Joe Biden is facing one of the most politically treacherous moments of his presidency as he tries to defuse a growing debt ceiling crisis in tense tax talks with Congress due to begin this week.
The US president is due to meet congressional leaders from both US political parties on Tuesday, with an early June deadline looming for new legislation to lift the country’s $31.4 trillion lending limit or risk a default on the US debt and other government payments.
But while public opinion polls suggest a slim majority of Americans are complying Biden in clash with Republican House Speaker Kevin McCarthy, analysts warn his political lead is fragile: He continues to suffer from low approval ratings, particularly on the economy, even after last month’s launch of his re-election campaign of 2024.
A potential default, or even a contact with default, could shake up the financial sector and provide a blow to the broader economy.
“The longer it goes on, especially if you start talking about disrupting the markets. . . people tend to blame the president more than they blame Congress,” said Doug Heye, a Republican strategist.
Biden has been saying for months that he is unwilling to negotiate on the debt ceiling. He called on Republicans to do what they have done in previous years under then-President Donald Trump: raise the lending limit without preconditions.
Republicans in Congress, however, have tried to tie the debt-limit hike to steep spending cuts — something Democrats say is tantamount to holding the US economy “hostage.”
Biden’s hand weakened last month when Republicans passed a House bill that would raise the debt ceiling by $1.5 trillion or until March of next year, whichever comes first.
“Democrats may reject the premise that the debt ceiling should be negotiated, but in terms of optics, McCarthy seems reasonable and there is no clear message to voters that one side should be held accountable for a default,” he said. Ben Koltun of Washington. Beacon Policy Advisors.
The Republican bill cuts spending on government programs, some of them popular, as well as a rollback of many Biden administration policies, including clean energy tax credits.
The legislation is doomed to fail in the Democrat-controlled Senate. Even so, prominent business groups and some centrist members of Biden’s own party have called on the president to use him as a starting point for talks with McCarthy.
But any deal seems far away. Both Biden and McCarthy are practiced in relationship-based politics and “always trying to prove opponents wrong. If there was a deal to be made on the debt ceiling that would avoid kickbacks with their respective foundations, both of them would get it in a heartbeat,” Koltun said.
“But both were inherently distrusted by their respective party bases and did everything to get them to come to power,” Koltun added. “This left them more distant on policy and the process than if they had been left to negotiate a deal on their own.”
Most Democrats still support Biden’s willingness to negotiate on budget issues and his refusal to put conditions on the debt ceiling. Many are wary of Republicans’ motives in any talks, fearing they are simply looking for ways to hurt the economy and blame Biden for it.
“The White House is right to separate these discussions,” said Bill Foster, an Illinois Democrat on the House Financial Services Committee. “It is entirely possible that we will have to see a backlash in the markets before we see a sensible way out.”
A Washington Post/ABC poll released last week found that Americans were sharply divided over who to blame if the government defaulted on its debt, with 39% of respondents saying they would primarily blame Republicans in Congress and 36% saying they would blame Biden. 16% said they would blame both parties equally.
The same poll found that more than half — 58 percent — of Americans sided with Biden’s position that the debt ceiling and the federal budget should be managed separately. But support for the president’s position has dropped 7 percentage points since February, when the question was previously asked. Alarmingly to the White House, a separate Washington Post/ABC poll released Sunday found Trump leading Biden in a potential 2024 presidential rematch.
McCarthy tackles his challenging calculation. His political future is still tenuous after he allowed rule changes that made it easier for members of his own party to call a no-confidence vote in him, part of a deal that got him elected as president. this year. That means right-wing members of his caucus wield enormous influence and can reject any potential concessions to Democrats.
“Sometimes I think they’ll just do a last minute deal like they always do. But part of me thinks there are more Marjorie Taylor Greene types in this Republican caucus than there were 10 years ago,” said J Miles Coleman, of the University of Virginia Center for Politics, referring to the right-wing congresswoman of Georgia.
In the last major debt-ceiling standoff in 2011, Biden, who was then the vice president, negotiated an 11th-hour deal with House Republicans. But the calculated risk policy fueled the market turmoil and led Standard & Poor’s to downgrade the American credit rating to triple A.
While many in Washington are quietly optimistic about another last-minute deal, others warn that the polarized environment — and complicated political calculus on both sides — sets the stage for a fiscal showdown. Janet Yellen, the US Treasury secretary, warned Sunday they were there no good alternatives to raising the debt ceiling.
“There’s kind of an assumption here that we’re not going to go over the debt limit because we’ve never done it before,” Heye said. “If we’ve learned anything in the last five or six years, much less the last 10, it’s that assuming something isn’t going to happen because it’s unprecedented is foolish.”
—————————————————-
Source link