If House Speaker Kevin McCarthy fails to stand up to the extreme right-wing members of the Republican Party, it is likely the United States will default on its debt on June 1. That’s the date the federal government runs out of money if Congress doesn’t raise the statutory cap on the amount the federal government can borrow. Negotiators have a week to strike a deal and every day without an agreement makes default more likely.
In 2011, when I was part of the last major debt ceiling negotiations, most Republicans understood the dangers of default and the need to avoid it. But even then, the talks were so prolonged and difficult, the nation avoided default by only 48 hours. As a result, the US bond rating was downgraded and interest rates soared, which cost taxpayers about $1.3 billion.
Many Republicans in the House are dismissing the dangers of default, which they view as an acceptable outcome if their extreme demands are not met. They are encouraged by Donald Trump, who recently said that if Democrats don’t cave into extreme Republican spending cuts, “you’re going to have to do a default.”
The Republican budget demands were written by the House Freedom Caucus, a group of the most radical House Republicans — the faction which forced former speaker John Boehner to resign in 2015 and has led prior efforts to shut down the government. Recently the Freedom Caucus warned McCarthy to engage in “no more discussion on watering it down. Period.” It’s noteworthy that Congress raised the debt ceiling three times under Trump with little fanfare.
Republicans are demanding an astonishing $4.5 trillion in spending cuts over the next 10 years in return for a $1.5 trillion debt hike. Their cuts, if enacted, could be as high as 30 percent to vital government funding for programs like nutrition assistance for pregnant mothers, law enforcement, and National Institutes of Health cancer research. It is essential for the Congress to address our burgeoning deficit. But playing Russian roulette with our debt and cutting benefits for the most vulnerable are the worst ways to do it.
In addition to deep spending cuts, Republicans are using the threat of a government default as a vehicle to achieve unrelated goals such as stricter work documentation for the Supplemental Nutrition Assistance Program, Medicaid, and the Temporary Assistance for Needy Families program. link? Holding the nation hostage by making such demands is irresponsible, and as congressional Democrats like House Democratic leader Hakeem Jeffries have made clear, such extreme proposals are “a nonstarter.”
Reaching a deal will require McCarthy to give up on these radical demands. That means standing up for the first time to the most right-wing members of his conference. But it will be difficult for McCarthy to do so because he knows it could easily spell the end of his speakership.
McCarthy is the weakest speaker in at least 50 years with only a four-seat margin over House Democrats. It took 15 rounds of voting before members finally elected him speaker — among the longest in history. More worrisome, he was forced to capitulate to his most far-right faction to win the job by making promises that weakened his power. For example, he changed the House rules to allow just one dissatisfied member to offer a motion to remove him. That means five Republicans, unhappy with the deal McCarthy accepts, may be enough to remove him from office.
If McCarthy is unwilling to put the nation’s interests first, there are two options available to Democrats — both of which will be difficult to pull off. President Biden could try to claim authority under the 14th Amendment to override the debt cap. But no president has ever exercised that power and the courts could block it. Or House Democrats could try to pass a clean debt hike by gaining support from five less-extreme House Republicans. But with the House so bitterly divided, getting any House Republican to break ranks with McCarthy will be hard. Moreover, it’s highly unlikely Senate Republicans would ratify such a bill.
We are in a perilous time and the fate of the economy is in the hands of Kevin McCarthy.
Thomas Kahn is a faculty fellow at American University. He’s the longest serving staff director of the House Budget Committee in history (1997-2016) and was part of the 2011 Biden bipartisan budget and the Super Committee negotiations.