Who won the debt ceiling negotiations?
2023-06-02 00:27:17
Every Friday, Guardian columnist and former Washington correspondent, Jonathan Freedland, invites experts to help analyse the latest in American politics. From politicians to journalists covering the White House and beyond, Jonathan and his guests give listeners behind the scenes access to how the American political machine works.
This is The Guardian.
After a stalemate that lasted for months, intense negotiations between Republicans and the White House last weekend, House Speaker Kevin McCarthy and President Joe Biden made a breakthrough.
The White House and Republican leadership have reached an agreement to raise the country's debt ceiling.
The deal, with concessions from both sides, was then sent to Congress for a vote. Where, despite the best efforts of some Republican hardliners, it got the numbers needed to pass.
Yeas are 314, the Nays are 117.
The bill is passed.
The bill now heads to the Senate for another round of negotiations and a potential vote ahead of Monday's June 5th deadline. But a single rogue senator could hold it all up. So what's likely to happen? Can the U.S. avoid economic disaster? Are Joe Biden and Kevin McCarthy right to see this as a win, or has each failed by giving into the demands of the other?
I'm Jonathan Friedland, columnist at The Guardian, and this is Politics Weekly America.
So the atmosphere on Capitol Hill has actually been pretty tense, and I mostly cover the house side.
So, Mariana Sotomayor is a congressional reporter covering the House of Representatives for the Washington Post. Notebook in hand, she's been walking the corridors of Congress and has been able to get the reaction of those emerging from behind closed doors negotiations.
They've been very cognizant that this would be an extremely difficult vote. They've known for a long time that it was likely going to have to be a bipartisan vote. Because of the far right flank would not like whatever was produced. And the closer that we were getting to the X date. You really did get a sense from a number of Republican negotiators. People who were in the room, people who kind of knew roughly what was going on. There was a sense of concern that maybe they wouldn't be able to pull this off. Now we know that the House was able to pass a bipartisan bill over to the Senate side in the hopes that it becomes law.
A lot of the talk around this subject can get pretty technical. There are some terms there that may not be that familiar. Let's start with the one at the core of all this the debt ceiling. Just explain in layperson's terms, what is the debt ceiling?
Yeah, here in the United States, we have something called the debt ceiling, and essentially, Congress and the White House must set that level. It's usually pretty simple, typically bipartisan, without any circumstance of negotiations. That number is raised because, of course, America has debts, it owes a number of debts that it has to pay back.
And over time, that's accumulated. Once you hit that ceiling, that magic monetary number, it just has to go up so that we as an economy can just continue to pay off our debts.
Yeah, and it's important because it's not new spending, it's not a bill proposing let's spend x billions on defense next year. It's actually the debts that are already incurred, money that the United States has already spent and that it owes to people. Those who have lent the United States money, presumably the bond markets and so on, and it's they who they owe the money to.
And it's essentially saying, we will be good for our debts, we won't default, we'll pay the money we owe. Is that roughly right?
Yeah, the money is owed to. As you said, there are bonds out there, a lot of foreign countries, right? Because we do a lot of business with them. For example, if we were to default, which hasn't happened in modern American history, that would be catastrophic.
Our economy would fall into a significant recession, it would devastate retirement accounts, increase borrowing costs. According to Moody's, nearly 8 million Americans would lose their jobs.
This is the money that we use to pay Social Security and Medicaid, Medicare. Like you mentioned, these are previously approved spending in the U.S that, you know, both President Biden is to blame for that, his administration, but also President Trump's. So this is a bipartisan spending that has been incurred over time. It is up to the Treasury Department.
We all knew going into this year that we could potentially default and we would reference this Mystery day as an X date because of tax season, which is in April. We knew that it wouldn't be at the beginning of the year. Because Treasury would be able to look at all of the taxes that are being paid by a certain date. And say, OK, we have this much money that has come in, we can only pay off our debts for a certain amount of time. Of course, after a great tax filing season, that's when we first heard the Treasury Secretary, Janet Yellen project, as early as June. And that really did start putting the pressure on members of Congress, of course, the White House, to come together and negotiate.
Because there were those questions of when that X date was. It actually fomented a lot of mistrust among the more far right flank of the Republican Party, who at this point, don't trust anything. Already. What the federal government might say. So that really did create, frankly, more problems for Speaker Kevin McCarthy when he was trying to corral all of these votes.
Once the date was there, circled on the calendar. These talks have been going on and they've been very much reported as if it is negotiations between two sides about a budget. In a way, like in the normal way, you'd be planning future spending. Of course, as you've been saying, and as we've been saying, it's very different from that. It's actually about money that's already gone out the door and whether or not you're going to pay it back to the people who lent it to you. And for that reason, some people have thought this shouldn't really be framed as negotiations. And I just want to read to you something written by the commentator with Mother Jones magazine, David Corn, who wrote Imagine I come home and find a crazy man in my house.
