“Nope,” Biden said matter-of-factly in August when asked by a reporter if he was concerned about the potential for a US default on its debt. “They’re not going to let us default.”
The comments, which bordered on a casual dismissal, came as Senate Minority Leader Mitch McConnell was rallying Republicans behind the idea that Democrats would have to approve any debt ceiling increase themselves.
Washington, once again, was barreling toward a self-imposed crisis that would rattle markets, threaten the US credit rating and, as has been the case for the better part of a decade, create yet another reason for Americans to question the government’s ability to handle the most basic of tasks.
In the moment, Biden’s brush-off appeared to be a misunderstanding of the dynamics that threatened to overtake Capitol Hill.
Instead, what it was — according to interviews with multiple people involved in the events that would take place over the next four months — was an early window into a strategy that would ultimately play a role in what became a crisis-free resolution that transpired with oddly little fanfare.
“It’s giving the system enough space to breathe so that we don’t create unnecessary political or partisan anxiety,” Steve Ricchetti, one of Biden’s closest advisers and point people on Capitol Hill, said in an interview when asked to describe the White House posture.
There are no shortage of major issues Biden and his team are grappling with as they prepare to enter his second year in office. The pandemic is entering a winter surge, and the economic dislocations that have come along with it continue to rattle an economy that by many metrics is otherwise in the midst of a robust recovery.
Biden’s cornerstone domestic legislative priority will be punted into next year amid continued disagreements with Sen. Joe Manchin of West Virginia, the key Democratic holdout, and critical presidential priorities ranging from voting rights to gun restrictions have no clear path forward due to Senate Republican opposition.
Yet on the issues of basic governance — the baseline requirements of any federal government that have been the center of so many crises in the last decade — Biden and leaders on Capitol Hill have managed to methodically handle them with limited theatrics.
“Maybe it’s a low bar,” a Democratic senator told CNN with a chuckle. “But it’s one we haven’t really cleared without drama in a long time.”
A Senate agreement
The pathway out of a looming debt ceiling crisis didn’t hatch at the White House. It was, by all accounts, an agreement driven by Senate Majority Leader Chuck Schumer and McConnell, two leaders who have had a complex and frosty relationship defined more by Senate floor speech attack lines than substantive closed-door meetings.
It’s what made McConnell’s mid-November request to meet with Schumer something that raised eyebrows in Schumer’s office and at the White House. McConnell had for months made clear that any debt ceiling increase would need to fall on the backs of Senate Democrats.
He’d even laid out the mechanism for the majority to accomplish that desire — an onerous budgetary procedure that would allow an increase through a simple majority vote.
But Schumer had set his party’s path — raising the debt ceiling through budget reconciliation was, in his view, a dicey nonstarter and he had no intention of blinking.
Senate Democrats repeatedly rebuffed McConnell’s push, objections that grew louder, more entrenched, and perhaps most importantly, even more unified after the Kentucky Republican backed off his demand to clear the way for a short-term increase in October. There was furor over the idea of turning what had become a bipartisan necessity in the last decade — one Democrats helped former President Donald Trump address three times — into something required only of the majority. There was anger that the minority, no matter how slim, was attempting to dictate the change in process.
Yet even as McConnell made clear directly to Biden that Republicans wouldn’t help with another debt ceiling increase — first in a scathing letter, then in a phone call with the President described by one person as matter-of-fact and devoid of fireworks — the political dynamics had started to shift.
Democrats were struggling to find the path forward on Biden’s cornerstone domestic legislation, the Build Back Better Act. The party’s poll numbers — and the President’s — had taken a hit in the process, thanks to a persistent pandemic and rising prices driven by supply constraints.
McConnell had always been clear that default wasn’t a hot stove he had any intention of touching. Now the idea of risking that, in a way that would thrust Republicans into the middle of a partisan battle that could end in catastrophe, carried zero appeal.
“They’re lighting themselves on fire,” one Republican official said of the view of Democratic poll numbers. “There’s zero reason for us to jump in the flames with them right before a midterm year, right?”
McConnell, throughout the year, had also keenly observed the pressure on Democratic Sens. Kyrsten Sinema of Arizona and Manchin to ditch the filibuster. Both had rejected growing Democratic desire to go down that path, but both were clear the debt ceiling wasn’t something that should be a political pawn.
McConnell decided to broach a pathway toward a debt ceiling increase with Schumer.
Ramping up the pressure
Biden administration officials, throughout the fall, deployed the tried-and-true levers of the last decade to ramp up pressure on Republicans.
There were the strategically timed letters and phone calls from Treasury Secretary Janet Yellen laying out the urgency and shrinking timeline to default. There were letters and calls from business and banking groups warning of dire economic consequences.
There was even a letter from bipartisan former Defense secretaries that, in a late addition, included the signature of rock-ribbed conservative Dick Cheney, who led the Pentagon under President George H.W. Bush and went on to serve as President George W. Bush’s vice president.
Yet, even as they made clear there was no daylight between Schumer and Biden, Biden’s top deputies took pains not to elevate the issue in public comments.
