The debt ceiling from 20,000 feet
Good morning! It’s Tuesday, February 14, 2023. The 2024 elections are 630 days away.
Happy Valentine’s Day! Before jumping into the newsletter, I want to do something I don’t love having to do: issue an important correction. As many of you pointed out, I meant to write yesterday that a report commissioned by the Trump campaign “found no evidence of widespread fraud” in the 2020 election. My sincere apologies for the original phrasing, which dramatically changed the meaning of the sentence.
Something I do love, though: My attentive readers, several dozen of whom reached out yesterday to flag the typo. I’m grateful to all of you for your close readership of the newsletter and promise to do a better job of catching such errors in the future. Now, onto today’s (hopefully error-free) news!
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Ask Gabe: Won’t the debt ceiling work itself out like always?
Sometimes when covering politics, at least in my less jaded moments, my thoughts wander over to “The West Wing,” the fictional White House drama that ran on NBC in the late 90s and early aughts.
In addition to dramatics like kidnappings and assassination attempts, the more tedious parts of our political process — like the debt ceiling — also existed in the “West Wing” universe, and the borrowing cap was just as vexing to political observers there too.
In one Season 6 episode, (fictional) communications director Toby Ziegler expresses confidence that the debt ceiling will be raised but says the Treasury Department still wants to send a memo to the president explaining what would happen in case of a default.
He casually runs through the potential consequences: “You know, the immediate collapse of the U.S. economy, followed by Japan sinking into the sea, followed by a worldwide depression the likes of which no mortal can imagine. Followed by Week Two.”
“So, this debt ceiling thing is routine, or the end of the world?” his deputy Annabeth Schott asks, confused.
“Both,” Ziegler responds.
There is a lot “The West Wing” gets wrong about American politics, but they hit this one dead-on. Mundane legislative procedure, or a five-alarm fire with the power to melt the world economy? The debt ceiling is simply both, which is what makes it so difficult to cover with the right tone.
But I always like to level-set with all of you, so I will do so here: My expectation, like Frank’s, is that Democrats and Republicans will eventually strike some sort of agreement and avert an unprecedented default on the U.S. debt. But, up until that moment comes, I still think it would be a journalistic disservice to not frequently and fully cover the debt ceiling as a major issue worthy of attention.
Here are a few reasons why:
First, it’s not just hitting the debt ceiling that has major consequences. Getting close is pretty bad too.
In 2011, the most recent time Washington came close to a default, the debt ceiling brinksmanship caused Standard & Poor’s to downgrade the U.S. credit rating for the first time ever, from AAA to AA+.
The threat of a default also led to the most volatile week for the U.S. stock markets since the 2008 financial crisis, and cost taxpayers an estimated $18.9 billion over 10 years, since investors subsequently demanded the government pay higher interest rates on the federal debt.
All of that happened not because the U.S. defaulted, but because it seemed like we might. So even if a deal is eventually struck, just by us creeping up on the Treasury Department’s X-date, the debt ceiling is still able to wreak havoc on the economy.
Second, it is difficult to overstate how far apart the two sides are right now. That doesn’t mean they won’t strike a deal eventually. But consider where we’re starting from: One party refuses to raise the debt ceiling without spending cuts. And the other party refuses to even entertain negotiations.
There seems to be a persistent sense across the political spectrum that some deus ex machina will swoop in to save the day, but, as I’ve reported repeatedly, there doesn’t appear to be an appetite in Washington for any of the possible off-ramps (unilateral executive action, a discharge petition, a bipartisan spending commission). That could change, of course, but I can only report for you on how things stand right now.
It’s important to note, and I think often missed in the coverage, that it isn’t just the Freedom Caucus ruling out a clean debt ceiling increase: Republican moderates are too. Centrist Rep. Don Bacon (R-NE), for example, called a discharge petition “DOA” last week and reiterated the conservative stance that any debt ceiling increase will need to be paired with spending cuts.
The entire GOP is united behind that position — and almost the entire Democratic Party refuses to even consider cutting a single cent. With compromise now a dirty word in Washington, both sides are too scared of their party bases to be seen as backing down; frankly, they’re also scared of their rank-and-file members, unsure they’d have the votes for anything other than a full endorsement of their position.
Again, this is just right now. But it’s a pretty stark way to start out, which is why I think it’s important to prepare you all for how hard and drawn-out this process will be. (Not to mention, if a spending deal is struck, it will also have big implications for the future of our politics and economy, so the dealmaking is worth covering in its own right, even removed from the implications of a default that might never happen.)
Third, all the confidence is only making things worse. In order for the current situation to change and for the two parties to actually conduct real negotiations, there will probably need to be some sort of outside forcing mechanism.
