2 Ways This Debt Ceiling Debate Ends

Political battles in Washington sometimes feature the hallmarks of a bad sequel that uses the same narrative threads as its predecessor — just with less verve and imagination.

In 2023, it’s taking the form of another round of drama over the debt ceiling. Congressional Republicans say they won’t back a debt ceiling hike without spending cuts, while President Biden wants Congress to raise the limit with no strings attached to avoid any risk of a shock to the global economy.

This tension isn’t new: Legislative fights over the debt ceiling date back to the 1950s, as both parties have used the issue to make the other side look fiscally irresponsible for backing a higher limit — even though the threshold only affects the government’s ability to pay what it already owes and does not authorize new spending. What is new is the increased political brinkmanship, which in recent years has taken the country to the edge of default multiple times. Most infamously, a divided government only avoided a default with a last-minute deal in 2011, prompting a downgrade to the nation’s credit rating for the first time. Now the clock is ticking on whether 2023’s episode will be worse than 2011’s: The country reached the debt ceiling last month, and the Treasury will only be able to use “extraordinary measures” to pay the bills until early June.

Once again, a Democratic president, a thin Democratic Senate majority and a newly minted Republican House majority must work together to resolve the debt ceiling conflict. But the end result will depend on how the debate plays out in the current political environment, which differs from 2011 in several crucial ways. Firstly, the GOP has a much narrower majority in the House than it did 12 years ago. And it’s also much less united behind Speaker Kevin McCarthy, who had to make concessions to the right flank of his party to win the speakership after 15 rounds of balloting, than it was under then-Speaker John Boehner. 

McCarthy’s narrow majority and limited hold over his caucus could hamper his ability to find a compromise between his party and Biden. But Republicans’ weaker-than-expected midterm showing could also make some in the GOP reticent to engage in an all-out struggle, a departure from 2011 when the Republicans felt they had a mandate from a strong midterm performance to seek a showdown with former President Barack Obama. Given this, here are two different pathways for the latest debt-ceiling clash:

It could be the worst yet

The political environment in Washington, especially the internal workings of the House GOP, could make finding a deal treacherous. Much like in 2011, Republicans are intent on using the debt ceiling as leverage to extract cuts in the name of fiscal restraint, said Laura Blessing, a senior fellow at the Government Affairs Institute at Georgetown University. “But we’ve got a more volatile House of Representatives in terms of difficulty controlling the individual members,” Blessing said. “You have folks who are perfectly willing to march to the beat of their own drum.”

Some House Republicans are opposed to a debt limit hike under any circumstances — and McCarthy only has 222 votes to start with. Even more moderate Republicans have spoken out against the idea of a “clean” debt ceiling hike — saying Biden will need to agree to at least some cuts — but what the 70-odd members of the GOP’s more center-right Main Street Caucus find acceptable may differ significantly from the preferences of the 40-odd members of the far-right House Freedom Caucus. 

As a result, McCarthy is almost certainly going to need some Democratic votes to pass a debt ceiling hike. That’s not a surprise, though, since Democrats control the Senate and the White House, said Frances Lee, a political scientist at Princeton University. “The party with more institutional power traditionally bears more of the burden for carrying debt limit increases,” Lee said. “Republicans will be looking to Democrats to pony up votes on this.” But in terms of pure arithmetic, McCarthy could also be aided by the fact that House Democrats have been more amenable to raising the debt ceiling over the past decade or so, even when former President Donald Trump was in office.

However, what Republicans want and what Democrats might be willing to vote for seem very far apart right now. Republicans have suggested they’d target spending cuts in areas such as aid for low-income families, climate change initiatives and Affordable Care Act subsidies — reductions Democrats are unlikely to support. Now, the parties are only at the opening stages of negotiation, but McCarthy’s willingness to reduce his party’s requests to gain Democratic votes could also result in him losing much-needed GOP support. “What happens when you get Democratic votes? That probably makes it harder to hold on to some of the Republican votes that he still has,” Blessing said. “I think the narrow margins are an indication of how volatile this negotiation is going to be.”

And the rules changes McCarthy agreed to during the speaker race could complicate his flexibility in negotiations. For one thing, it now only takes one member to file a “motion to vacate the chair,” meaning a single unhappy Republican could start the process to bring about a vote to remove McCarthy as speaker. And the rules also require a three-fifths supermajority in the House to raise taxes. In essence, McCarthy has to find just the right balance in a deal while the Sword of Damocles hangs over his head and a political trapdoor lies below his feet.