He's holding a full gas can and a lit match and says, If you don't sign over the deed to your house, I will burn this place down. And of course, he would refuse. And you'd enter into a standoff for days, and people would gather around, and eventually the media and the police, they would show up. But then you would imagine that if the media were reporting that situation the way they've been reporting this, they would put a headline out saying two local residents caught in fierce negotiations. If their talks don't succeed, a house will go up in flames. Meaning, says David Corn, you're writing this as if both sides are equally responsible, and it's a negotiation. When? Instead, it's a kind of hostage crisis, with one side very clearly holding the other hostage and therefore to blame.
How do you see it?
You know, talking to both Democratic lawmakers and Republican lawmakers, I think each of them have claimed that the other party is taking someone hostage. So I have heard that word a lot in the last couple of weeks. I mean, it is a very different situation. In the sense that you do have a Republican majority, and the reason why I say that is because the Republican majority under a Democratic president, so you have a divided government.
So they have really tried to look at different opportunities where they could possibly negotiate with the White House, with Democrats. And this was the first one and the most consequential one. Democrats, of course, when they had control of Congress under President Trump, we didn't see them use the debt ceiling as the same kind of leverage. And I said, I remember to Senator Schumer and to Nancy Pelosi, would anybody ever use that to negotiate with?
They said, Absolutely not.
That's a sacred element of our country. So they, of course, have been pointing out exactly what you read from that article that in the past. Historically, debt ceiling is just not used as a negotiation tactic. Because everyone knows just how serious it is. If we could default, we've never lived it, so we can only imagine just how bad that would be.
And partly for these reasons. Joe Biden originally said, Look, he's just not going to negotiate that way, and certainly not going to negotiate what the Republicans wanted, which was cuts in spending. But he did. In the end, why did he shift, do you think?
Well, there's a lot of theories out there. And there is no group more upset by this than House Democrats, who. Some have privately, some have even publicly admitted that the White House just did not do a good job holding their ground. But at the end of the day, you listen to both parties. They acknowledge that, as much as you may, try to avoid a negotiation, or at least set the parameters for one. You're still getting closer to that X date, right? So you have to, at some point, find a way to lift the debt ceiling. And I will say that something that Biden pointed out early on this year was, you know, I have to produce my budget.
If Republicans want to talk spending, let's save it for budget negotiations, which tend to happen later in the year.
I told congressional leaders that I'm prepared to begin a separate discussion about my budget and spending priorities, but not under the threat of default.
There was an impasse of sorts because I think Biden and McCarthy were able to have a pretty respectful relationship, at least on the phone, behind closed doors. There's public statements out there where they're trading barbs. That really did help instruct the negotiators in the room to finally kind of put politics aside. Because, of course, there's always going to be flanks of the Democratic and Republican Party who will not be happy, but they were able to find a compromise.
And this is classic Biden territory, isn't it? Joe Biden offered himself back in 2020 as this seasoned operator who'd been half a century on Capitol Hill. As a longtime member of the Senate, he knew about brokering bipartisan compromise and the mechanics, the operations of Congress. That was his sort of USP as a presidential candidate.
And this is exactly this is sort of meat and drink. To him to thrash out a deal like this behind closed doors, he's done it. Let's dive into some of the substance because in the end, it was like a massive budget negotiation. There are some new restrictions.
I.R.S money will get reallocated, some of those Covid relief funds will get clawed back. We also, as we've been going through this 99 page text, found that there was surprise approval for a natural gas pipeline that Senator Joe Manchin, from West Virginia, had been pushing for.
An expansion of the demands on recipients of SNAP benefits to work SNAP Benefits. Being of a kind of food program, supplemental nutrition assistance program that can be used like cash to purchase food, this is a benefit for the poor. Now there are restrictions, more requirements for recipients to work. Democrats obviously don't like that.
Just talk us through who got, who won, who lost, what Republicans are annoyed about, what Democrats are annoyed about in this huge sort of cluster negotiation that Biden, Joe Biden and Kevin McCarthy pulled up.
Yes, you know the question of who won, who lost. If you ask Republicans who like this bill, they will say that they won. Democrats who like this bill, they'll say they won. Republicans who hate this bill will say this is the worst thing ever, same thing with Democrats.
So, honestly, even asking some of these people who won has been pretty difficult to figure out. It really is a compromise at face value. And Democrats, of course, wishing that a number of these social welfare programs were not cut into. However, they are happy that the White House was able to make sure that nothing that they passed in the last couple of years, these big social programs that they funded, none of that was cut into, none of that was cut into.
