About the Debt Ceiling Deal

We don’t have many of the fine details of the debt ceiling deal Kevin McCarthy has struck with (P)resident Joe Biden yet, but my first proposition is that the exact details don’t matter, and my conclusion is that the outcome is a modest but potentially significant win for Republicans. I think McCarthy played a weak hand—the political equivalent of a pair of deuces—extremely well. The political outcome of this deal is more important than the near-term fiscal policy outcome.

This is not the consensus of many conservatives right now, but The Squad and other “progressives” don’t like it either. It appears that the compromise will be passed with a typically swampy center-out bipartisan vote that most Power Line readers will hate. But before you take to the comment thread to demand that “Lucretia” kick my rear end, hang with the analysis for a moment.

There is a lot of criticism that McCarthy got a bad deal because the spending restraints are modest to non-existent (likely true), and moreover that he only got a $10 billion cut from the $80 billion passed last year for stepped-up IRS harassment of American taxpayers, after promising to rescind the entire amount as part of a deal. I suspect the IRS can’t actually absorb the $80 billion in new funding, or the surge of agents it funds, so a $10 billion cut is no real sacrifice at all by Democrats. It will require a Republican House, Senate, and President to roll back this predation fully, and that will have to wait another 18 months.

It was never realistic that this goal could be achieved, however. And even the very modest spending restraints can’t really be enforced by this deal, any more than the “permitting reform” promised to the fool Joe Manchin last summer could be enforced. The real action on spending will be in the regular budget process still to play out over the summer, which Democrats, having been surprised by the Republicans actually passing a debt ceiling bill, now think will yet fall apart in the formal budget process still to come. So the Freedom Caucus members should by all means vote against this deal, but it is in their interest to hang together with McCarthy for the bigger budget fight still to come this year.

So why do I think the deal is a political win for McCarthy that is more significant than the green eye-shade details of spending? First, he forced Biden to renounce his “no negotiations” on the debt ceiling position. Democrats like House leader Hakeem Jeffries are now lying that they never said they wouldn’t negotiate, but the RNC has the receipts:

Second, more important than this aspect of the debt ceiling deal: Biden agreed to work requirements for welfare recipients. Again, the details are vague, and the Biden Administration will cheat, as the bureaucracy will make sure to limit the reach of this “agreement” to make it effectively nugatory. To repeat, it will take a Republican Congress and Republican president to implement this principle properly.

But keep in mind that as recently as two weeks ago Democrats in Congress said any work requirements for welfare benefits would be a deal breaker. As I have argued on the podcast and elsewhere, this is because for Democrats, welfare programs are not relief for people in temporary distress, but means of redistribution by way of entitlement, and as such any suggestion of reciprocal obligation by recipients is a direct blow to their ideology.

These kind of political concessions are more important going forward than whether the budget for the next year is capped at 1 percent growth or 2 percent growth. McCarthy has won an important concession from Biden on this point, and even if the media ignores it, “progressive” Democrats are fuming about it, and Republicans, if they have the wit for it (always doubtful) can run with it.

Caveat: This assessment subject to change as we get further details of what’s in the bill the House will vote on.

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