Sen. Mitch McConnell had a message for Americans increasingly worried that the economy will collapse if the federal debt ceiling is not raised: Just keep calm.
“Look, I think everybody needs a break,” Mr. McConnell, the Kentucky Republican and minority leader with deep experience in the debt-limit showdown, told reporters at home earlier this week. “Regardless of what may be said about the conversations on a day-to-day basis, the president and the speaker will reach an agreement. It will eventually pass on bipartisan votes in both the House and Senate. The earth will not be fulfilled.”
This may be a case that is easier said than done. While Mr. McConnell, President Biden and spokesman Kevin McCarthy have repeatedly assured the American people that there will be no default, that assurance looks a little more uncertain with just over a week to go until the US Treasury release. it is assumed that the money will run out pay their obligations.
Even if negotiators agree on a deal soon — an outcome that seemed within reach but still did not materialize when talks resumed Friday — much still needs to be done, not least of which is getting approval in the House and Senate. That outcome is far from certain given the growing unrest — and some outright opposition — on both the right and the left. At this point, no one can be absolutely sure that the United States won’t topple over the initial cliff, even if none of those involved wants it to. Time is short.
“Nobody can guarantee that there won’t be a failure, if for no other reason than the clock is ticking pretty fast here,” said G. William Hoagland, a longtime Republican budget guru on Capitol Hill who is now a senior vice president. at the Bipartisan Policy Center. “We’re on thin ice in a big way.
Negotiators breathed a sigh of relief on Friday afternoon when the finance minister announced that the initial deadline had been pushed back four days to June 5. But Congress will still be hard-pressed to act until then, and a short extension could even be counterproductive and some of the urgency to make a deal.
“We are at the limit of being able to do this, and we have to come up with some really tough terms in these closing hours,” said Representative Patrick T. McHenry, Republican of North Carolina and Mr. McCarthy’s chief negotiator. “We’re going back to the bottom line and it’s not resolved.”
Since the impasse began, Mr. Biden and congressional leaders have tried to play down fears that a failure would occur, essentially saying it was unthinkable because Congress had narrowly avoided failure before. After one of the high-level meetings at the White House, Sen. Chuck Schumer, the New York Democrat and majority leader, cheered that all four leaders said bankruptcy was off the table.
Part of their motivation for offering these constant assurances was to bolster their own strength, reassure the public, and prevent financial markets from falling during the talks.
But President Biden changed his tune slightly during his visit to Japan last weekend, saying for the first time that if Republicans insist on pushing the issue, there might be a default after all.
“I can’t guarantee that they wouldn’t force a default by doing something outrageous,” Mr. Biden told reporters. “I can’t guarantee that.
Representative Hakeem Jeffries, Democrat of New York and Minority Leader, expressed a similar sentiment when asked this week if he could still be confident the government was in default.
“Not with this group,” he said, referring to Republicans, some of whom he says wouldn’t mind the financial chaos of a default if they thought it might help them politically in 2024.
Mr. McCarthy, the House leader and California Republican, has also repeatedly said there will be no default and stressed on Friday that he believed the outcome would be positive.
“I’m totally optimistic,” he told reporters as talks continued without an apparent breakthrough.
One way to avoid a default, Mr. McCarthy said, is for the Senate to approve and the president to sign a measure that Republicans have passed in the House to raise the debt limit while making steep budget cuts and rolling back other initiatives of the Biden administration. But that probably won’t happen, even if the treasury runs out of money. Mr McCarthy also ruled out an emergency short-term suspension of the debt ceiling.
Even a deal between House Republicans and Mr. Biden would not end the drama; in some ways, this would be just the beginning.
House Republicans have a 72-hour rule for the time between when legislation is released and when it is up for a vote, a timeline that pushes the showdown ever closer to the Treasury Department’s June deadline.
Moreover, with hard-right elements of the Republican conference joining progressive Democrats in voicing their reservations that a deal is looming, Mr. McCarthy and Mr. Jeffries may have to thread the needle to get the necessary bipartisan votes to approve the deal. .
Mr. McCarthy and his leadership team will have to make an extremely accurate assessment of the number of Republicans committed to voting for any final budget deal with an attached increase in the debt limit. Then they will have to let Mr. Jeffries know how many votes Democrats need to produce to make sure at least 218 lawmakers support the package.
A wrong estimate can spell disaster. As the country plunged into a dire financial crisis in September 2008, the House stunned the Bush administration by failing to pass its bank bailout program. In a chaotic turn of events on the House floor, the measure failed as many Republicans refused to support it despite the president’s pleas and some Democrats balked as well. The stock market plunged in real time as the vote unfolded. Four days later, shaken members of the House returned and passed the bill with a few changes.
Some believe it might now take a similar scenario to pass a debt limit plan in Congress — a failed vote and a market downturn that underscores the economic consequences of default and motivates lawmakers to act. Others would prefer it not to happen, given the potentially serious consequences of even a brief failure.
“I was optimistic that it wasn’t going to happen, but the longer it goes on, the more likely it seems,” said Mr. Hoagland, the budget expert. “Time is running out for me to do this, but I’m just praying I don’t fail.
Luke Broadwater contributed reporting.