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A Debt Deal May Be Coming. An Expert on the Congress Drama.

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House Speaker Kevin McCarthy speaks to members of the media at the U.S. Capitol in Washington on Wednesday.

Al Drago/Bloomberg

​​About the author: Casey Burgat is the director of the Legislative Affairs program at George Washington University's Graduate School of Political Management.

Many predicted Kevin McCarthy wouldn't get this far. 

Following his public, dayslong struggle to become House speaker in January, few observers anticipated McCarthy would establish such a strong negotiating position in debt limit talks with President Biden. For months, Democrats and the White House were sure that because history, precedence, and the Senate were on their side, their position of "no negotiations on the debt ceiling" would ultimately compel McCarthy and House Republicans to do what previous Congresses have done: pass a clean hike to the debt limit.

That strategy, however, became untenable as McCarthy kept his conference unified, at least publicly, behind the strategy that any measure that raises the debt ceiling must be coupled with spending cuts. Anything less would simply never get through the Republican-led House. 

The speaker's position was further bolstered—again, to the surprise of many—when he shepherded a bill through the House that combined a debt-limit increase with a nonstarter wishlist of GOP spending cuts and policy demands. Although the bill had no chance of becoming law, its passage contributed to the White House's reluctant acceptance that House Republicans were resolute in their stance that the debt ceiling and spending cuts must be linked, even as the default deadline loomed.

McCarthy's strategy succeeded in getting negotiations the president said were never going to happen. But hammering out a legislative compromise that can pass both chambers while allowing the speaker to keep his job was always going to be the more difficult task. 

McCarthy's challenges stem from a simple reality: A crucial segment of the Republican Conference—somewhere between two to three dozen lawmakers—will simply not support anything less than the Limit, Save, Grow Act that passed the House last month. These members have staked their political reputations on not caving to Democrats and won't retreat from their position. What's more, if they come to feel the speaker gave too much on a compromise they were never going to support in the first place, McCarthy could face a rebellion from the ultraconservative wing of his own party. Should that happen, his speakership could end only months after it began.

McCarthy has a narrow margin of only five votes that he can afford to lose on any negotiated debt-limit deal. That means he needs support from at least some House Democrats to secure passage. At the same time, though, the deal can't give conservatives too much of what they want because then no Democrats would be willing to give McCarthy the votes he needs to get it over the finish line. 

Complicated, right? This is exactly why we've seen weeks of fitful negotiations despite the very real threat of economic catastrophe. 

On the surface, this intricate dynamic grants House Democrats, and by extension, President Biden, considerable leverage in the negotiations. Knowing their votes will be necessary, Democrats have felt confident they can resist the inclusion of more conservative provisions, such as work requirements on government benefits, in the final bill. 

This is where McCarthy's biggest legislative achievement as speaker—passing the GOP's debt-ceiling measure that helped force the president to the negotiating table in the first place—may, ironically, make it more difficult for him to forge such an acceptable compromise. 

To ensure passage in the House, McCarthy was forced to incorporate a broad range of ultraconservative desires into the bill. Without them he wouldn't have had enough votes within his own party to get the measure through. But once it passed—and because he has been fervently championing the virtues and necessity of each of these provisions since—McCarthy may have unwittingly elevated expectations among his members of what is ultimately acceptable.

The situation isn't completely dissimilar to when my 6-year-old daughter put a puppy atop her birthday wishlist; once it became a possibility, even just in her own mind, it became the baseline against which she measured every other potential gift. 

Similarly, the inclusion of conservative demands in the bill may render enough of McCarthy's conference unwilling to settle for anything less. They have held media appearances on the bill; they have communicated with their constituents about why it's necessary; and to show strength and unity in the continuing negotiations with the White House, House Republicans have said explicitly that their bill is the only viable option that does what all have long said must be done: raise the debt ceiling. 

Enough Republicans, and perhaps even McCarthy himself, may have talked themselves into this take it or leave it position. When asked what concessions Republicans are willing to make in the continuing talks McCarthy replied, "We're going to raise the debt ceiling." Nothing else.

Unless Biden and Senate Democrats completely back down to save the economy, such a stance won't become law. This leaves us waiting for Biden and McCarthy to find the perfect balance in a deal that allows both parties to claim victory, but not so loudly that McCarthy's speakership is put in jeopardy or that Biden is seen as giving in to the hostage-takers. 

Such a deal is possible, even likely, but the timing has become absolutely dire. Congress has just days before the hard June 1 default deadline. If and when a compromise is reached, the legislation has to be written and made available for a minimum of 72 hours for members to read and digest the bill. And then the Senate, a body not exactly known for its breakneck speed, must get the bill through and on the president's desk. Doable, but tough.

Still, even if the debt ceiling is raised and catastrophe is averted, we've all lost by how this process has played out. A menacing new precedent has been normalized. The debt limit, once viewed as an untouchable third rail because of its calamitous consequences should default occur, is now seen as one of the most valuable legislative crowbars available to political parties and leaders willing to use it. 

And they have proven increasingly willing to use it.

Precisely because of its potential destruction, the debt ceiling can and will be used to put the opposing party in an impossible, but very real, false choice: accept our partisan demands or tank the economy. The strategy may pay off for McCarthy and Republicans this time around, but it will likely make the next inevitable fight over the decision to pay our country's bills even more perilous.

Guest commentaries like this one are written by authors outside the Barron's and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to ideas@barrons.com

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