A few days ago, in these pages, I predicted that the ongoing debt ceiling crisis would reveal US President Joe Biden to be finally out of his depths or have unexpected depths of sophistication. Or, I added, a jerryrigged agreement could simply postpone a day of reckoning.
The first scenario has been avoided as Mr Biden has neatly escaped a dangerous trap. The emerging solution appears to be a combination of scenarios two and three: a familiar deal that vindicates several of the President’s defining strategies.
On Saturday night, Mr Biden and Kevin McCarthy, the Republican Speaker of the House of Representatives, announced an agreement to extend the debt ceiling for two years in exchange for strikingly narrow spending cuts and caps.
Many significant details are not yet known, but the broad outlines are clear. The White House and the House of Representatives have done a fairly standard deal, at least when Democrats hold the presidency. Republican presidents ask for, and receive, unconditional debt ceiling expansions, which allow the Treasury Department to borrow money to pay for debts already incurred by Congress.
However, a pattern has emerged whereby Republicans do not extend this courtesy to Democratic presidents. Republicans suddenly remember that they are supposed to be alarmed at national budget deficits and debts, no matter whether they are becoming a greater or lesser percentage of GDP.
Many Democrats were petrified that Mr Biden, negotiating almost entirely in secret and apparently on Republican terms, was poised to cheerfully give up far too much to avoid a massive crisis. Yet this does not appear to have happened.
The actual cuts in spending are extremely limited, and even the caps to spending increases seem to hew reasonably well to major White House goals developed under the last Congress. Republicans gained a symbolic sop – at least in terms of national expenditure, although undoubtedly with alarming significance for many individuals and families – with some potential restrictions on nutritional and other support for poor people and, more importantly, new work requirements on “able-bodied” individuals without dependents.
Savings will be decidedly modest. For Republicans, it's a matter of principle. And while few Democrats are going to be happy about these changes, even fewer will be kept up at night. It was a big win for one side, in their own eyes, and not much of a loss for most people on the other side.
The numbers are not going to be huge. For Republicans, it's a matter of principle. And while few Democrats are going to be happy about these changes, even fewer are going to be kept up at night. It was a big win for one side, in their own eyes, and not that much of a loss for most people on the other side.
On the other hand, Mr Biden appears to have protected much of the most important spending he was able to secure in the first two years after his election. Total spending cutbacks over 10 years under these terms may be limited to a mere $650 billion.
Mr Biden had no white rabbit to pull out of his hat, no brilliant and unanticipated gimmick, or unexpected genius solution. As is so often the case with the wily old fox, the President's superpower is his normality, transparency and predictability. While he disingenuously insisted he would never negotiate over budget issues with the debt ceiling being effectively held hostage – though of course that's exactly what he did – from the onset he stressed the two biggest themes of his presidency: bipartisan compromise and political patience.
This approach and rhetoric have consistently infuriated many progressive Democrats. But it has just as consistently worked. It is exactly what secured the huge pandemic bailout which began his term. And the hard infrastructure act. And the high-tech investment act. And the social spending and climate change bill. And more besides. Very little of that appears meaningfully threatened, indeed it would be more accurate to say it largely has been protected, by the terms of this agreement.
In effect, Mr Biden has again delivered what he said he would, in exactly the way he said he would do it, despite numerous doubts, including my own, particularly as the witching hour approached. The Treasury Department, by the way, has cited next Wednesday as the first day a potential default might begin. Presumably, it's ready to come up with a few last-ditch workarounds to buy extra time to test the legislative viability of the agreement.
And here's where Mr Biden truly got the better of Mr McCarthy.
Both leaders now must sell a compromise agreement that no one is going to be happy with to members of Congress on both sides, including the Democratic progressive-left and Republican hard-right. While their tasks may be roughly similar, the obstacles and consequences for failure each will face are radically different.
The murmurs of unease among progressives is extremely muted compared to categorical opposition already emanating from right-wing conservatives. It may not be simple or comfortable for the President to get his House ducklings in a row, but it just may not be possible for the House Speaker.
And now the political calculation has completely flipped. Before this agreement, there was every reason to suspect the sitting president would face most of the blame for any financial calamity. But if the Republican House Speaker makes a solemn agreement with the President to save the economy, and that is sabotaged by his own extremist faction, they, and he, will be left holding the bag essentially alone.
Unless Democrats make the unimaginable blunder of opposing the agreement in sufficient numbers to create a real obstacle to passage, which seems highly unlikely, this has now become an internal Republican problem and probably a crisis. There will be members of the extreme right who will tell Mr McCarthy they didn't support him for Speaker so that he could release the only real "bargaining chip" hostage they have for such limited restrictions. It will be very surprising not to start hearing hyperbolic fulminating about betrayal, treason and a war against the country’s fiscal sanity and financial future.
In the old Roadrunner cartoons, the hapless predator Wile E Coyote – a self-declared "super-genius" – produces one apparently ingenious trap after another, only, in horror, to find himself holding the bomb just as it is about to explode. In the coming days, the House Speaker may discover he, too, is unexpectedly in possession of a round, black, hissing object that his vanished opponent has surreptitiously managed to hand back to him.