Biden faces tough decisions in debt ceiling crisis

WASHINGTON â€”  President Biden has grounded his reelection hopes in large part on not being Donald Trump, and the former president’s resentment-filled performance at a CNN town hall Wednesday night illustrated why that argument might suffice.

During the broadcast, Trump defended taking children away from their families at the border, wouldn’t rule out a federal abortion ban, said he would pardon “a large portion� of the people convicted of attacking the Capitol in the Jan. 6, 2021, riot and advocated for the U.S. to default on its debt for the first time in history.

“It’s simple, folks. Do you want four more years of that?� Biden’s campaign account tweeted after the show.

But despite the vast unpopularity of those Trump positions with voters outside of his hardcore base, Biden is the incumbent this time. To win in 2024, he probably has to do more than simply be the anti-Trump.

At minimum, the president has to convince voters that he’s capable of effectively steering the U.S. economy — a subject on which a majority currently rates him poorly.

That means avoiding a default on federal obligations this summer, an event that economists warn could cause economic chaos and a topic on which Biden and congressional Republicans are currently stalemated.

Negotiate or go it alone

For months, as the federal government has crept ever closer to exhausting its credit limit, the White House position has been that Biden would not negotiate with Republicans over raising the amount Washington legally can borrow.

Congress has a nonnegotiable obligation to authorize enough borrowing to cover the spending it has already written into law, Biden and his aides have argued.

The government will hit its current $31-trillion limit soon, perhaps as early as June, Treasury Secretary Janet Yellen has warned. Without an increase, the Treasury would be unable to meet all federal obligations, jeopardizing social security checks, interest on government bonds and salaries for soldiers, among other things. Such a default would be unthinkable, Democrats have said.

Republicans, from House Speaker Kevin McCarthy (R-Bakersfield) on down, have made the opposite argument: Congress needs to keep raising the debt limit because the government spends too much, they say. So an increase in the limit should be tied to negotiations to reduce spending.

Biden’s refusal to negotiate made political sense so long as McCarthy was unable to get his fractious caucus to agree on a budget package. If the House couldn’t pass anything, the Speaker would have to give up or accept blame for a potentially catastrophic default, White House aides knew.

But in late April, McCarthy succeeded by the slimmest of margins. The bill that passed, 217-215, wasn’t legislation anyone liked much — even on his side — but it was the necessary ticket to the negotiating room.

“We’ve done our job,� McCarthy said after the vote.

“The White House made a big bet — not an unreasonable one — that Republicans would not be able to get their act together,� said Liam Donovan, a D.C. lobbyist with long experience in Republican politics.

Once McCarthy succeeded, however, “not negotiating wasn’t going to be tenable.�

So this week, without admitting he was doing so, Biden shifted course: He began talking.

Now, he’s got decisions to make.

How far to go in the talks is a delicate choice. Any deal with McCarthy will involve spending cuts that will anger Democratic constituencies. Even the idea of negotiations sits badly with many Democrats, who accepted the earlier White House argument that the debt ceiling shouldn’t be a negotiating topic.

In 2011, President Obama‘s talks with Speaker John Boehner (R-Ohio) over the debt ceiling and spending generated a backlash among Democrats that for a time threatened Obama’s reelection. Biden’s role in negotiating a final deal that year with Senate Republican leader Mitch McConnell of Kentucky has long been a reason for progressive activists to mistrust him.

Another downside of talks: If Biden were to cut a deal with McCarthy that the Speaker then couldn’t sell to House Republicans — the fate Boehner suffered — the White House would have angered Democrats and gained nothing.

Yet failure to reach a deal could trigger a default — a risk Biden doesn’t want to take. Economic chaos, whoever is to blame, would seriously damage the president’s chances for reelection.

In a brief news conference on Tuesday, after an initial meeting with congressional leaders, Biden said he would do “everything in my power� to avoid a default.

Trump, knowing a recession could be to his political advantage, made a deal harder to reach with his remarks during the CNN show.

“I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re going to have to do a default,� he declared.

A default might lead to “a bad week or a bad day,� he said, minimizing the consequences. But “you might as well do it now because you’ll do it later,� he added, falsely implying that the U.S. is on a path to inevitably being unable to meet its obligations because of the mounting debt.

Trump’s words won’t make reaching a deal any easier. But a possible outline of one has started to become clear.

An increase in the debt ceiling and limits on spending would be legislated separately. That way, Republicans could say the two were linked, while Democrats could deny that.

The spending cuts would include rescinding some unspent COVID-19 relief funds — something Biden said Wednesday he could accept.

Beyond that, the two sides likely would agree to cap the annual appropriations Congress makes for federal programs. Since appropriations have to pass both houses, Democrats know they would have to compromise with Republicans even if the debt ceiling weren’t an issue.

None of that would be easy. The two sides have big disagreements.

The path might be smoothed by agreement on something both sides want — albeit for different reasons.

One possibility would be a deal to change federal permitting rules to ease the building of new energy-related projects.

Meeting Biden’s goals for renewable energy will require a big expansion of electric transmission lines, White House officials say. Republicans want to speed approval of new pipelines and other projects.

It’s probably no coincidence that John Podesta, the veteran Democratic operative whom Biden chose last year to guide new clean-energy investments, unveiled the administration’s position on reforming the permit process the day after Biden and the congressional leadership met. Podesta’s plan got tentative approval from environmental groups that have opposed previous efforts to change the rules.

The alternative for Biden would be to forego negotiations and try to go it alone, perhaps by pursuing the legal argument that the debt ceiling violates the 14th Amendment’s command that “the validity of the public debt of the United States, authorized by law ... shall not be questioned.�

But that doesn’t appear to be where he’s heading. Wednesday, Biden traveled to a swing district in New York to press his case that Republicans are “literally ... holding the economy hostage.�

But in remarks to reporters later that day, he appeared to be readying his argument for easing Democrats into accepting a difficult compromise.

“Look, the idea that we’re going to just not discuss anything consequential is just not real,� he said.

Big change at the border

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Across the southern border with Mexico on Wednesday, communities, migrants and border agents braced for the long-anticipated end of Title 42 orders. Most U.S. Customs and Border Protection facilities were already overcapacity. Hundreds of other migrants lined up near ports of entry in Arizona and Texas to see whether they would finally be let in, Andrea Castillo, Hamed Aleaziz, Patrick McDonnell and Kate Morrissey reported.

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Title 42, a decades-old public health statute used during the COVID-19 pandemic to keep asylum seekers out of the U.S., lifted at 8:59 p.m. PST on Thursday, ushering in a new era for U.S. border control, Castillo reported.

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