The House Democrat leading his party’s debt-limit fight with Republicans has a warning for US markets: prepare for a summer plunge because Democrats are going to the mat to stop the GOP from using the ceiling to enact spending cuts.
(Bloomberg) — The House Democrat leading his party’s debt-limit fight with Republicans has a warning for US markets: prepare for a summer plunge because Democrats are going to the mat to stop the GOP from using the ceiling to enact spending cuts.
Representative Brendan Boyle of Pennsylvania, the top Democrat on the Budget Committee, sees the standoff as “the most dangerous moment since 2011,” when the US credit rating was downgraded for the first — and only — time.
“That caused real damage and I could see something like that happening again,” Boyle said.
But Democrats, Boyle added, won’t yield to demands from House Speaker Kevin McCarthy to tie steep budget cuts to raising the debt ceiling. That’s a very different stance for a party that, a dozen years ago, was eager to strike a spending deal to avert default.
“It ends when McCarthy folds. He can either do that very quickly or get right up to the deadline and allow reality to set in,” Boyle said in a interview in his Washington office.
He added that he’s offering Republicans a face-saving solution to the impasse: support his bill permanently transferring the power to raise the debt ceiling from Congress to the president. That’s unlikely to get much support from Republicans while the US is still months out from the fiscal cliff, but Boyle isn’t a player to ignore in this economic game of chicken.
The 46-year-old congressman is so central in Biden’s debt-ceiling strategy that the president is announcing his 2024 budget proposal in his Philadelphia district on Thursday. Boyle, an early endorser of Biden in the 2020 primary, represents a strikingly similar brand of Pennsylvania-bred working-class Irish American politics.
Both men have vowed to thwart Republican efforts to use the debt ceiling to trim the social safety net. Both say that there is room to negotiate over agency budgets for 2024, but that discussion must be separate from a no-strings debt ceiling increase.
“Ideologically I am a firm believer in the New Deal,” Boyle said. “Some of the core reasons why I am a Democrat are defending Social Security, defending Medicare, defending Medicaid.”
Working-Class Roots
Boyle grew up in a small Philadelphia row home, the son of an Irish immigrant janitor father and Irish-American crossing guard mother. His office is plastered with Philadelphia Eagles gear.
“I do not come from an elite background or any sort of wealth,” he said. “I was the first in my family to go to college. I’m still paying off the student loans.”
The congressman says he wants to ensure the American dream is achievable for working-class people like the ones he grew up with. That, he said, requires fully funding government programs that create pathways to new service and knowledge economy jobs.
After graduating from Notre Dame, Boyle went into business consulting in the Washington area. The Sept. 11, 2001, terrorist attacks motivated him to further his education, at the Harvard Kennedy School, and ultimately run for a seat in the Pennsylvania House where he served with his brother Kevin. Boyle was first elected to Congress in 2014.
He asked to serve on the tax-writing Ways and Means committee and the Budget panel, positions from which he said he believed he could defend the social safety net.
“I think that if our side were ever to fall asleep, these programs would be very vulnerable to being cut if Republicans were ever again to get unified government,” he said.
Boyle called the 2011 deal to raise the debt ceiling, which included discretionary spending caps, was a mistake that cost the economy some 1 million jobs by some estimates.
“That is not a history I intend to repeat,” he said. He rejects arguments by Jodey Arrington, the Republican chairman of the Budget Committee, that the US is heading to a crisis where the $31.4 trillion debt has become unsustainable.
Boyle said current levels of inflation are not driven by the debt and bond markets indicate a healthy appetite for Treasuries.
“There is no magic number that the deficit or debt should be,” he said. “There is absolutely no sign from markets or the economy that our debt and deficit are too high right now.”
Boyle added that he does believe debt could become unsustainable, but that’s a problem that should be solved by a tax on billionaires and shoring up the Social Security trust fund by raising payroll taxes on those making more than $400,000 per year.
“It’s kind of like when they asked Willie Sutton why he robbed banks he said that’s where the money is,” Boyle.
Democratic Strategy
Biden’s speech in Boyle’s district will be the opening salvo in the Democrats’ debt ceiling strategy. From there, Boyle will discuss with colleagues whether to craft a House Democratic budget that could differ in some respects from Biden’s. But that will take a back seat to attacking whatever budget Arrington and McCarthy produce.
The GOP has pledged to balance the budget within 10 years, a gargantuan feat that would require nearly $20 trillion in deficit cuts over a decade. McCarthy has said Social Security and Medicare reductions are off the table. If the GOP also shields defense and veterans spending, then the rest of government would have to shrink some 85% by some estimates.
“Their enemy is not the Democratic side, their enemy is math,” Boyle said.
Publicizing the impact of GOP cuts and explaining to the public that the debt ceiling is about spending previously authorized will help Democrats win the battle, Boyle said.
“I think the markets will be on our side. I think ordinary Americans are on our side,” he said. “This about whether or not you are going to pay the bill that you ran up. People intuitively get that of course you should raise the debt ceiling.”
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