Manchin’s Plan to Avert a Debt Crisis Just Might Work


As part of a deal to increase the debt ceiling, Joe Manchin wants Congress to appoint a bipartisan commission on entitlement reform. I know what you’re thinking: Another debt ceiling crisis? Another bipartisan commission? Another session of Congress dominated by what Joe Manchin wants?

This time, however, it’s Republicans more than Democrats who ought to appreciate the wisdom of playing ball with the moderate Democratic senator from West Virginia. House Speaker Kevin McCarthy and his colleagues have painted themselves into a corner on this issue. They’ve made clear what they don’t want to do — raise the debt ceiling without concessions from Democrats — but they don’t have an alternative proposal of their own.

Meanwhile, though it’s easy to roll one’s eyes at the similarity between Manchin’s proposal and the failed Joint Select Committee on Deficit Reduction that met in 2011, today’s situation is different in important ways.

During former President Barack Obama’s first term, concern over the deficit was purely political hysteria. Interest rates were low, inflation was low, unemployment was high, and the Federal Reserve was debating how far to go in terms of unorthodox monetary measures to stimulate the economy.

Today’s economic reality is utterly transformed. The unemployment rate is at its lowest level in decades. Inflation, though fallen from its highs of last year, is still well above the Fed’s 2% target rate. And interest rates, though not exactly high in historical terms, are higher than they’ve been for a long time — and are still going up.

Under the circumstances, a call for deficit reduction actually makes sense.

At the same time, the internal politics of the Republican Party have shifted. In 2011, John Boehner and Paul Ryan, for better or worse, had a House majority that was ready and willing to pass radical budget proposals that called for huge cuts to Medicaid and domestic discretionary spending, while also privatizing Medicare. The effort to force the White House to accede to such a plan as the price of raising the debt ceiling failed, but they tried.

Fast forward to 2022, when Senator Rick Scott’s agenda for budget cuts was immediately disavowed by Minority Leader Mitch McConnell. Florida Governor Ron DeSantis almost never talks about fiscal issues in public, even though he has become a conservative superstar in part by winking to the donor class that (unlike his rival Donald Trump) he is not opposed to cuts in Social Security and Medicare.

In short, nobody in the Republican Party within six feet of a competitive election wants to run on big entitlement cuts. Which is why, for all the drama in the House, Republicans are nowhere near to producing a plan that has anything like 218 votes.

They’re demanding that Democrats negotiate with them, but they don’t have a position to form the basis for a start of negotiations. So the White House and most Democrats on Capitol Hill are comfortable rejecting the various piecemeal Republican proposals, which they see as an effort to get Biden and Democratic leadership to negotiate with themselves.

In part, Republicans may be overestimating their own leverage because they misremember the Obama-era debt ceiling crisis.

A crucial factor in 2011 was that Obama sincerely wanted a dramatic bipartisan deal to reduce the deficit. For whatever mix of political and substantive reasons, it was one of his priorities, and he wasn’t opposed to using the debt ceiling as a way to get talks going.

Biden, despite his fondness for bipartisanship and his embrace of deficit reduction as part of the misleadingly named Inflation Reduction Act, does not appear to be in any hurry to cut a bipartisan deal on the deficit.

He agreed to the Inflation Reduction Act in order to get talks with Manchin restarted. But it was a partisan bill whose main purpose was to advance Biden’s policy on energy and health care. And he has talked incessantly, during his campaign and since becoming president, about uniting the country and has signed a range of bipartisan legislation that the White House is very proud of.

But a grand bargain on deficit reduction has never been an administration priority. He seems less convinced than Obama was of the merits of entitlement reform, and more willing than Obama was to simply go with the flow rather than trying to persuade Republicans to raise taxes.

This altered situation is exactly why Republicans should take Manchin seriously.

The supercommittee, the Simpson-Bowles commission, and similar efforts failed last time around because Republicans thought they could get a better deal by beating Obama and taking an all-cuts approach to deficit reduction. But they didn’t beat Obama — taxes went up — and by the time there was a GOP governing majority in 2017, there was no longer a party consensus in favor of cutting Medicare and Social Security. Conservatives had overplayed their hand.

Manchin is offering Republicans both a road out of the dead-end course they’ve set themselves on — and another chance to cut entitlements. Democratic leaders aren’t enthusiastic about this idea anymore, but if Republicans were united around something with even a patina of bipartisanship, Biden and moderate congressional Democrats would have a hard time saying no.

More From Bloomberg Opinion:

• The Debt-Ceiling Nonsense Has Gone On Long Enough: The Editors

• Financial Engineering the Debt Ceiling: Matt Levine

• Are Democrats Taking Joe Manchin for a Ride?: Ramesh Ponnuru

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Yglesias is a columnist for Bloomberg Opinion. A co-founder of and former columnist for Vox, he writes the Slow Boring blog and newsletter. He is author, most recently, of “One Billion Americans.”

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