WASHINGTON ― President Joe Biden will sign the Fiscal Responsibility Act into law on Saturday, capping weeks of congressional drama with a surprisingly dull end to a standoff that risked a worldwide economic catastrophe.
In a brief Oval Office speech on Friday night, Biden called the agreement “very good news” and said it showed bipartisanship was still possible in a politically polarized Washington.
“No one got everything they wanted, but the American people got what they needed,” he said. “Both sides operated in good faith. Both sides kept their word.”
Here are five takeaways from this year’s debt ceiling fight:
1. Joe Biden set the terms of debate.
The president’s maneuvering to set limits on the debate early in the showdown, as well as his strategic silence during the negotiations, giving Republicans room to back the bill, demonstrated that the 80-year-old former senator still knows a thing or two about dealmaking.
Even before Republicans won the House, Kevin McCarthy (R-Calif.) said they would demand policy concessions in exchange for a debt ceiling hike. Some of his colleagues suggested changes to the government programs driving the debt, namely Social Security and Medicare, an idea McCarthy didn’t rule out. Failing to raise the debt limit would cause a federal default that could spark an economy-wrecking financial crisis.
Every day in January, Biden or someone else in the White House hammered Republicans for suggesting they’d seek changes to the popular retirement programs. It all came to a head during the State of the Union Address in February, when Republicans loudly booed Biden for saying they’d shortchange seniors.
“So folks, as we all apparently agree, Social Security and Medicare is off the books now, right? They’re not to be touched?” Biden said, prompting Republican cheers and a weird moment of agreement that helped focus the agenda for the next several months.
Weeks earlier, former President Donald Trump had also chimed in, saying Republicans shouldn’t touch the programs, and McCarthy had begun to say they were off the table.
This week, however, the speaker complained Biden had insisted Congress could only adjust discretionary spending programs that aren’t really driving the debt.
“The president walled off all the others,” McCarthy said on Fox News.
2. McCarthy surprised everyone by taming the Freedom Caucus.
Everyone expected the feared House Freedom Caucus to destroy McCarthy when the House inevitably passed a bill with Democratic votes, but so far they’ve been unable to follow through on their tough talk.
Part of McCarthy’s deal to win the speaker’s gavel involved placating far-right lawmakers, agreeing to change House rules so individual members could initiate a vote to take the gavel away at any time. Right-wingers wanted power over McCarthy so that he wouldn’t dare cut a deal with Democrats, even though Democrats control two-thirds of the legislative process.
It wasn’t clear how McCarthy could possibly please both moderates and more extreme members of the GOP conference, but he steered them into supporting a symbolic bill that hewed close to Freedom Caucus demands for the debt ceiling ― an achievement that strengthened his negotiating position and seemed to catch the White House off guard.
For much of May, McCarthy pilloried Biden for failing to sit for negotiations or publicly pitch a set of demands. When talks got underway in earnest, McCarthy maintained an aggressive tone while Biden signaled he was willing to make concessions.
And then last week, when McCarthy and the White House revealed the framework of their deal, hardline Republicans complained but didn’t get in the way. Nobody tried to force a vote of no-confidence in McCarthy, and key members, such as Reps. Jim Jordan (R-Ohio) and Marjorie Taylor Greene (R-Ga.), made it clear they had the speaker’s back.
As part of his deal to gain the speakership, McCarthy had agreed to put three archconservatives on the House Rules Committee, an influential panel that decides what bills go to the House floor for an up-or-down vote. Two of the three voted against the debt ceiling bill, but Rep. Thomas Massie ― one of those Kentucky Republicans who is usually willing to use parliamentary procedures to annoy everyone on Capitol Hill ― actually voted for it.
“My interest in being on this committee was not to imprint my ideology,” Massie said ahead of the Rules Committee vote. “I think that is an inappropriate use of the Rules Committee.”
3. Democratic ‘grown-ups’ held their nose and saved the bill.
Though there was plenty of opposition from the left, the bill ended up passing with the support of some progressive lawmakers in both chambers of Congress who swallowed bitter provisions, including stricter work requirements for safety net programs. Even Democrats who opposed the deal admitted they would have voted for it had it been necessary to stave off a debt default.
