Debt Ceiling: Is There Anyone in Washington Who Can Prevent America From Hurtling off a Financial Cliff?


While the main action will be on the House side, the Senate will also have a role to play, and here, Manchin, the iconoclastic West Virginia Democrat, has been eager to volunteer for duty. The White House’s position, at least publicly, is that it won’t negotiate over the debt ceiling, seemingly to try to force Republicans to specify what programs they’d cut and own responsibility for the crisis. Manchin, however, has said Social Security and Medicare cuts are off the table, but that wider negotiations are essential. “Yeah, it’s not helpful,” a Biden ally says. “But it’s not as unhelpful as Manchin could be.” Indeed, one idea Manchin has suggested to bolster the finances of the Social Security system—making wealthy people pay more taxes—is downright progressive, and almost certainly a political nonstarter. A second Manchin proposal, though, is likely to gain more traction: establishing a Congressional commission to study future budget cuts in exchange for raising the debt ceiling now. If that sounds familiar, it’s because President Barack Obama put together a similar fiscal commission in 2010. It didn’t work.

Such a low-impact ending seems like wishful thinking. “Having to negotiate with Congress on the debt limit is going to be the biggest pain point this year,” the Biden adviser says. “There’s no way a clean debt limit is going to pass. So what cuts can pass the House and the Senate that the White House will sign?”

Those specifics are in the distance, but the messaging campaign to fix blame is underway and accelerating. Elizabeth Warren, the Massachusetts Democratic senator, has pointed out that Trump and Republicans who now claim to care about deficits instead made them worse by passing massive tax cuts. “They want to cut your Social Security and Medicare. They’re actually threatening to have us default on the American debt,” Biden said during a Thursday-afternoon speech in Virginia. “I will not let anyone use the full faith and credit of the United States as a bargaining chip.” The administration is also signaling that in the coming months it will try to pressure the 18 House Republicans who hold seats in districts where Biden beat Trump in 2020. “McCarthy has a group of members who are facing highly competitive reelections. Those are the seats we’re targeting as our best path back to the majority,” Pennsylvania Democratic congressman Brendan Boyle tells me. “It’s very clear that it’s the Republicans—specifically House Republicans, not Senate Republicans, not Mitch McConnell—the extreme House Republicans who are taking raising the debt ceiling hostage in order to try to get cuts, including cuts to Social Security and Medicare.”

Boyle has, for four years, been trying to pass a bill that would largely shift responsibility for raising the debt ceiling from Congress to the president. Under the current setup, Yellen is stuck using “extraordinary measures” to dodge default, temporarily. The best guesses say she’ll run out of options in June or early July. The damage, however, could start sooner. In 2011, during a similarly fraught impasse, the financial markets started plunging roughly two weeks prior to the debt-ceiling drop-dead date, with the S&P 500 sliding 15%.

In 2011 Republicans agreed to a deal two days before the estimated date for a US default. This time the abyss may get even closer. “Anyone who tells you they know what the off-ramp here looks like,” a senior Democratic congressional aide says, “is bluffing, to use the nicest word for it.” 

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