), chair of the National Republican Senatorial Committee, suggested Wednesday that Democrats want to get Republicans on board because they fear the political blowback from going it alone. “They must have a big concern that they don’t want to do this on their own. It’ll hurt their campaigns,” Scott said.

Negotiations over raising the debt ceiling are a fairly recent phenomenon. In 2011, a standoff led to a downgrading of the U.S. credit rating and a deal between lawmakers to facilitate spending cuts and deficit reduction. After that, Obama made his pledge to never negotiate on the matter again, even as Republicans demanded concessions. His insistence worked, which has led some Democratic veterans of debt limit fights to continue to predict that Republicans will back down.

“I don’t think [McConnell] is ultimately going to filibuster the United States into default and economic catastrophe,” said Seth Hanlon, who served as a special assistant to Obama at the National Economic Council.

But on Wednesday evening, CNN reported that House Democrats had begun to concede that they may need to act alone in raising the debt ceiling through a separate reconciliation bill, which could pass the Senate with majority support.