Schumer and White House chief of staff Ron Klain were in regular contact, “sometimes multiple times a day,” one official noted, and Klain regularly backed Schumer’s position inside the West Wing, even when some of Biden’s economic officials raised concerns about pushing things too close to the brink, people familiar with the matter said.
But White House officials were also careful not to close any potential off-ramps should they come to the forefront.
Throughout, the open lines of communication with McConnell’s office were maintained. It’s, in part, a necessity — in a 50-50 Senate, the minority leader’s office is a critical player in the basic functioning of the chamber.
But it was also a reflection of the relationship Biden has sought to maintain with McConnell.
White House officials are candid about the reality that one of their cornerstone legislative achievements of their first year, the $1.2 trillion infrastructure law, wouldn’t have been possible had McConnell moved to short-circuit the effort. While he wasn’t a lead negotiator and kept his own cards close to the vest, McConnell was quietly involved as a group of Senate Democrats and Republicans mapped out the deal with their White House counterparts.
Biden made a point of thanking McConnell in his televised remarks at the signing ceremony for the bill, even though the senator wasn’t among the hundreds in attendance.
Two veteran legislators who were critical deal makers in past fiscal battles when Biden served as vice president, they don’t view each other as old friends and don’t engage in regular calls to check in or compare notes on family and friends, people familiar with their relationship say.
They do, however, share an understanding that if they’re talking, it’s likely because there is an area or problem of mutual interest and — without much pretense, hyperbole or fanfare — they need to find a pathway toward a solution.
The two would speak more than once as the debt ceiling resolution came to fruition.
Democrats get together
After McConnell broached the meeting with Schumer, the New York Democrat picked up on the desire to address the debt ceiling on the annual defense authorization bill that was set to move through both chambers.
Schumer wanted to let Speaker Nancy Pelosi know of the potential breakthrough in advance of his meeting with McConnell but couldn’t reach her by phone. He then realized both were heading to the same climate change news conference outside the House side of the Capitol. Schumer sprinted over to reach the California Democrat before the event started and asked her to stay close by after she was done speaking.
The two walked to Schumer’s car and got inside, and the New Yorker walked through what was on the table. The next day, McConnell came to Schumer’s office to go through the potential details.
After the Thanksgiving holiday, Schumer and McConnell met again for 30 minutes just off the Senate floor to finalize the agreement. Schumer called Pelosi and Klain to read them in on the agreement to include a fast-track provision to allow for a simple majority vote on the debt limit on the defense bill.
House Republicans, who Pelosi would need to pass the defense authorization bill, rejected the idea, leading McConnell and Schumer to package the fast-track measure with two must-pass provisions.
Throughout the process, White House officials made clear that Biden would be behind any agreement, even though there were questions as to whether McConnell could secure the 10 Republicans needed to clear the fast-track bill.
They had good reason — several McConnell allies in the conference had panned the idea to reporters before he had read them in on the details.
But within 18 hours, after McConnell privately walked through his rationale — and made clear Democrats alone would be responsible for not only voting to raise the debt ceiling, but also attaching a $2.5 trillion number to the increase — 14 Senate Republicans would end up joining all 50 Democrats to advance the fast track measure.
“It was pretty remarkable to watch him turn that around,” said one administration official, who — despite being wary of coming across as complimentary of McConnell — willingly acknowledged the Kentuckian’s ability to get the votes in line.
Democrats would pass the debt ceiling increase on a party-line vote five days later. McConnell made a point of noting that only Democrats technically voted for the increase. Schumer pointed out that Democrats didn’t use the reconciliation process — and a bipartisan agreement set up the ultimate resolution.
There was, in short, something in the final agreement for everyone.
“Responsible governing has won on this exceedingly important issue,” Schumer said. “The American people can breathe easy, and rest assured there will not be a default.”
In the span of two weeks, Congress had placed the pin back in the default grenade until after the midterm elections and funded the government with minimal drama. The annual defense authorization bill also moved through.
“These folks have found ways to work together and see their way through what have been historically, over the last 15 or 20 years, sometimes thorny or extraordinarily disruptive and painful issues,” Ricchetti, who serves as a counselor to the President, said of McConnell, Schumer, Pelosi and Biden.
‘Just do the work’
As lawmakers prepared to depart for the Christmas holiday last week, Schumer and McConnell were once again on the floor laying down attack lines.
McConnell ramped up his all-out war against Biden’s $1.75 trillion economic and climate package, saying at one point that the best Christmas gift for Americans “would be putting this bad bill on ice.”
Schumer, who was managing intra-party divides on the Build Back Better proposal and voting rights efforts, trained his fire on Republicans, who — in his words — “will not join us to defend democracy.”
Biden was grappling with an ominous winter Covid surge as Manchin continued to throw a wrench into the President’s efforts to secure one more major legislative win for the year.
Shortly before noon on Thursday, with no fanfare or signing ceremony, the White House sent out a news release announcing Biden had signed the debt ceiling increase.
There would be no default.
“Not a lot of drama. Not a lot of hyperventilation,” Ricchetti said. “Just do the work.”