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Politifact: The debt limit fight: Why does it matter? How could it be resolved?

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I spoke to Lou Jacobson for his Politifact post on the debt limit fight and how it might be resolved.

• The White House could act unilaterally. The executive branch could mint a platinum coin with a face value of $1 trillion, deposit it in the Federal Reserve, and pay off its financial obligations as normal.

…

During a previous debt limit fight, Obama called the idea “wacky,” and in 2021, Yellen called it a “gimmick.” It’s also unclear whether this would be upheld in the courts.

Ironically, some Republicans might like to see Biden take this path, said Liam Donovan, a principal at the law firm Bracewell.

“It would absolve Republicans of any responsibility, while opening the door to political attacks on Biden’s extra-constitutional overreach,” Donovan said.

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• A fig leaf solution. The likeliest endgame, experts say, is that the two parties will negotiate a deal that raises the debt limit, but with conditions that Democrats can live with, such as “a good-faith, bipartisan reform to the process that can help Republicans save face without Biden looking like he paid a ransom,” Donovan said. “A small concession is the optimal path because it provides an offramp for the bulk of the Senate conference that doesn’t want a clean hike but also doesn’t have the stomach for going over the brink.”

This would leave lots of tough negotiating for consideration of spending bills later this year, but most observers say that’s a preferable outcome.

Read the full piece here.

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NYT: This Debt-Ceiling Fight Will Be Different

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I participated in a roundtable discussion for the New York Times to discuss the Republican House majority and the coming clash over the federal debt limit. The Times‘ Ross Douthat led the conversation with me and my friend Haley Byrd Wilt of The Dispatch.

Here’s one of the key points I made:

Douthat: Let’s turn to the debt-ceiling issue. A lot of moderates and market watchers seem relatively sanguine, on the grounds that we’ve seen debt-ceiling fights before in the Obama era, and we know this will end (eventually) in compromise. But Liam, you’ve talked a lot about how there’s a big gulf between what conservatives consider the lessons of those Obama-era negotiations and how the Biden White House remembers them. Can you talk about those dueling visions?

Donovan: This is the fundamental problem at play — a mutual comfort level based on shared experiences from the not-so-distant past that the sides took very different lessons from.

For Republicans, the showdown in 2011 was the signal achievement of the Tea Party: staring down President Barack Obama and forcing the cuts associated with the Budget Control Act. It validated one of the animating forces of the right over the past decade-plus — that the party’s failures are a result of weak, feckless leadership, and if they fight, they win.

For Democrats, including Joe Biden, who as vice president had a front-row seat to the deal, it was evidence of why you should never negotiate under these circumstances, because it enables and encourages ever more reckless hostage-taking. That informs their current posture, as does the fact that they actually won the last such game of chicken in 2021.

Read the full piece here.

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