Donald Trump is egging on Republicans already intent on using the federal debt limit as leverage to extract concessions from Democrats, potentially pushing the country further toward the brink of default as the former president seeks to reassert his grip on the GOP.
(Bloomberg) — Donald Trump is egging on Republicans already intent on using the federal debt limit as leverage to extract concessions from Democrats, potentially pushing the country further toward the brink of default as the former president seeks to reassert his grip on the GOP.
The former president has been posting exhortations on social media for Republicans to “be tough” and not “give in” as the US approaches running out of cash later this year, asserting the party “can get back almost everything” Democrats won legislatively under President Joe Biden.
Republicans who control the House have been demanding deep spending cuts in exchange for raising the debt cap. Biden and congressional Democrats are insisting that the limit be raised without conditions.
The matter could come to a head this summer. US Treasury Secretary Janet Yellen informed congressional leaders on Thursday that the US had reached the debt limit and has begun taking special accounting maneuvers. Last week, she said the steps would likely tide the Treasury over at least until early June.
As he mounts his third White House run, Trump is again inserting himself into a high-profile political fight, despite drawing blame for midterm losses by his hand-picked candidates that led to disappointing overall results for the GOP. Critics say he’s encouraging a game of chicken that could be catastrophic for the US financial system and economy.
“For a former president to be part of an effort that is literally creating a crisis that doesn’t have to exist is not political leadership,” said Princeton University presidential historian Julian Zelizer, who has studied the Republican Party. “It’s the opposite.”
A Trump spokesman didn’t respond to a request for comment.
Waning Influence?
Some GOP strategists doubt Trump’s entreaties will spur Republicans to do anything they otherwise wouldn’t do, especially after a group of them rebuffed calls from the former president to support Kevin McCarthy’s bid for House speaker earlier this month.
“His influence is waning on the Hill,” said Doug Heye, a former aide to senior Republicans and a Trump critic. “He’s only important if we pay attention to him.”
But McCarthy credited Trump for ultimately helping sway the final holdout conservatives to vote “present” on the 15th and decisive ballot. Unlike Senate Minority Leader Mitch McConnell, who does not need the support of Trump-aligned Republicans to keep his job, McCarthy is beholden to them. Under a rules change agreed to this month, conservatives may be able to oust him with a floor vote at any time.
McCarthy’s ability to maneuver is also circumscribed by another deal he cut with ultraconservatives to win his job: A commitment that no debt-ceiling increase would be allowed without a budget agreement or “commensurate” fiscal reforms.
For now, McCarthy is hoping to pressure Biden into engaging in budget-cutting talks to come to a compromise on the debt ceiling and address federal spending.
Read more: McHenry Becomes Republican to Watch in US Debt-Limit Showdown
Trump could play an active role in rounding up votes for those GOP plans, or hang back and attempt to claim credit if they pass. Or he could help steer talks to a dead end to try and ensure a default, triggering economic turmoil for Biden as Trump seeks the Republican nomination for 2024. Biden has said he plans to seek reelection but has not yet made a formal announcement.
Key figures from the Trump administration are also playing a role. Former Trump chief of staff Mark Meadows has been advising House Freedom Caucus members on the matter, and former Trump budget director Russ Vought and his Center for Renewing America have advocated focusing on cuts to discretionary spending rather than Medicare and Social Security.
Biden’s Challenge
Biden, for one, has signaled both frustration and optimism. In a speech Monday, he touted the falling deficit and called deficit hawks “fiscally demented,” without specifying who he was referring to.
“The president has been clear — he will not allow Republicans to take the economy hostage or make working Americans pay the price for their schemes to benefit wealthy Americans and also special interests,” White House Press Secretary Karine Jean-Pierre told reporters Wednesday, calling it the “basic duty of Congress, to get that done.”
In the event of a default, Biden would likely take at least some of the political blame. Yet the White House’s position that it’s Congress’s responsibility to raise the borrowing cap could provide the president with a measure of political insulation.
The Republican-led House is a much steeper challenge than the Senate, where Biden’s Democrats hold a narrow majority. McConnell is arguably closer to Biden than to Trump, who has launched racist attacks at McConnell’s wife, Elaine Chao, who served in Trump’s cabinet.
Trump has also repeatedly criticized McConnell for not using the debt ceiling for negotiating purposes with Democrats.
Biden sent a signal earlier this month that partisan gridlock could be overcome, joining McConnell to celebrate funding for a bridge between Ohio and the Republican’s home state of Kentucky.
It was those two who spearheaded a deal on a debt-limit increase in 2011, when a weekslong standoff prompted Standard & Poor’s to issue the first-ever downgrade of the US government’s credit rating.
Read more: What’s the Debt Ceiling, and Will the US Raise It?
The limit was suspended in 2017, 2018 and 2019, and reset at a higher level again after each freeze before being raised in 2021, according to the Congressional Research Service — allowing the nation’s red ink to swell by almost $8 trillion under Trump.
“What they really want to do is to use the debt ceiling as a brinkmanship sort of negotiation to do serious spending cuts, including cuts in Social Security and Medicare, and that’s a non-starter for Democrats,” Representative Gwen Moore, a Wisconsin Democrat, told Bloomberg Television on Wednesday.
“The Republicans protest too much, methinks, about our debt because our debt has increased under Republican leadership.”
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