Strategists and policy experts in both parties believe Democrats will have to come to the bargaining table soon to negotiate a debt ceiling deal that would avoid an economic catastrophe.
President Biden and Senate Majority Leader Charles Schumer (D-N.Y.) are so far refusing to negotiate with Speaker Kevin McCarthy (R-Calif.) on raising the nation’s debt ceiling, but voices across the political spectrum argue the precedent for such talks has been set.
Former President Obama negotiated with the House Republican majority in 2011 to extend the nation’s borrowing authority, while former President Trump agreed to big discretionary spending increases in 2019 to raise the debt ceiling.
Obama agreed to negotiate big spending cuts with Republicans before the 2012 presidential election because he knew he was ultimately responsible for the health of the U.S. economy, which would have taken a major hit if the federal government had defaulted on its debt obligations in 2011.
Trump agreed to a $320 billion increase in domestic and military spending as part of a two-year budget deal because he wanted to take the threat of default off the table before his reelection bid.
Experts say Biden is now in a similar position as he readies his own reelection bid and won’t be able to resist negotiations.
“A failure to deal with the debt limit would be catastrophic for the economy. Any serious person who has studied this knows the economic consequences would be deep, long-lasting and disastrous,” warned former Senate Budget Committee Chairman Kent Conrad (D-N.D.).
Conrad said he understands why Democrats refused to negotiate with Republicans on raising the debt limit during Obama’s second four years in office, but he expects Biden to sit down with Republicans this year on the issue.
“You can see that there is the possibility at least of a negotiation,” he said.
Conrad said a negotiation between Biden and Republicans in Congress would be an “opportunity to deal with some of the long-term challenges facing the country.”
“The hard reality is both Social Security and Medicare are headed for insolvency,” he said. “There’s an opportunity to deal with some of these long-term challenges that are critically important to the country.“
Other Democrats also think a bipartisan negotiation will take place, though they predict that Republicans won’t win the same steep spending cuts they got from Obama a decade ago.
“Ultimately Schumer, McConnell and Biden will figure something out,” said Jim Kessler, a former Schumer aide who now serves as executive vice president for policy at Third Way, a centrist Democratic think tank.
“In the end, I think the likelihood is the agreement will come out of the Senate and the House will be forced to take it. McConnell’s view is, ‘We’re not going to default,’” he said.
McConnell predicted at an event at the University of Louisville on Thursday that Republicans would negotiate a deal with Biden.
“In the end, I think the important thing to remember is that America must never default on its debt. It never has, and it never will,” he said. “We’ll end up in some kind of negotiation with the administration over what the circumstances or conditions under which the debt ceiling be raised.”
Biden so far is not getting tremendous pressure from his party to enter negotiations, with the exception of Sen. Joe Manchin (D-W.Va.), who represents a state that tends to be deep-red in presidential elections.
“We have to work together. It’s bipartisan, it’s always been bipartisan as far as the debt ceiling,” Manchin told Fox Business in an interview in Davos, Switzerland. “I think what we have to do is realize that we have a problem. We have a debt problem.”
Manchin, who is up for reelection in 2024, floated the idea of considering reforms to prolong the solvency of federal programs such as Medicare and Social Security in exchange for Republican support for raising the debt ceiling.
“We would put bipartisan, bicameral committees together to look at each one of the trusts and come up with solutions of how you fix it,” he said.
A Senate Republican aide said refusing to negotiation with Republicans “isn’t sustainable especially with folks like Manchin floating ideas out there.”
Besides Manchin, who hasn’t said whether he plans to run for reelection next year, vulnerable Senate Democrats include Sens. Jon Tester in Montana, Sherrod Brown in Ohio and Jacky Rosen in Nevada, as well as Independent Sen. Kyrsten Sinema (Ariz.) will be watching the debt ceiling maneuverings closely.
Schumer and then-Speaker Nancy Pelosi (D-Calif.) refused to negotiate spending cuts in exchange for raising the debt limit in the fall of 2021 and instead put pressure on McConnell to work out a deal to bring along at least 10 Senate GOP votes.
McConnell agreed to a procedural workaround that allowed debt-limit legislation to circumvent a filibuster in the Senate, allowing him to make the argument that Democrats alone raised the debt limit. But McConnell still came under withering criticism from former President Trump and some conservatives because GOP votes were needed to allow the debt limit bill to bypass a filibuster.
Republicans say Democrats can’t expect McConnell to help pave the way for a clean debt limit increase this year.
“Mr. Schumer and others are talking about, ‘We can do what we did in ’21 and that’s just hold out and Republicans will cave,’ I don’t think that’s realistic when you have a divided Congress,” said Bill Hoagland, senior vice president at the Bipartisan Policy Center and a former Senate Republican leadership aide.
“My sense here is, and Biden’s been here before — he went through it in 2011 — at the end of the day it’s not ‘My way or the highway.’ He has to give something to Congress and Congress has to give to something to him,” Hoagland predicted.
“I think some form of limitation on discretionary spending is likely,” he added. “It shows the president is willing to work with Congress.”
Hoagland said reforms that would reduce or put new restrictions on Medicare and Social Security benefits are less likely than negotiated cuts to discretionary spending because Republicans don’t want to be accused of forcing cuts to popular entitlement programs before the next election.
Trump warned Republican lawmakers in a video message circulated on Friday not to cut “a single penny from Medicare or Social Security.”
Already, Democratic leaders are revving up their message that the new House GOP majority wants to put those programs on the chopping block.
“From rising home costs, interest rates, cuts to Social Security, Medicare and more, it’s clear who will actually pay the price for gratuitous partisan politics: American families,” Schumer said in a statement.
Newly elected House Democratic Leader Hakeem Jeffries (N.Y.) tweeted Friday: “Social Security is not negotiable.”