Historically, that’s come from Wall Street — but investors are acting pretty sanguine right now, taking the same position as Frank. Ramesh Ponnuru explains in the Washington Post why that could backfire:
In the past, stock markets have jolted Congress into acting. During the financial crisis of 2008, Congress initially rejected a bailout. Markets plunged, and Congress passed one. Today, though, markets appear to believe a deal will be made. That confidence could prove self-subverting. We might actually have to breach the debt ceiling and go into default for markets to get scared.
I understand where the confidence is coming from. But it might actually be increasing the threat of a default, since lawmakers (unfortunately) need an atmosphere of panic to get to the negotiating table, and we don’t have one right now. That’s another bizarre element of the situation that I think is important to cover up-front and for readers to wrap their heads around.
Fourth, even though it is my personal prediction that a deal will eventually emerge, I could be wrong. I don’t know if you’ve all noticed, but ignoring things because of “how things have always gone” has not been a particularly successful strategy of late.
Yes, in the Clinton and Obama eras (and in “The West Wing”), it was generally a sure bet that an agreement would eventually be reached. But it also used to be a sure bet that reality TV hosts didn’t get elected president! Or that speakers of the House were elected after just one ballot.
I don’t want to exaggerate about the changes to our politics, but suffice it to say that we have ventured fairly far from the Land of How Things Have Always Gone. Recent events — from the 2016 election to the 2021 transition to the 2022 midterms — show us that it has generally not been wise for journalists to just go off a mix of our guts and historical precedent, and not prepare our readers for the full range of possible outcomes.
Here, the speakership vote is instructive. Again, there was a sense in some corners that because the majority party had always united behind a speaker before the balloting, Republicans would too. And then, breaking with precedent, they didn’t. And that led to chaos, and national embarrassment, and eventually policy changes with real-world implications. The debt ceiling endgame could unfurl much the same way.
Finally, I think covering the debt ceiling is important because it tells us something important about our current moment. This conflict and the speaker vote are also connected because the same House Republicans who struggled for five days to pick their own leader are now charged with avoiding the economic catastrophe of a default.
Compromises necessarily mean both sides accepting some amount of failure. But it is hard to imagine 218 House Republicans agreeing to a deal that is anything less than everything they want. Conversely, it is hard to imagine any meaningful (non-defense) spending cuts that could attract widespread Democratic support. (The easy way out, of course, is a commission to study cuts without actually specifying them, but Kevin McCarthy told me himself that was out of the question. For now.)
In a recent Politico podcast interview, McCarthy confidant Ben Howard expressed the same assuredness that others have about the situation. “The debt limit is like kidney stones,” he said. “It’s gonna pass. It’s just a matter of how much pain you have to go through.”
“As someone who’s had kidney stones,” host Ryan Lizza shot back, “I will tell you that sometimes you have to have surgery if it doesn’t pass.”
We have arrived at a moment in politics when neither party seems at all willing to swallow any pain (both politically and fiscally), which I think is notable. The two most recent debt ceiling confrontations — 1995 and 2011 — are now remembered as times of peak partisanship in modern U.S. history, key moments in the path to the two parties growing ever more polarized and landing us where we are now.
No matter if the debt ceiling is raised or not, it appears we may be on the verge of another of those moments of exacerbated division. Both parties cite the lessons of 1995 and 2011 frequently; in both cases, their takeaways have been to grow even more stubborn, to redouble their insistence on always fighting and never backing down.
2023 could also become a signal moment in these partisan mythologies and in the larger story of worsening Washington tribalism, a final reason why it’s worthy of our attention and analysis as it’s unfolding.
So there you have it.
As I hope I’ve proven to you over time, I really try not to be hyperbolic or hysterical in my political coverage. You won’t read in Wake Up To Politics that the world is ending, and I don’t believe that it is now.
But I do believe that the debt ceiling is important to cover — not just because of the devastating consequences of breaching it, but because of the myriad of political and economic implications that come with not breaching it (and that will come with any eventual deal). That’s my 20,000-foot view, and it’s the one that will inform my coverage of the impasse right up until we have a resolution.
More news to know.
Former UN Ambassador Nikki Haley is running for president. Haley made the announcement in a launch video this morning; she will kick off her campaign tomorrow with a rally in South Carolina, where she formerly served as governor. Haley would be the first female and first non-white Republican presidential nominee. “I don’t put up with bullies,” she said in her announcement video. “And when you kick back, it’s hurts them more if you’re wearing heels.”
- I’ll have more analysis of Haley’s announcement ahead of her launch rally tomorrow.
