What’s the Big Deal?

Photo of President Joe Biden, courtesy of Politico

Around 9pm on Saturday, after President Biden and Speaker McCarthy held a 90 minute telephonic “summit” to break the logjam between Congressional and White House negotiators, they emerged with a tentative budget and debt limit deal. 

The world breathed a sigh of relief.

This was a critical step. It meant both sides believed they had a deal they could take back to their parties and, hopefully, garner enough support—218 votes in the House and 60 in the Senate—to avert a global economic catastrophe. They are now rushing the bill to Congress on Wednesday, giving everyone a promised 72 hours to review it, but importantly also to have time to whip votes for the package of measures. And that time is running out; the Treasury runs out of money on June 5, the so-called X-Date.

So how bad, or good, is this deal? And will it make it through the House and then the Senate? The ink is barely dry on the agreement, but political observers and vote counters already have some initial assessments. Bottom line: Joe Biden did pretty darned good, and Kevin McCarthy has a big hill to climb.

We’ll get to what’s in the deal and why Biden by many accounts came out a winner. But before we do that, we need to take a broader view of what just happened.

Negotiating with hostage takers

Throughout this spring, it had been the White House’s position that it would settle for nothing more than a “clean” debt ceiling bill, one that raised the debt limit to pay the bill for things we’ve already spent money on. The bill should arrive without condition, Biden demanded, just as the parties have always done regardless of who was in the White House. 

At the same time, Biden had put out his budget, which called for many things the Democrats want, including higher taxes on the wealthy to pay for social programs. 

From the Republicans, no counteroffer came for months and months. Biden wasn’t going to negotiate against himself, however, so he did the right thing and said, “Come to me when you have a real proposal.”

To everyone’s surprise, perhaps even Kevin McCarthy’s, the Republicans finally were able to come to agreement on a bill that slashed non-military, discretionary spending by some 18 percent across the board and threatened programs for veterans, the elderly, the disabled, and the poor. There were a handful of defectors from the far-right, but in perfect GOP form, Rep. George Santos (R-NY) cast the decisive vote for the bill.

Democrats in the Senate, led by Sen. Chuck Schumer (D-NY), declared the bill a non-starter, labeling it the “Default On America” (DOA) Act. Right wing extremists in the GOP dug in, threatening to crash the economy by blocking a debt ceiling raise if the bill did not advance.

The first thing Joe Biden did was meet with Congressional leaders, including Speaker McCarthy and Senate Minority Leader Mitch McConnell. As a first order of business, he got everyone to agree that a default was not going to happen, that it was off the table. This point often gets overlooked, but it is a significant one: The negotiator for the hostage takers (Kevin McCarthy) agreed that he would never detonate the bomb in the bank vault.

If this were a movie, that’s the moment when the chief detective gets the other guy to put down his weapon and walk across police lines to talk. It was a pivotal moment.

Getting them to do what they were always going to do

Biden has seen more budget deals and negotiations than nearly anyone alive. He has led them before, and he has made mistakes. But one thing was always clear in his head: They would have to be at the same table, talking about the budget, in a few months anyway. So if McCarthy wanted to talk about the budget now, with his weapon down, that made a lot of sense.

Imagine it is November or December of 2023, and the parties are at a budget stalemate. Democrats want increased taxes on the wealthy, but that is never going to happen in a House controlled by the GOP. Republicans want to slash social programs deeply, but that is never going to fly in the Senate. 

Where would the parties likely wind up?

One obvious place is pretty much right where they are, preserving the status quo. This compromise could come in the form of a spending cap, meaning for some period of time, Congress would agree not to increase the budgets on most programs, except for normal indexing of benefits under Social Security or Medicare. 

Then, because no one wants to be deemed anti-military or veteran, those departments get exempted from the caps.

Finally, there likely would be some face-saving giveaways to the extremists and the obstructionists to make them back down and not tank the deal—or in McCarthy’s case, not call for his head.

What if Biden could simply take all that and make it happen a bit earlier than usual, while defusing the bomb that the GOP extremists were still holding? That would be a super result, right?

The Big Deal

Now let’s look at the tentative deal that the sides are taking back to their parties.

• It raises the debt ceiling for two years—pushing the issue past the next presidential election.

• It freezes discretionary spending in the budget for a period of two years—a lot less than the 10 that the GOP had come in demanding. That two years overlaps more or less with what the GOP would be able to freeze on its own simply by continuing to hold the House majority.

• It exempts defense spending from the freeze and protects veterans’ medical care. No surprise there.

• It claws back unspent Covid-19 relief funds, but maintains Biden’s student loan debt relief program. The latter is a win for Democrats, but the Supreme Court might screw with it this term.

• It cancels the 2023 agent staffing funding requests of the IRS, which is a portion of the $80 billion in new IRS funding from the Inflation Reduction Act. Most of that $80 billion supports operations, customer service and taxpayer assistance, which wouldn’t be canceled. The details and bottom line amount is unclear—some have put it around $10 billion—but it doesn’t seem like this would be a death blow to the program by any means.

• It expands the age limit for existing 20-hour/week work requirements for adults receiving food stamps from age 49 to 54–so long as they are childless, able-bodied adults. But it also expands exemptions for veterans, the unhoused, and certain others on SNAP. All the changes sunset in 2030.

It’s hard not to look at the above and wonder, “Why did the GOP just drag us through all this drama and chaos?” After all, what the country wound up with is something very close to a budget deal that would be part of a standard continuing resolution, or CR, hashed out this fall. The GOP threw a tantrum and threatened Armageddon, but it got milk toast.

Seriously, this is not mind blowing stuff. It’s rather mundane and within expectation, given that the House is controlled narrowly by the Republicans and the Senate narrowly by the Democrats. In such a situation, the ball rarely moves much. And it barely moved here.

Getting it passed

There is widespread belief that the GOP will hate this compromise. After all, it contains none of the draconian cuts that the DOA bill contained. It raises the debt ceiling for two years, taking it off the table next year as a possible weapon. And it isn’t cruel to lots of poor people, the disabled or the elderly, and so it won’t make the libs cry. 

In a twist of irony, McCarthy now almost certainly is banking on enough Democrats in the House coming on board to save the bill and keep America from defaulting. 

Some Democrats will have to hold their noses and vote for this, especially because it caps spending in ways that they don’t like, and it makes it harder for certain people to qualify for food stamps. But the truth is, they would have had to face this nose-holding moment later in the year, almost as a given. Here, they have the added political cover of doing the right and necessary thing by the economy and the world, even while so much of the GOP caucus screams and obstructs and would rather see it all burn.

From where I sit, the chance of passage in the House and Senate is decent. Democrats are more realistic than their Republican counterparts, and they are the adults in the room. They already knew that spending freezes were likely, and this bill is far better than many worst-case scenarios (such as increasing the work requirements to 30 hours a week for everyone, or slashing veterans’ benefits). They can even claim a small victory with expansion of SNAP benefits for certain vulnerable communities.

The real question is whether McCarthy will lose so much of his caucus that his speakership goes the way of other Republican leaders, like John Boehner, who have had to rely on Democrats to get a budget bill passed. McCarthy is looking very vulnerable right now, and we’ll have to see just how angry and loud the GOP gets over this bill.

The fact that some of the “Freedom” Caucus are already infuriated is a very good sign that Biden did a great job under the circumstances. If we can put the debt ceiling threat behind us, that will force the GOP back to its standard, more contained pattern of investigating Hunter Biden and playing the victims of government overreach and witch-hunts.

You know, normal crazy GOP kind of stuff. The kind that doesn’t have a bomb attached to it.