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    Even Most Biden Voters Don’t See a Thriving Economy

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    A majority of those who backed President Biden in 2020 say today’s economy is fair or poor, ordinarily a bad omen for incumbents seeking re-election.Presidents seeking a second term have often found the public’s perception of the economy a pivotal issue. It was a boon to Ronald Reagan; it helped usher Jimmy Carter and George H.W. Bush out of the White House.Now, as President Biden looks toward a re-election campaign, there are warning signals on that front: With overall consumer sentiment at a low ebb despite solid economic data, even Democrats who supported Mr. Biden in 2020 say they’re not impressed with the economy.In a recent New York Times/Siena College poll of voters in six battleground states, 62 percent of those voters think the economy is only “fair” or “poor” (compared with 97 percent for those who voted for Donald J. Trump).What the Economy Looks Like to Biden Voters in Swing StatesPercent of President Biden’s 2020 supporters who …

    Notes: Respondents of other races were omitted because of low sample sizes. The figures may not add up to 100 percent because of rounding.Source: New York Times/Siena College polls of 3,662 registered voters conducted Oct. 22 to Nov. 3 in Arizona, Georgia, Michigan, Nevada, Pennsylvania and WisconsinBy The New York TimesThe demographics of Mr. Biden’s 2020 supporters may explain part of his challenge now: They were on balance younger, had lower incomes and were more racially diverse than Mr. Trump’s. Those groups tend to be hit hardest by inflation, which has yet to return to 2020 levels, and high interest rates, which have frustrated first-time home buyers and drained the finances of those dependent on credit.But if the election were held today, and the options were Mr. Biden and Mr. Trump, it’s not clear whether voter perceptions of the economy would tip the balance.“The last midterm was an abortion election,” said Joshua Doss, an analyst at the public opinion research firm HIT Strategies, referring to the 2022 voting that followed the Supreme Court’s decision to overturn the Roe v. Wade ruling. “Most of the time, elections are about ‘it’s the economy, stupid.’ Republicans lost that because of Roe. So we’re definitely in uncharted territory.”There are things working in Mr. Biden’s favor. First, Mr. Doss said, the economic programs enacted under the Biden administration remain broadly popular, providing a political foundation for Mr. Biden to build on. And second, social issues — which lifted the Democrats in the midterms — remain a prominent concern.Take Oscar Nuñez, 27, a server at a restaurant in Las Vegas. Foot traffic has been much slower than usual for this time of year, eating into his tips. He’d like to start his own business, but with the rising cost of living, he and his wife — who works at home answering questions from independent contractors for her employer — haven’t managed to save much money. It’s also a tough jump to make when the economy feels shaky.Mr. Nuñez expected better from Mr. Biden when he voted blue in 2020, he said, but he wasn’t sure what specifically the president should have done better. And he is pretty sure another Trump term would be a disaster.“I’d prefer another option, but it seems like it will once again be my only option again,” Mr. Nuñez said of Mr. Biden. For him, immigrants’ rights and foreign policy concerns are more important. “That’s why I was picking him over Trump in the first place — because this guy’s going to do something that’s real dangerous at some point.”Mr. Nuñez isn’t alone in feeling dissatisfied with the economy but still bound to Mr. Biden by other priorities. Of those surveyed in the six battleground states who plan to vote for Mr. Biden in 2024, 47 percent say social issues are more important to them, while 42 percent say the economy is more important — but that’s a closer split than in the 2022 midterms, in which social issues decisively outweighed economic concerns among Democratic voters in several swing states. (Among likely Trump voters, 71 percent say they are most focused on the economy, while 15 percent favor social issues.)Kendra McDowell thinks President Biden is doing the best he can given the continuing challenges of the wars in Ukraine and Gaza. “People are shopping — you know why? Because they’ve got jobs,” she said.Hannah Yoon for The New York TimesDour sentiment about the economy also isn’t limited to people who’ve been frustrated in their financial ambitions.Mackenzie Kiser, 20, and Lawson Millwood, 21, students at the University of North Georgia, managed to buy a house this year. Mr. Millwood’s income as an information-technology systems administrator at the university was enough to qualify, and they worried that affordability would only worsen if they waited because of rising interest rates and prices. Still, the experience left a bitter taste.“The housing market is absolutely insane,” said Ms. Kiser, who wasn’t old enough to vote in 2020 but leans progressive. “We paid the same for our one-story, one-bedroom cinder-block 1950s house as my mom paid for her three-story, four-bedroom house less than a decade ago.”Ms. Kiser doesn’t think Mr. Biden has done much to help the economy, and she worries he’s too old to be effective. But Mr. Trump isn’t more appealing on that front.