So Democrats were relieved by that it actually ended up happening on snap that because of the tweaks that were made on the age requirements, which Democrats were very worried about. It actually will help get more people on that program. Now. On the Republican side, of course, many people, and even Speaker Kevin McCarthy and some of these negotiators, will say it doesn't cut enough spending. Someone who many people, I'm sure, have not heard of before, who actually won something, and for a reason, is Congressman Thomas Massey. He's a Republican.
He sits on the rules committee, which is the last committee any bill can go through before it's voted on the floor. And McCarthy was cognizant enough to know that. Because there are a number of Freedom Caucus more far right Republicans sitting on this extremely important committee, they could block this bill from even getting onto the floor.
The Republican conference right now has been torn asunder and we are working hard to try to put it back together again this weekend. By making sure that this bill gets stopped.
So what does he do? he appeases. One of them, that didn't really make a big deal during the speakership fight, is very vocal, but not necessarily ready to burn the place down. He gave him exactly what he wanted so that he could vote alongside other Republicans to make sure that the bill could get onto the floor. And that passing it was still on track.
So it's passed through the house now 314 to 117.
It means more House Democrats voted for the bill than did House Republicans. Given that who looks stronger afterwards is it Joe Biden? Because he was able to keep his party with him.
Or does Kevin McCarthy look good because he managed to extract? squeeze these concessions out of the White House? And there is this across the board, big cuts to spending, which is, after all, a Republican staple demand.
I think in this day of political partisanship, where votes, especially in the majority, a lot of things that are put on the floor typically passes with a significant. Almost all members of the majority party. Because we didn't see that happen yesterday and more Democrats ended up voting this bill through than Republicans. It was a little embarrassing and I had talked to a number of leadership sources on the staffing side and they were saying that. There was a rule vote earlier in the day where Republicans just did not have enough votes to overcome this procedural hurdle, that would again just finalize debate ahead of a final passage vote. And because of that, Democratic leaders were preparing without McCarthy even asking necessarily for their help. They just knew that the votes weren't gonna be there because Republicans have this far right flank.
And many of them are just staunchly opposed to anything that is bipartisan, staunchly opposed to anything that needs democratic votes. So the moment that more Democrats were voting for this than Republicans, my goodness, Speaker Kevin McCarthy's face was just serious. A number of his leadership team was also just watching those vote tallies with such intensity, and, to his credit, McCarthy. When he was asked later about this, he bluntly said repeatedly, Look, could I have done better in getting support? Yes, I could have.
But this is a lesson for next time, because there are going to be other difficult votes that will likely need bipartisan support because of Republicans razor thin majority.
Yeah, I mean, you could. People will remember. We covered it on this podcast, how narrowly he became speaker round after round. I think it went to 15 rounds of voting before he even became speaker, and now he's. There's proof there that he cannot get through his program without Democratic support. I mean, this is an extreme case. But one does wonder if his speakership is sort of weakened, if not hanging by a rather thin thread after this. And it's because of the group you've been mentioning, that group of right wing members of Congress who in some ways, don't really even accept the sort of basics. Which is that there is. The government has to do things and has to spend serious money to do them.
I mean, do you think this is the harbinger of more trouble to come for Kevin McCarthy?
It definitely is, and the reason why is because we saw a change in tone. Of course, there are a number of Republicans who didn't even vote for McCarthy to become speaker. Republicans, Republican leaders were cognizant that they were just not gonna win over. Those people who you rightly describe just are never going to deliver the vote.
But then you have scores of other Republicans who McCarthy has reached out to. Has incorporated in a number of discussions, especially in these negotiations, and has kept them at least alert of what was happening. And those people who have been not right next to McCarthy's corner, but very, very close and has helped keep others in the far right at bay. It really was the first time where we saw them passionately say that there will be a reckoning if this bill passes and becomes law.
Kevin McCarthy has the obligation now to come forward and explain how he is going to do better than this bill, how he is going to improve on the situation. We have 12 appropriations bills coming up in the next three months, we can get through those appropriations bills and recover some of this money. But he's got to make sure that he does that, and I think that....
Whether a motion to vacate happens, and that, of course, is. One. Republican can just say I don't have trust in McCarthy and it will trigger a floor vote to oust him. There is more chatter among these Republicans that that should be an option, that McCarthy has lost a lot of trust. Whether that happens remains to be seen, only because House Republicans have left for the weekend. Maybe they take a breather and come back and don't necessarily pull that trigger.
But this is definitely strike one out of three for many of these Republicans, which is not good for McCarthy.
