Photo-Illustration: Intelligencer; Photo: Win McNamee/Getty Images
the national interest

Kevin McCarthy’s Main Debt-Ceiling Argument Is a Lie

A clean hike can’t pass? Of course it can.

Photo-Illustration: Intelligencer; Photo: Win McNamee/Getty Images

“Let me be clear: A no-strings-attached debt-limit increase cannot pass,” announced House Speaker Kevin McCarthy last week. This claim, which McCarthy and his allies have been repeating for weeks, has received little scrutiny from the news media and forms the foundational premise of their public argument. Democrats have to give McCarthy some policy concessions in return for raising the debt ceiling. The alternative is unrealistic.

But this is almost certainly false. The House disagrees about specific spending levels for various government programs, but a majority of its body agrees on the need to raise the debt ceiling. If McCarthy brought a bill to the floor to raise the debt ceiling, it would need just a few Republicans to support it, along with the whole Democratic caucus, and would very likely pass. The issue is that he simply doesn’t want to bring such a bill to the floor.

Instead, McCarthy is focusing his energy on a bill that combines raising the debt ceiling with a wide array of spending cuts, measures that would be totally unacceptable to both the president and the Senate majority.

So why are they doing this? Punchbowl, the Capitol Hill newsletter that is known for being very close with McCarthy, explains the stakes quite clearly:

McCarthy simply wants to get to the negotiating table with President Joe Biden and top Democrats. To do that, it’s imperative that House Republicans pass this bill. Otherwise, the House could be forced to move a clean debt limit increase this summer. That’s exactly what Biden wants, but it would be devastating for McCarthy.

Passing the bill means McCarthy keeps alive his hopes of extracting a ransom from Biden. Failing to pass the bill means he would be forced to give up the extortion scheme and simply raise the debt ceiling. That outcome would certainly be “devastating for McCarthy.” But should the rest of us care?

Likewise, Republicans say their least conservative members might be willing to raise the debt ceiling without concessions, but they are afraid of what the craziest Republicans would do to them. “At this point, there is no indication whatsoever that moderate Republicans would agree to lift the debt limit with no reforms from the administration,” the Manhattan Institute’s Brian Riedl told the Washington Post. “I don’t see that happening. They would be crucified within their own caucus.”

Crucifixion! That sounds painful. But assuming this threat is metaphorical — I wouldn’t put anything past the likes of Marjorie Taylor Greene, but practicing literal crucifixion seems like it would be controversial with the Christian right — I wonder what actual leverage the far right has here. Is the implicit threat that they’re going to run primary candidates against the Republican members who are at greatest risk of losing to Democrats? Or they’re just going to bluster angrily?

McCarthy has signaled loudly that he sees his plan as a placeholder and that none of the specific measures are nonnegotiable. The only thing he cares about is that he is seen as getting something in return for raising the debt ceiling. As Republican lobbyist Liam Donovan noted, the cuts McCarthy could realistically obtain would be obtainable anyway when Congress writes its annual spending bill. So what McCarthy is fighting for, specifically, is to uphold debt-ceiling extortion on principle.

If the symbolism is all that matters, you might think this is just a matter of kabuki. Fire a few tax collectors, make a few poor children skip some meals, and call it a day.

But the reason both sides are actually fighting over the principle of debt-ceiling extortion is that the principle matters. Republicans immediately decided to use their newfound majority to ransom the debt ceiling because they remembered their successful hostage taking in 2011 (and forgot the Democrats’ conviction never to repeat this error). Giving them success again would institutionalize the practice. Indeed, any future Republican Speaker facing a Democratic president would be crazy not to ransom the debt ceiling — if they failed to get something even McCarthy was able to finagle, it would be the ultimate badge of failure.

Most Republicans consider regular debt-ceiling extortions to be fair and reasonable. It’s just a kind of tribute Democratic presidents have to pay when Republicans control the House. (Everybody understands that Republicans automatically raise the debt ceiling when they control the government and that House Democrats are too institutionalist to ever pull the same extortion scheme against a Republican president.)

The trouble is that, even if you consider this fair, it’s hardly stable. In any situation in which two opposing parties are bargaining over a ransom, they both have an incentive to hold out to the very end to maximize their leverage. Institutionalized debt-ceiling standoffs mean a regular game of chicken with the global economy at stake. The Cuban Missile Crisis ended peacefully, but if that scenario were an iterative game that occurred routinely, it would probably end badly at some point.

Extortion apologists have tried to fudge this issue by pretending that previous cases in which Congress attached other measures to debt-ceiling bills are the same as holding it hostage. It is common for Congress to use bills that are going to pass as vehicles to attach unrelated measures. That is not the same thing as holding the debt ceiling hostage, just like me making a side deal to throw in the floor mats when I sell you my car is not the same as being carjacked.

There is a pretty intuitive difference between a negotiation that includes the debt ceiling and a negotiation in which Congress uses the threat of default to obtain concessions. Sometimes Congress is negotiating the debt ceiling, and sometimes it’s holding it hostage, and the difference is clear to all parties involved.

At the moment, everybody’s attention has focused myopically on the near-term risk of a failed negotiation. But the larger stakes are whether we will continue to hold these high-stakes negotiations, which over time all but guarantee catastrophe when one side or the other miscalculates.

Biden is correctly refusing to pay any ransom. Does that run some risk of default? Yes. On the other hand, paying a ransom all but guarantees it will happen eventually.

Backing down from his extortion threat would certainly cause problems for McCarthy. It may even cost him his job. That would certainly teach a lesson about the risks of hostage taking that future Speakers might take to heart. If poor Kevin’s job security is the cost of defusing debt-ceiling extortion, it’s a price we should be willing to pay.

Kevin McCarthy’s Main Debt-Ceiling Argument Is a Lie