“It’s not that I think that anybody of a different party could do better, but more that someone with their mental faculties who’s not retirement age could do a better job,” Ms. Kiser said. “Our choices are retirement age or retirement age, so it’s rock and a hard place right now.”Generally, voters don’t think Republicans are fixing the economy, either. In a poll conducted this month by the progressive-leaning Navigator Research, 70 percent of voters in battleground House districts, including a majority of Republicans, said they thought Republicans were more focused on issues other than the economy.The health of the economy is still a major variable leading up to the election. A downturn could fray what the president cites as a signal accomplishment of Bidenomics: low unemployment. A study of the 2016 election found that higher localized unemployment made Black voters, an overwhelmingly Democratic constituency, less likely to vote at all.“I think the likelihood that they would choose Trump is not the threat,” Mr. Doss said. “The threat is that they would choose the couch and stay home, and enough of them would stay home for an electoral college win for Trump.”But in the absence of a competitive Democratic primary, the campaigning — and television spots — have yet to commence in earnest. When they do, Mr. Doss has some ideas.So far, Mr. Biden’s messaging has focused on macroeconomic indicators like the unemployment rate and tackling inflation. “The truth is, that’s not the economy to most people,” Mr. Doss said. “The economy to most people is gas prices and food and whether or not they can afford to throw a birthday party for their kid.”Mr. Millwood supports a higher federal minimum wage, and is impatient with the bickering and finger pointing he hears about in Washington.Audra Melton for The New York TimesIt’s difficult for presidents to directly control inflation in the short term. But the White House has addressed a few specific costs that matter for families, by releasing oil from the Strategic Petroleum Reserve to contain surging oil prices in late 2022, for example. The Inflation Reduction Act reduced prescription drug prices under Medicare and capped the cost of insulin for people with diabetes. The administration is also going after what it calls “junk fees,” which inflate the prices of things like concert tickets, airline tickets and even birthday parties.The more the administration talks about its concrete efforts to lower prices, the more Mr. Biden will benefit, Mr. Doss said. At the same time, Mr. Biden can lessen the blowback from persistent inflation by deflecting blame — an out-of-control pandemic was the original cause, he could plausibly argue, and most other wealthy countries are worse off.That’s how it seems to Kendra McDowell, 44, an accountant and single mother of four in Harrisburg, Pa. She feels the sting of inflation every time she goes to the grocery store — she spent $1,000 on groceries this past month and didn’t even fill her deep freezer — and in the health of her clients’ balance sheets. Despite her judgment that the economy is poor, however, she still has enough confidence to start a business in home-based care, a field in greater demand since Covid-19 ripped through nursing homes.“When I talk about the economy, it’s just inflation, and to me inflation is systemic and coming from the Trump administration,” Ms. McDowell said. If the pandemic had been contained quickly, she reasoned, supply chains and labor disruptions wouldn’t have sent prices soaring in the first place.Moreover, she sees the situation healing itself, and thinks Mr. Biden is doing the best he can given the challenges of the wars in Ukraine and now Gaza. “People are shopping — you know why? Because they’ve got jobs,” Ms. McDowell said. “God forbid, today or tomorrow, if I had to go find a job, it’s easier than it was before.”Ms. McDowell is what’s known in public opinion research as a high-information voter. Polls have shown that those less apt to stay up on the news tend to change their views when provided with more background on what the Biden administration has both accomplished and attempted.Ms. McDowell, a mother of four, said that she felt the sting of inflation every time she went to the grocery store, but that she didn’t blame Mr. Biden.Hannah Yoon for The New York TimesThe 15-month-old Inflation Reduction Act is still little known, for example. But this past March, the Yale Program on Climate Change Communication found that 68 percent of respondents supported it when filled in on its main components.A frequent theme of conversations with Democratic voters who see the economy as poor is that large corporations have too much power and that the middle class is being squeezed.Mr. Millwood, Ms. Kiser’s partner, said that he was concerned that society had grown more unequal in recent years, and that he didn’t see Mr. Biden doing much about it.“From what I see, it really doesn’t look like the working class is benefiting from many things recently,” said Mr. Millwood, who supports a higher federal minimum wage and is impatient with the bickering and finger pointing he hears about in Washington.After the phone conversation ended, Mr. Millwood texted to say that upon reflection, he would also like to see Mr. Biden push to lower taxes for low-income families and make it more difficult for the wealthiest to dodge them. After being sent news articles about Mr. Biden’s support for the extension of the now-expired Child Tax Credit and the appropriation of $80 billion for the Internal Revenue Service, in part to pursue tax evaders, he seemed surprised.“That is absolutely what I had in mind,” Mr. Millwood texted. “It’s been so noisy in the media lately I haven’t seen much that is covering things like that,” adding, “Biden doesn’t seem so bad after all haha.”Ruth Igielnik More

