How to Avoid Another Debt Limit Debacle

Some seem to be learning the wrong lessons from the mostly drama-free extension of the debt limit

Many folks —myself included — spent months warning the public of the looming disaster generated by an extreme Republican House holding the full faith and credit of the United States. We pleaded with Democrats to use their power in the last Congress to defuse this ticking time bomb. As America stumbled closer to the so-called “X Date” of default, the volume and intensity of our concerns over the potential economic wreckage neared hysteria.

In the end, none of that came to pass. There was little drama. Unlike the last debt limit crisis, no real damage was done. We didn’t default, the markets didn’t crash, and the U.S. credit rating was unharmed. The deal that will avert default contained painful cuts and policies, but the pain is limited compared to the alternative.

The whole process felt almost normal.

Some interpret this as a return to the pre-Tea Party way of debt limit negotiation when there was a modicum of drama but no actual danger of default. Maybe McCarthy and the House Republicans are not as dangerously extreme as we all feared. While (almost) no one sees this deal (struck under the threat of default) as a sign that bipartisanship is back, there is a sense that maybe McCarthy and Biden can have a better-than-expected working relationship.

Sure, that’s all possible, but it’s not probable. I will stipulate that I am not a natural optimist AND hold the Trump-era GOP in very low regard, but the drama-free resolution of the debt limit is more likely a one-off aberration than the new normal.

We have 18 months until the next debt limit crisis rears its ugly head; and my near-term concern is that Democratic politicians and the media will learn the wrong lessons from the relatively quiet diffusion of this debt limit bomb.

1. Is McCarthy a Good Faith Negotiating Partner?

My general take on McCarthy, dating back to the Obama years, is that the Speaker is an affable doofus with more ambition than brains and a weathervane for a moral compass. Nothing that transpired last week changes that assessment. With that said, it’s worth noting that McCarthy largely handled the debt limit discussions with reason and professionalism. While he made some empty promises to his caucus, the Speaker avoided the sorts of ridiculousness and performative temper tantrums that tank the markets and imperil a deal. Congrats on doing your job with a bare minimum of competence!