Kevin McCarthy is, at last, speaker of the U.S. House of Representatives. But the fight to get him there was tremendous – no balloting for speaker had gone on so long in more than a century. And it is clear that McCarthy had to pay off holdouts in the GOP House caucus with substantial concessions that will almost certainly cripple his speakership. It is doubtful he will last longer than his troubled predecessors did.
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The two previous GOP speakers – John Boehner (speaker from 2011 to 2015) and Paul Ryan (speaker from 2015 to 2019) – were unable to control the same populist, right-wing bloc that undercut McCarthy’s election last week. McCarthy, with a reputation for opportunism and pursuing the path of least resistance, will find his internal opponents holding him hostage repeatedly. They will force him to speak to issues the GOP base and media organs care about – investigations of the Biden administration, “wokeness,” the debt ceiling – even if much of the country does not care about these things. His inaugural address suggests as much.
McCarthy, a pre-Trump country-club Republican much like Senate Majority Leader Mitch McConnell, almost certainly wishes to focus on traditional Republican issues like taxes and deregulation. Therein lies the next major clash between the hardline Freedom Caucus and moderates around McCarthy.
A Looming Fight
McCarthy trying to contain the trumpist radicals in his caucus will bring about the next major GOP internal conflict later this year, over the debt ceiling. This will be a classic contest between establishment Republicans, with close ties to business and the GOP’s traditional big donors, and the trumpist-populist wing with its ties to right-wing media and its widespread belief in conspiracy theories about globalists, vaccines, the 2020 election, and so on.
The debt ceiling is a curious American quirk. It is a legislative limit on how much the U.S. Treasury Department can borrow. Its intent is to discipline federal spending. It has never really done so. Decisions to appropriate money are made through the normal congressional budget process. Ideally, those budgeteers would keep an eye on the encroaching debt limit and curb spending. In practice, this does not appear to happen. The outcome has been that the debt limit was, until recently, simply raised whenever it was approached.
As the Republican Party has radicalized over the last 30 years, the debt ceiling has become an increasingly attractive tool for hard-right lawmakers to hold Democratic presidents hostage, seeking to compel spending cuts they were unable to obtain in the appropriation process.
However, unlike the simpler tool of provoking a government shutdown, breaching the debt ceiling could provoke a sustained U.S. financial crisis and possibly spread to the global economy. The Treasury would be unable to spend and pay off debt, potentially forcing the U.S. to default. The U.S. has never defaulted on its obligations. This reliability keeps U.S. interest rates low and backstops the dollar’s role as the global reserve currency.
No one really knows what would happen if the U.S. breached the debt ceiling, and it is a risk no serious person wants to run. It is a disturbing sign of just how nihilistic the modern GOP has become that it ran this risk twice under former President Barack Obama (in 2011 and 2013) and will try it again this year under Biden.
McCarthy does Not Want to Breach the Debt Limit
The good news is that McCarthy is almost certainly not so ideological and careless about the potentially huge consequences. McCarthy is clearly a creature of the Reagan-era GOP, where big business and a wealthy donor class played a major role setting the Republican Party’s economic agenda. That is now in decline. Former President Donald Trump has accelerated the GOP’s change into a working-class party. Highly educated and high-income voters increasingly tilt to the Democratic Party.
But McCarthy, like Boehner and Ryan before him, represents the old guard. He does not share the recklessness of Trump and his followers. Like many business-class elements of the party, McCarthy wants entitlement cuts, but he is not willing to risk the American economy and possibly even a global recession for that. The business wing of the GOP is not irresponsible.
Ultimately, the rest of us must rely on that business interest to head off a financial crisis the GOP’s extremists seem intent on provoking. The Freedom Caucus will demand massive entitlement cuts from the Biden White House which it could not secure in the appropriations process. The White House will say no, and the crisis will run to the brink (as it did in 2011). This is where McCarthy will be required to show backbone at last and face down his caucus’ radicals.
This is still the most likely scenario. But today’s trumpist Republicans are even less serious about governing than the Tea Party was a decade ago. It might be time to finally consider the genuinely gimmicky options necessary to sideline this regular bout of brinksmanship.