James K. Galbraith

Macroscope | Democrats’ disastrous US debt ceiling deal snatches defeat from jaws of victory

The result of Joe Biden and Democrats negotiating with Republicans is an appalling act of political surrender and an abandonment of progressive principles

Worse still, bargaining away their leverage over a divided opposition did nothing to prevent a similar crisis in the future or stand up for their constituents

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House Speaker Kevin McCarthy (left) shakes hands with US President Joe Biden after the State of the Union address to a joint session of Congress at the Capitol in Washington on February 7. Biden has praised McCarthy for his role in negotiations over the US debt ceiling despite the economic disruption and loss of global standing it brought the country. Photo: Reuters

James K. Galbraith

Published: 9:30pm, 7 Jun 2023

There is an odious American political mythology concerning bipartisanship, according to which bitter adversaries, scarred by battle, find common ground, join hands and stroll off together into the sunset. It is mostly hokum.

Ulysses S. Grant did not reconcile with Robert E. Lee after Appomattox. Franklin D. Roosevelt did not reconcile with Herbert Hoover during the Great Depression, nor John F. Kennedy with Richard Nixon after the 1960 election. One does hear sugary reminiscences of Ronald Reagan and Tip O’Neill swapping blarney. But the real O’Neill fought Reagan – on principle and on politics – with everything he had.

In the spirit of the myth, US President Joe Biden recently praised House Speaker Kevin McCarthy after committing an appalling act of political surrender – on tax enforcement, social programmes, student debt, the environment and more.

Worst of all, Biden abandoned the principle that the debt ceiling should not obstruct progressive priorities in the future. But everything is all right, we are told, because Biden and McCarthy worked things out together.

But the White House and Treasury had at least three plausibly legal, wholly constitutional ways to defuse the supposed crisis without involving McCarthy and his increasingly unhinged Republican caucus. The administration could have minted a high-value platinum coin and deposited it at the US Federal Reserve, resorted to consol bonds which never mature, or issued premium bonds.

Republican House Speaker Kevin McCarthy (left) sits for debt limit talks with US President Joe Biden in the Oval Office at the White House in Washington on May 22. Photo: Reuters

Instead, they emerged from their trenches, waved a white flag and bargained away the keys to their fortress – all so the besieging army would go away for few years. Worse, the Democrats knew the Republican troops were divided and mutinous. Biden showed that when he told them, correctly, to get lost when they first approached.