As you and I speak, Mariana, it's not law yet, it still has to pass in the Senate. There's talk that it could come very soon. Perhaps by the time people have heard this, it may have passed through the Senate if it is rushed through there.
But just alert us to that. Are there any obstacles it has to still overcome? There any senators who could throw a spanner into these very delicate works?
Yes, so there are several Republican senators who are saying that they will not stop the clock, of course, over on the Senate side, it takes a long time to actually get to final passage just because of parliamentary procedural rules. They won't stop the clock if their amendments get a floor vote, so what has to happen is it's likely there's going to be a number of more votes on those amendments.
Senator Tim Kaine, who is also very upset with that new pipeline provision, has an amendment that would essentially strip that out of the bill. So, both Senate Majority Leader Chuck Schumer, on the Democratic side, and the Senate Minority leader Mitch McConnell, on the Republican side. They have to appease these demands to make sure they can quickly consider the bill. But, of course, they also have to make sure that there is not enough support within both parties. To make sure that these provisions don't actually get in there and kind of screw up the entire process.
If all goes to plan, this won't be an issue again, at least until January 2025. Very deliberately, after the next presidential election, do you expect that come that moment where perhaps a new president will be sitting in the White House? We are going to be back to the same thing all over again, and there will be more negotiations. A standoff over the debt ceiling every bit as tense as this one.
It's quite possible, of course. We can't predict who the president will be, but whether it's a Republican or Democrat. And let's say Congress is all Democrat or all Republican, you could have divided government again. That already incentivizes some kind of negotiations, depending on who the president is, too, whether it's a Republican or Democrat. That's going to add an extra level of dynamic here. And while. I think both parties are actually breathing a sigh of relief that they don't have to do this again during an election year. Because that could be.
There's not even words to describe just how much more difficult that would be. Because people would be feeling even more incentivized out of political purposes to get what they want. It's also not great that after an election, possibly when you have a new president coming in and definitely new leaders over on the congressional side, things could get difficult, tricky. I'm hoping that's not the case, however.
MARIANA Always on the podcast, we do like to ask our guests a what else? question, something completely different. And perhaps it won't surprise you that we are talking, not for the first time, about Donald Trump. On Wednesday, word came that he had been caught out once again on tape, being recorded, saying something that could make his life a little bit more difficult.
CNN is reporting. Prosecutors have obtained an audio recording of a summer 2021 meeting in which former president Donald Trump acknowledges that he held onto a classified Pentagon document about a potential attack on Iran.
Apparently, the tape even has a rustling sound, as if he is flapping the paper in the air as he talks now. CNN, who broke this story, haven't actually heard the recording, but sources there suggest that the conversation proves that Donald Trump knew that the document he had held onto was classified, and that really contradicts his claim. His defense in this whole case, so far, that he only held onto declassified material. Now, we have come to the conclusion that there's almost nothing that can hurt Donald Trump. No amount of jeopardy seems to dent his numbers, if anything, sometimes improves them.
But this could spell some more legal trouble for him.
Absolutely, it definitely can, and you know the fact that this recording isn't out there, we don't actually hear him. I'm sure Trump will capitalize on that, say it's fake news. But it is pretty significant in the sense that because it's out there that he is talking about having this classified document, kind of teasing it and saying, Oh, you know, I could release it. It has all this information about Iran.
But, you know, it's likely, I probably shouldn't. That shows a little bit of he understands the ramifications, a little bit of intent there from him, that he knows he has something that he shouldn't. And that, at the end of the day, is what makes this case very different from we've seen past. Presidents all have willingly given back these documents once they were alerted by the government that they would like these classified documents back. The difference here is, of course, again Trump. And denying it multiple times, to the point where the FBI had to go raid his home to get them back.
This audio could prove crucial in this investigation because it does show he understands that he should not be in possession of this.
Mariana Sotomayor, congressional reporter for The Washington Post Thanks so much for talking to me for Politics Weekly America.
Of course, happy to join you all.
And that is all from me for this week. Before I go, can I suggest you listen to this week's episode of our sister podcast, Politics Weekly UK. My colleague Gabby Hinsliff is joined by the former Downing Street Chief of Staff Gavin Barwell and a former Crown chief, prosecutor, Nazir Afzal. To discuss the ongoing battle between the Covid inquiry and the Cabinet office. The episode is a good reminder as to why the inquiry should be learning lessons about the terrible losses endured by people around the country during the pandemic. Rather than having to extract WhatsApp messages exchanged between ministers. So search for that wherever you get your podcasts.
But for now, it's goodbye. The producer is Danielle Stevens, the executive producer, Maz Ebtehaj. I'm Jonathan Friedland. Thanks as always for listening.
This is The Guardian.
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