The Debt Limit and 2024
Hello, I hope you had a great weekend! It definitely feels like Summer is about to begin.
The news has been dominated by the return of Trump to cable news and the debt ceiling negotiations. The debt limit has all the makings of an obvious impending crisis that takes everyone by surprise. You think it will get hammered out like last time, only it might not. One person I spoke to in DC said, “Those who have confidence that the debt limit increase will work itself out aren’t seeing what I’m seeing.” He puts the odds of a hard default at 25%.
This week on the podcast I interview Dave Weigel, veteran political reporter for Semafor who I met while he was at the Washington Post. “The White House think that people will blame the Republicans if there’s a crash. But Republicans figure they will blame the President.” And Trump just called for a default if Dems don’t cave. It would be very hard for McCarthy and the Republicans to capitulate to a clean debt ceiling increase, so the question is what gets included in a compromise.
One reason why the possibility of default is higher is that both sides can hand wave a little bit on when the drop dead date is. Janet Yellen said the US could start defaulting as soon as June 1, but both sides and the press believe that the Treasury could shift some money around and continue to pay bills after that – other orgs forecast that the US might make it to July or August. It’s that kind of fuzziness that could lead to going past the deadline and cause markets to shudder. I’m glad that both sides seem to be taking the June 1 deadline seriously; the next two weeks will be enormous to avoid a completely unnecessary crisis that is born of the fact that the two parties are so polarized and unable to perform even basic tasks.
Dave and I also discuss the 2024 presidential field at length. We have both heard that there’s still some doubt as to whether Joe Biden actually stands next November; he may back out before the convention in August and the DNC could put together a ticket. But according to Dave, “There is no way they bypass Kamala. She would be at the top of the ticket, perhaps with a male governor to balance her out.” I am incredulous that the Dems would have confidence that Kamala would win the general given her shaky polling and performance in the Democratic primary and as Veep. I’ve heard concerns from a number of plugged-in people. Still, Dave’s take makes sense particularly given the current DNC leadership. He thinks there is still time to turn around public perception of Kamala (which I, personally, disagree with). Barring this kind of turn, it’s Joe Biden, as the DNC isn’t even bothering to hold debates.
For the Republicans, we both think it’s Trump in the pole position. The CNN Townhall almost certainly helped him stay above his rivals. There are another 4 or 5 Republican candidates who are set to announce, which will make consolidation more difficult. The biggest threat to him remains Ron DeSantis, whose campaign will be announced imminently. Will DeSantis the candidate perform much better than DeSantis the candidate-in-waiting? When I asked Dave, he was already projecting Trump into the general. Not a great sign for those who want another GOP candidate to emerge. There’s not much time, as the first GOP debates are in August.
A healthy political system wouldn’t give us a rematch between Biden and Trump, who will be a combined 160 years old in 2024. But a healthy political system wouldn’t have us facing a possible debt default either. Avoiding a self-imposed crisis is the best we can hope for nowadays, and even that hope might not last forever.
For my interview with Dave Weigel, click here. To build a better politics, check out Forward Party here.
