Crunch time on debt ceiling

Here is my sense of where things stand

I’m not on the team that’s negotiating the debt ceiling - far from it, as a freshman member of the minority party - but I want to report back to you my understanding of where things stand.

In general, I think the two sides still have serious disagreements but are probably closer to a deal than is generally being reported. 

And that’s good, because in order to avoid default we need to hear an announcement of a deal within the next 24-48 hours.

Why? Because even though the deadline for default we’ve been given by the Treasury Department is June 1st, it typically takes about 10 days to go from making a deal to passing a bill. 

And as you’re reading this, we’ve got eight days left. 

That means we’re already testing the limits of how fast we can get a bill through both chambers - especially considering that it takes 24 hours just to write the bill and Speaker McCarthy has pledged to give House members at least three days to review the bill once it’s written, as he pledged back in January in order to become speaker. 

Then it would have to go to the Senate, where the only bills that move quickly are the ones that have been blessed with ‘unanimous consent.’

And hey, I’m not a senator, but I would be deeply shocked if this ends up being a bill that passes unanimously in that chamber. Which means they’ll need as much time as we can give them.

The Biggest Gap

Most of the debt ceiling fight at this point is over 14% of the federal budget.

That’s roughly what’s left when you set aside Social Security, Medicare, Medicaid, defense, and interest on the debt.

None of that can be cut without suffering major political consequences, so members of Congress who want to reduce spending almost always skip over those items - which comprise roughly 80% of our budget - and focus elsewhere.

It’s just that focusing elsewhere means you’re trying to drain a pond that’s already pretty small.

The name of that pond, charmingly enough, is ‘non-defense discretionary spending.’ 

Some of the big fish in that pond are early childhood education, affordable housing, scientific research, transportation, border security, NASA, and environmental protection.

It’s always been unrealistic to expect massive savings by focusing on 14% of the budget, but here we are.

The current state of negotiation is that the President is willing to freeze our level of spending for those programs at last year’s level. (Normally, you’d see an increase of a few percent.)

Speaker McCarthy wants the spending for those programs reduced to the level from the year before, which means roughly a $140 billion cut.

After that question is resolved, the next big one is how far out we’ll push the next debt ceiling fight. 

The Speaker wants us to hit the debt ceiling again this time next year - which means having this fight all over again just as election season is heating up. 

That sounds like a nightmare to me. Scheduling our next near-miss with default during such a white-hot political moment would be taking crisis manufacturing to a new height. 

There are other disagreements to iron out, but if we can reach a deal on those two, I expect everything else to resolve quickly.

McCarthy’s Incentives

As a more general observation, my sense is that there are plenty of bipartisan deals we could reach, but that the highest hurdle we’re trying to clear is finding a deal that lets Speaker McCarthy keep his job.

If he allows a vote on something that doesn’t have deep enough cuts, his right-flank could easily punish him by stripping him of his speakership. 

Which means a big part of this negotiation is Speaker McCarthy asking himself, “What can I agree to with the Democrats that won’t infuriate my right-flank so much that they’ll retaliate against me?”

Just something to keep in mind, as his answer to that question is setting his parameters for the negotiation.

The 14th Amendment

Some people are suggesting the President should end this by invoking the 14th amendment.

The 14th amendment does say that the debt of the U.S. “shall not be questioned,” which a lot of people read as making the debt ceiling itself unconstitutional.

And it might be. That is not a wild legal theory - but the time to test that theory was January, not May.

Here’s what would happen:

If the President said the 14th amendment means he can ignore the debt ceiling, he would get sued. 

The people suing him would pick a jurisdiction where they thought they had the best chance of getting a favorable judge, so they’d be more likely to win at the lower court level. 

And if they did, it would immediately send shockwaves through the economy. 

Then it would be appealed to the Supreme Court. At that point, whether or not we defaulted would come down to one or two Supreme Court Justices and no one - absolutely no one on planet Earth - knows what decision they would make. I don’t know what the odds of losing would be, except that they’re high enough to make this an extremely risky maneuver.

And the biggest problem with losing in court is that we might not have time to respond with a legislative fix before defaulting. A loss could mean instant default, which is why the administration is extremely reluctant to roll those particular dice.

Again, I think we will reach a deal and avoid default - but we need to do that very, very soon.

That’s the latest. I’ll keep you posted.

Best,

Rep. Jeff Jackson (NC-14)