With less than two weeks until the United States government essentially runs out of money to pay its bills, a new ABC/WaPo poll finds President Joe Biden with a dismal 36% approval rating, and trailing former President Donald Trump by 6 points in the 2024 race for the White House.
For months, House Speaker Kevin McCarthy and his GOP allies have demanded spending cuts in exchange for voting to raise the federal debt ceiling. Biden and congressional Democrats have refused to acquiesce, citing the bipartisan tradition of lifting the country’s borrowing limit without preconditions.
To be sure, Biden’s argument prevails in a vacuum: both parties accrue debt, and thus are equally responsible for ensuring the full faith and credit of the U.S. government. It is regrettable – and dangerous – that House Republicans are using the debt ceiling as a political football, and there is merit to Biden’s claim that McCarthy is “holding the economy hostage.”
That being said, with just days until default, it is simply not feasible for Biden – whose approval rating hit a record-low just after he announced his reelection campaign – to continue digging his heels in. Not only is striking a deal to reduce spending good politics, as most voters actually support many of the House GOP’s proposals; it also makes practical sense, given how high both inflation and interest rates currently are, and the fact that the U.S. is over $31 trillion in debt.
This showdown comes at a time when half (48%) of the country has “almost no confidence” in Biden on the economy, per a Gallup survey, and the majority (60%) also believe the federal government spends too much money, according to AP-NORC polling.
Accordingly, the electorate supports several of the budget cuts Republicans have proposed, as well as McCarthy’s plan to roll these policies into one bill in exchange for raising the debt limit, per the April 2023 Harvard CAPS Harris poll. In addition, nearly two-thirds (64%) of registered voters believe Republicans should hold out until Democrats agree to spending restraints.
Evidently, Biden recognizes that he doesn’t have the upper hand in this fight. This week, he designated top aides to negotiate with their GOP counterparts while he attends the G-7 Summit in Japan, which he will return from prematurely to continue talks. This is a step in the right direction, though there is still much to be done before the June 1 deadline.
Biden is no stranger to debt ceiling deal making. In 2011, then-Vice President Biden played an active role in negotiating $2.4 trillion in spending cuts with Tea Party House Republicans in exchange for raising the country’s borrowing limit. In 1995, then-Senator Biden advocated for a deal that would lift the debt ceiling and restrain federal spending, while still protecting vital social programs. Biden will need to strike a similar compromise in the next two weeks, despite facing pressure from the progressive left to reject all of the House GOP’s proposals.
Biden has already indicated an openness toward rescinding billions of dollars in unspent pandemic relief funds, which most registered voters (65%) support, per the aforementioned Harvard CAPS Harris poll. Additional GOP proposals that also have majority support are strengthening certain work requirements for recipients of some federal assistance programs (62%) and freezing U.S. government spending at last year’s level (61%).
Most importantly, Biden must come out in support of capping federal spending – which is the big-ticket item in the House GOP proposal – and back away from his initial plan to increase discretionary spending by nearly 10% in 2024.
Work requirements will likely prove to be the most difficult piece of the deal for Biden to hammer out, which McCarthy has indicated are a ‘must’ for any deal, though progressives have deemed “entirely unreasonable.” On Wednesday, Biden took the smart approach by leaving the door open to expanding requirements, with the exception of those programs related to health care, i.e., Medicaid.
These House GOP proposals are not unprecedented, nor as draconian as some on the left have suggested. When I advised former President Bill Clinton, we worked with Republicans in Congress to pass bipartisan welfare reform that required recipients to begin working after two years of receiving benefits, among other measures. We also reduced government spending, decreased the debt and deficit, and achieved a balanced budget. Clinton left office with an approval rating of 65%, per Gallup, higher than that of every other departing president since Harry Truman.
Beyond the politics of the debt ceiling debate, it is self-evident that a default would be completely catastrophic for the U.S. and world economy. If a deal isn’t reached in time, the consequences could include a worldwide recession, frozen credit markets, tanking stock markets, and massive layoffs, according to an October 2021 report from the White House Council of Economic Advisors.
In 2011, when House Republicans pulled a similar maneuver, a prolonged impasse over raising the debt limit led to the first ever credit rating downgrade for the U.S. government, even though an agreement was ultimately reached at the eleventh hour.
The current stalemate is already producing real economic consequences: according to Bloomberg, the cost of insuring against a U.S. default is now higher than in emerging markets, such as Brazil and Mexico.
Clearly, there are no winners in this debt ceiling deadlock – not Democrats, not Republicans and certainly not Americans. But if a deal isn’t reached in time, even if McCarthy and his GOP allies are to blame, President Biden will be the biggest loser.
Douglas Schoen is a longtime Democratic political consultant.