“I would have voted to avoid default if it would have made the difference,” progressive Sen. John Fetterman (D-Pa.) said in a statement Thursday. “All in all, this was a tough vote and an ugly situation manufactured by extortionists. While we avoided a catastrophe this time around, we should never put the country in this situation again.”
The left’s biggest critiques were about the process rather than the contents of the bill. They warned the Biden administration against negotiating with people who are willing to plunge the economy into default. If Biden agreed to extortion now, they argued, Republicans would use the same tactic over and over again. They urged the White House to explore other options, including raising the debt limit unilaterally by citing the 14th Amendment. Biden shot down the legally untested idea as unfeasible and focused on striking a deal instead.
“The Democrats are called on once again to be the grown-ups in the room,” vented Sen. Elizabeth Warren (D-Mass.). “And the grown-ups in the room are the ones who have to make the hard choices.”
4. Republicans will take the debt ceiling hostage again.
Progressives have every reason to be concerned.
The agreement suspends the debt limit until Jan. 1, 2025, potentially setting up another grinding fight over spending in two years. Unless, of course, Biden loses his bid for reelection next year. History has shown Republicans have little interest in forcing fights over the debt limit under GOP presidents, and there would be little reason to constrain a president of their own party just days before he enters office.
But the latest drama over the debt ceiling has convinced significant swaths of the Democratic Party that they need to get rid of it for good. The United States and Denmark are the only democratic nations with an arbitrary debt limit, and the U.S. is the only one that could trigger global economic chaos if it defaults on its debt.
“We have to repeal the debt ceiling. We just have to,” complained Sen. Brian Schatz (D-Hawaii). “This is a preposterous way to conduct business.”
Even Sen. Jon Tester, a red-state Democrat, agreed with the need for reform. “Maybe just have it when you pass an appropriation bill, you automatically vote on the debt limit at that time,” he suggested.
Still, there are still a few Democratic senators who are opposed to the idea of eliminating the debt ceiling, which would ensure that the entire fiasco will repeat itself. Sen. Joe Manchin (D-W.Va.), for example, argued it provides a useful way to address deficits and debt.
“I think you have to recognize the financial conditions of our country, people should be made aware of that and there should be a process of doing it. It’s a shame this is the only way we have,” Manchin said.
5. The next big fight over spending is just around the corner.
The agreement should make avoiding a government shutdown in October, when federal funding is set to run out, easier for Biden and McCarthy. If federal spending is pie, Democrats and Republicans have, in theory, at least agreed on how big the pie should be. Determining how big each individual slice is could prove more difficult.
In reality, both Democrats and Republicans are looking at the pie and wondering if they can convince the other to agree to order seconds. Senate Republicans are demanding that Congress pass additional legislation to boost defense spending, even though the deal includes a 3% increase for the Pentagon, as the Biden administration had sought. Such a bill could also prove convenient for sending additional money to Ukraine in its defense against Russia.
Of course, any additional spending this year would need the approval of the GOP-led House, where skepticism of more aid to Ukraine runs rampant.
Another part of the bill could cause chaos this year by automatically cutting defense and nondefense funding if lawmakers fail to wrap up the dozen bills to fund government agencies by the end of the year.
“Think about the incentives this gives to the Democratic leader when it comes to appropriations bills,” said Sen. Tom Cotton (R-Ark.).
Rep. Rosa DeLauro (D-Conn.), the top Democrat on the House Appropriations Committee, voted against the bill, in part because of worries over the potential automatic rollback.
“It forces domestic investments to rely on budgetary gimmicks that will not only disappear in two years but are not guaranteed in the bill and instead are covered in a nonbinding side agreement,” she said.
Given the razor-thin margin Republicans have in the House, they’ll likely need Democratic help to pass the funding bills. And the Republican opponents of the debt limit deal meant to ease the annual budget process are unlikely to make things any easier.
As one of the deal’s chief foes, Rep. Chip Roy (R-Texas), thundered on the House floor Wednesday: “My beef is you cut a deal that shouldn’t have been cut!”
CORRECTION: A previous version of this article gave an incorrect date for when Biden would sign the bill into law. He plans to sign it Saturday.