US debt ceiling hike portends tough showdown between Republicans and Joe Biden

One voice less, and he had failed. After months of negotiations, Speaker Kevin McCarthy narrowly passed his first major bill through his Republican faction on Wednesday night. “We did our job,” McCarthy said afterwards. It is a symbolic feat of arms with major consequences.

The law would cap the entire US government budget for the next ten years. In practice, this equates to a reduction of 14%. The proposal ends many measures in the areas of climate, care and education – all workhorses for Democrats.

His law has no chance of becoming truly political. To do this, the proposal must first pass the Senate, where it will surely fall due to the Democratic majority. In extreme cases, President Biden could still veto it. Completely unachievable, the Republicans have also understood this. They are aiming for something else: to bring Joe Biden to the negotiating table, with the American economy at stake.

Dangerous dead end

The central issue is the increase in US public debt. Each year, Congress sets the debt ceiling, the maximum amount the United States can borrow. This cap is invariably raised as the country borrows more each year to keep it functioning. The current debt ceiling is expected to be reached this summer.

In a scenario where Congress votes against a raise, the US government would actually run out of money – with disastrous consequences. Republicans, led by Kevin McCarthy, are now using this scenario as leverage to force the president to make concessions.

Republicans in the House say they only want to vote for a raise in exchange for deep spending cuts, making it impossible to implement Biden’s policies in areas crucial to him. The result is a dangerous stalemate. “Worse than irresponsible”, the president described this barter.

Setback for Biden

For Joe Biden, McCarthy’s success on Wednesday is a setback. The Republican president has shown himself capable of aligning his brash faction beyond expectations. Earlier, he pointed out that Republicans are still saying no to his plans, but not offering an alternative. Now such an alternative is ready, albeit completely indigestible for Democrats.

It took McCarthy months to come up with a proposal that would swallow up his deeply divided faction. Due to the narrow majority in the House, five votes against were enough to defeat the bill in the House. In the end, four members of Congress voted against on Wednesday, all from the radical right.

The passed proposal forced the president on the defensive. “I will meet with McCarthy,” Biden said at a press conference on Wednesday. But not on raising the debt ceiling. It’s not negotiable.