Inflation continued to ease in January for the seventh straight month. According to a Labor Department report out this morning, consumer prices rose 6.4% in January compared to a year ago, slightly less than the 6.5% year-over-year increase in December. Inflation still remains far above the U.S. government’s 2% target.
- “Suspect dead, 3 killed, 5 injured in Michigan State shooting” Detroit Free Press
- “Health concerns grow in East Palestine, Ohio, after train derailment” NPR
- “White House announces interagency team to address ‘unidentified aerial objects’” NBC
- “Pence to fight special counsel subpoena on Trump’s 2020 election denial” Politico
- “Biden terminates Architect of the Capitol over alleged abuse of authority” Axios
- On one hand: “This Congress will be mostly about sound and fury well into the spring and early summer,” Paul Kane writes for the Washington Post, analyzing the “glacial pace” that the House and Senate have been moving at. (Conservatives are “quite pleased about it,” Burgess Everett and Olivia Beavers add for Politico.)
- On the other: Scott Wrong writes for NBC News about one emerging font of substantive policy work: the new House select committee on China. Populated by sober-minded members on both sides, “it could be the one bright spot of bipartisan cooperation” this Congress, he posits. Plus, per Morgan Chalfant of Semafor, the panel’s chair is planning to push beyond the traditional hearing format — and even host a war game.
An important story.
Almost three in five teenage girls felt “persistently sad or hopeless” in 2021, according to CDC findings released on Monday. 57% of the teenage girls surveyed reported feeling persistent sadness (a record since the CDC began keeping such data), compared to 29% of the boys. 24% of teenage girls said they had made a suicide plan in the past year. Read more from CNN.
Number to know.
54% of Americans say members of Congress should remain quiet during the State of the Union even if the president says something they disagree with, per a Politico/Morning Consult poll. 31% said lawmakers should be “vocal” about their disagreement during the speech.
The day ahead.
All times Eastern.
— President Biden will deliver remarks to a meeting of the National Association of Counties, a group composed of county officials from across the country. (Watch at 1:15 p.m.)
He will also receive his daily intelligence briefing in the morning.
— Vice President Harris has nothing on her public schedule except for sitting in on Biden’s intel briefing.
— White House press secretary Karine Jean-Pierre will hold her daily press briefing. (Watch at 2:30 p.m.)
— The House is out for the next two weeks. The chamber will meet for a brief pro forma session today; no business will be conducted. (Watch at 10 a.m.)
— The Senate will vote to confirm two district court nominees and to advance a third. (Watch at 11 a.m.)
Before convening, senators will receive a classified briefing from Biden administration officials on the flying objects recently shot down by the U.S.
— The Senate Judiciary Committee will hold a hearing on online child safety. (Watch at 11 a.m.)
Before I go...
Here are some politically-themed Valentine’s Day fun facts:
- Jimmy Carter, 98, and Rosalynn Carter, 95, claim the record for longest-lasting presidential marriage. They celebrated their 76th wedding anniversary last July, and still text each other “ILYTG” — “I love you the goodest.”
- Speaking of later-in-life love, one prominent House Democrat in his 80s just got engaged this month: former House Majority Leader Steny Hoyer, to political scientist Elaine Kamarck. (Former Sen. Harris Wofford was even older when he tied the knot at 90.)
- Three married couples have served together in Congress: Democrats Andrew Jacobs and Martha Keys in the 1970s, Republicans Bill Paxon and Susan Molinari in the 1990s, and Republicans Mary Bono (widow of Sonny) and Connie Mack in the late 2000s and early 2010s.
- Presidential meet-cute stories: Grace Coolidge first spied Calvin through a window of a boardinghouse, with his face covered in lather as he shaved. Bess Truman was Harry’s elementary school crush. Richard Nixon volunteered to drive his future wife Pat to her dates with other men, determined to win her over.
- Significantly less cute: Warren Harding and his mistress allegedly conceived a child in a White House closet. (A DNA test later confirmed his paternity. Politico Magazine once declared Harding “America’s horniest president.”)
- Two intriguing, short-lived relationships: William Rehnquist once proposed to his law school classmate Sandra Day O’Connor, decades before they would both join the Supreme Court. Transportation Secretary Pete Buttigieg (not yet openly gay) and Rep. Elise Stefanik, now rising stars from opposite parties, were rumored to have gone on a “single, uneventful date” with each other while at Harvard.
- Many presidents left behind extensive love notes, but perhaps none more than Ronald Reagan (there’s a whole book of them!). One year, he wrote his wife Nancy that merely celebrating Valentine’s Day on February 14 was for people “of only ordinary luck”: he, on the other hand, led a “Valentine Life” that would “continue as long as I have you.”
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