Democrats’ Perplexing Political Miscalculation

By Philip Klein

Thursday, October 07, 2021

 

Even though the debt limit showdown appears to have been temporarily postponed, Democrats remain committed to a strategy aimed at trying to pressure Republicans to join them in raising the ceiling. But the strategy is rooted in a core political miscalculation.

 

For months, Democrats have steadfastly refused to use the reconciliation process to raise the debt ceiling on a pure party-line basis. Senate majority leader Chuck Schumer has called the idea a “nonstarter.” House speaker Nancy Pelosi said she would rule out the idea of using the procedural maneuver to overcome any Republican filibuster. President Biden has said he cannot guarantee that the U.S. won’t default on its debt because “that’s up to Mitch McConnell.”

 

In reality, Democrats have the power to raise the debt limit whenever they want. The Senate parliamentarian has ruled that they can do so and would be able to in a separate measure that would not require tinkering with the separate $3.5 trillion social-welfare bill they are trying to pass. Even though Democrats have wanted to use reconciliation to push through a sweeping domestic agenda, to try to raise the minimum wage, and even to grant amnesty to millions of illegal immigrants, they have thus far been unwilling to use reconciliation to avoid a catastrophic debt-limit scenario.

 

Schumer has claimed there is not enough time to pursue a reconciliation process. But McConnell just took that argument off the table by saying Republicans would agree to allow Democrats to pursue reconciliation on an expedited basis, or to extend the debt limit into December to allow them plenty of time to get something done by reconciliation. While Democrats are planning to pocket that concession to buy time, they are still holding on to their position that they would never agree to use reconciliation for a long-term extension.

 

Obviously, Democrats are furious about the idea that Republicans won’t raise the debt limit. Liberals still feel that President Obama was played by Republican obstructionists during the 2011 standoff, and Democrats note that they agreed to suspend the debt limit during the Trump era. Also, they make the case that much of the debt requiring an increase in the limit comes from Trump-era spending that Republicans approved.

 

This history is a bit more complicated, of course. Democrats supported the $4.1 trillion in COVID-19 spending passed during the final year of the Trump presidency. The debt limit also has a long history of being partisan that predates the Obama administration. During the Bush era, both Biden and Schumer opposed raising the debt limit, for example. Regardless, Democrats believe that Republicans should now share the responsibility for raising the debt limit and don’t want to be the only ones to have to vote to increase it.

 

There are valid arguments that both parties should agree to stop turning debt-ceiling votes into partisan showdowns, or even that they should ditch the debt limit altogether since it does not functionally motivate lawmakers to rein in debt.

 

But putting aside those debates and looking at things from a purely political perspective, the Democratic thinking here is perplexing. Playing out the scenario, let’s say nobody blinks, Treasury runs out of options, and there is some sort of partial default on debt payments. Why would Democrats believe that it would help them politically? Sure, they have friends in the media who would amplify the argument that it’s all the Republicans’ fault. But there’s no reason to believe that voters would actually punish Republicans and reward Democrats as the more responsible party.

 

During the 2011 debt-ceiling fight, polls showed that more voters said that Republicans would be to blame for any failure to raise the debt limit. Nonetheless, as the crisis dragged on, Barack Obama’s approval rating reached the lowest point of his presidency.

 

There are also many reasons to believe that Biden would be even worse off than Obama was in 2011. For one thing, in 2011, Republicans were coming off a major wave-election victory, so the perception was that they were now at least partially in charge. And practically speaking, there was no way Democrats could raise the debt limit without Republicans. At the time, House Republicans were also making passage of a debt-limit increase contingent upon trillions of dollars in spending cuts.

 

Here, Democrats are coming off a victory that has given them unified control of government. They can raise the debt limit without a single Republican vote without giving in to any demands and without abandoning any part of their agenda. If the U.S. does actually default, the crisis would have gone far beyond where it was a decade ago, when the parties ultimately cut a deal to raise the debt limit.

 

Furthermore, this standoff is happening during a time in his presidency at which Biden has already lost the public’s confidence due to his handling of Afghanistan, the border crisis, COVID-19, and a host of other issues. Just 44 percent of Americans now say Biden is honest, compared with 50 percent who say he isn’t, according to a new poll from Quinnipiac University. The same poll found that “Americans say 55 – 42 percent that the Biden administration is not competent in running the government.”

 

If Americans don’t think Biden’s honest and competent now, what will they say if financial markets are in full-blown panic mode due to a default on U.S. Treasuries that his party had the power to avoid? Republicans will be able to argue that Biden caused chaos in Afghanistan, chaos at the border, and chaos in financial markets.

 

Thus, whatever principled stand Democrats believe they are making, it is resting on a flawed assumption about how the public is likely to react if the debt limit is in fact breached.