And we can’t forget about the Senate either. “[Senate Minority Leader Mitch] McConnell is saying, ‘Hey, McCarthy, you take the lead in these negotiations,’” Blessing said. “That makes sense. McCarthy has a harder conference to deal with here.” But while Democrats have control and have recently shown a greater willingness to vote for debt ceiling increases, their narrow majority still has to contend with the filibuster. In most debt ceiling clashes dating back to 2011, the Senate needed to find 60 or more votes at some point in the legislative process. 

And even if Senate Majority Leader Chuck Schumer and McConnell come up with their own deal in the Senate, the House still has to agree to a vote on it. This could certainly happen if the government is on the brink of default, but it may take that sort of risk to produce a vote. “The crisis is not upon us yet. It will come. But Congress has a tendency to push things down to the last minute,” said Lee. “And so I would certainly look for that to be likely in this case.”

It might not be as bad this time around

It’s easy to assume the worst, but Lee cautioned that this debt ceiling clash might not be as intense as the 2011 one, which came on the heels of massive Republican gains in the 2010 midterms. This time, the conflict follows a midterm in which Republicans only barely captured the House and fell short in the Senate. “Republicans don’t have a sense of mandate coming out of those elections,” Lee said. “That’s often very important for how members interpret recent elections, very important for their priorities, and also for what they think they’re expected to do and what they’ll be held accountable for next time.”

On top of this, the risk of shouldering the blame could also make it more likely for the two sides to find an agreement. “That risk helps to bring members to the table, regardless of their ideological preferences,” Lee said. While polling suggests, at first blush, that Americans are not sure or even slightly oppose upping the debt limit, Americans have shown a strong preference for raising the threshold in surveys that have asked if the ceiling should go up if the alternative is default. And with Democrats wanting a clean debt limit increase and Republicans looking for cuts first, the GOP may face more risk of blame. (This is not to say Democrats would avoid blame entirely, and they surely don’t want a fiscal calamity on Biden’s watch ahead of the 2024 election campaign.)

But also working in favor of an agreement is the GOP’s weakened ideological commitment to small government, as it has embraced a populist strain of conservatism more focused on cultural issues. For instance, Trump said recently that any debt ceiling deal should not reduce Social Security or Medicare benefits — a far cry from the entitlement-cutting approach of former Republican Speaker Paul Ryan. “I don’t think the Republican Party is as unified now as it was in 2011 on putting the brakes on spending,” Lee said. “I see this is much more of a problem of them figuring out how they’re going to negotiate rather than the unstoppable force meets the immovable object that we saw in 2011.”

Recent history also points to a less-combative path to a deal. In October 2021, the parties agreed to a short-term debt ceiling increase that set up a December showdown, in which Republicans would try to force Democrats to use the more burdensome budget reconciliation process to get around a GOP filibuster. But that December, the Senate remarkably put together a one-time carveout to the filibuster that allowed an up-or-down vote on the debt ceiling — although the legislation implementing the carveout still required 60 votes (with at least 10 Republicans joining) to break a filibuster. The use of a filibuster exception for the debt ceiling — “historically unusual,” in Blessing’s words — suggests the Senate, at least, could get creative to move a deal forward if the House is struggling.

And while McCarthy will want a deal that gets the cuts the GOP wants, the threat of a debt default could lead him to push forward with a House vote on legislation that won’t get majority support from his caucus. But that wouldn’t be groundbreaking — it’s what Boehner eventually did, Lee noted, as he decided to move “must-pass” legislation to the floor regardless. The last three debt ceiling bills that passed the House during Boehner’s speakership had support from a minority of Republicans. 

For Lee, the intensity of this debt ceiling fight is more a question of “ungovernability” than “showdown” for Republicans. That remains a far cry from 2011 — for now. “I had no idea how that was going to get resolved! I couldn’t even see how it could get resolved, considering the way people had boxed themselves into corners on that,” Lee said of the 2011 clash.

The script for this debt ceiling saga is still in the early stages, so we’re a long way from knowing how it’ll play out. “Right now, everyone’s showing off their fancy steps in this weird little tango that we do,” said Blessing. “This stage will end, and then we will get down to brass tacks at some point.” That end point will probably be right down to the wire, though, even if things aren’t as acrimonious as in 2011. “That’s so normal for Congress to not do a deal before you absolutely have to,” said Lee. “There’s bargaining leverage all the way up until the last minute, in fact. That’s part of what incentivizes the brinkmanship.” 

Let’s just hope this sequel isn’t as bad as, say, the fourth Jaws movie.