Then there’s Congress, where Democrats have a slender majority in the Senate and Republicans have a slightly larger majority in the House. The debt-ceiling fight demonstrated how much damage the GOP can do. It’s a near-certainty that, when the fiscal year ends September 30, House Republicans will refuse to pass appropriations bills or a continuing resolution and force a government shutdown. Is Fitch supposed to ignore that? What about the first of January 2025, when Biden must persuade Congress to raise the debt ceiling again? If he’s a lame duck, perhaps the House will let him off the hook in the interest of preparing the way for a Republican presidency. But if Biden is re-elected, the Republican House will be baying for his blood.
Finally, there’s the White House, where yes, the president has been managing the economy ably. But Biden has managed Republican threats to the economy less well. In November and December 2022, Biden gave up on trying to raise the debt ceiling while he still had Democratic majorities in the House and Senate. It would have been difficult; Senator Joe Manchin, Democrat of West Virginia, would likely have defected to the Republicans, and others might have, too. But cutting a deal then would have spared Biden having to negotiate later with intransigent House Republicans. Yes, it’s generally accepted that Biden outmaneuvered House Speaker Kevin McCarthy. But if Biden had cut a deal in November or December 2022, he might have been negotiating instead with Nancy Pelosi.
According to a July 31 report by Adam Cancryn and Jennifer Haberkorn in Politico, Biden isn’t exactly knocking himself out to prevent another debt-ceiling crisis after the 2024 election. He’s assembled a team chaired by White House counsel Stuart Delery and National Economic Council director Lael Brainard to study legal and policy options, Politico reports, but “there’s no clear timeline for the project and little in the way of overt direction.” The Politico story quoted Rep. Pramila Jayapal, Democrat of Washington, warning what Fitch is very likely thinking: ““We are going to get pummeled on this over and over and over again.” Meanwhile, the Biden administration, inexplicably, has moved to dismiss an ingenious lawsuit brought against Biden and Yellen by the National Association of Government Employees that argued the executive branch lacks any authority to plan for contingencies in the event that the debt ceiling is breached—an argument that, in effect, would nullify the debt ceiling itself. The administration’s motion said the lawsuit was mooted by the debt-ceiling bill that Biden signed into law on June 3. It’s mystifying why Biden would do this. The lawsuit could only have helped Biden’s argument that attempts to use the debt limit to leverage concessions are illegitimate and at odds with constitutional law.