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    On the Economy, Biden Struggles to Convince Voters of His Success

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    Wages are up, inflation has slowed and the White House has a new slogan. Still, President Biden’s poor marks on the economy are making Democrats worried.When a chant slamming President Biden spread from a NASCAR race to T-shirts and bumper stickers across red America two years ago, the White House pulled off perhaps its savviest messaging feat to date. Biden aides and allies repackaged the “Let’s Go Brandon” insult and morphed it into “Dark Brandon,” a celebratory meme casting Mr. Biden as some sort of omnipotent mastermind.Now, the White House and the Biden campaign is several weeks into another appropriation play — but it isn’t going nearly as well. Aides in July announced that the president would run for re-election on the virtues of “Bidenomics,” proudly reclaiming the right’s derisive term for Mr. Biden’s economic policies.The gambit does not appear to be working yet. Even as Mr. Biden presides over what is by all indicators a strong economy — one on track to dodge the recession many had feared — he is still struggling to convince most of the country of the strength of his economic stewardship. Wages are up, inflation has slowed, but credit to the president remains in short supply.Polling last month from the Democratic organization Navigator found that 25 percent of Americans support Mr. Biden’s major actions, such as the Inflation Reduction Act, but still think the president is doing a poor job handling the economy. It’s a group that tends to be disproportionately younger than 40 and is more likely to be Black or Latino — voters critical to Democratic victories.“This is the thing that’s vexing all Democrats,” said Patrick Gaspard, the president of the Center for American Progress.Democratic economists, pollsters and officials have a variety of explanations for why voters don’t credit Mr. Biden for the economy. Inflation remains elevated, and interest rates have made home buying difficult. There is also evidence that voters’ views on the economy are shaped as much by their political views as by personal experiences.And then there is the regular refrain that people don’t know about Mr. Biden’s successes. Even Mr. Biden’s supporters say that he and his administration have been too reluctant to promote their record and ineffective when they do.“I’ve never seen this big of a disconnect between how the economy is actually doing and key polling results about what people think is going on,” said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank in Washington.Mr. Biden on Friday attempted another victory lap in a White House speech celebrating the latest jobs report, which found no sign of an imminent recession and a slight increase in the unemployment rate as more people sought work. He credited the heart of his economic plan, including investment in infrastructure, semiconductor manufacturing and climate-related industries along with caps on the price of insulin medication.Bidenomics, Mr. Biden said, “is about investing in America and investing in Americans.”Mr. Biden said his economic plan was to credit for the latest jobs report, which found no sign of an imminent recession and a slight increase in the unemployment rate as more people sought work.Kent Nishimura for The New York TimesThe term Bidenomics emerged as a pejorative in conservative media and has been widely adopted by Mr. Biden’s rivals. “One of the most important issues of the campaign will be who can rescue our country from the burning wreckage of Bidenomics,” former President Donald J. Trump said in a recent video, “which shall henceforth be defined as inflation, taxation submission and failure.”Gov. Ron DeSantis of Florida offered his definition at a recent campaign stop in Rock Rapids, Iowa. “Bidenomics is basically: You have a lower standard of living so he can pursue the left’s ideological agenda,” he said.Behind the rhetoric, there is some debate over whether the economy will be the driving force it has been in past presidential elections. Some Democrats argue that their party’s resilience in last year’s midterm elections showed that the fight over abortion rights and Mr. Trump’s influence over Republicans can trounce more kitchen-table concerns.The White House argues that Democrats’ strong showing last year is a sign the Mr. Biden’s electoral performance isn’t strictly tied to the economy.“By all metrics, his economic record has improved since then,” said Andrew Bates, a White House spokesman.Still, nearly all of Mr. Biden’s campaign advertising this year sells his economic record. The ads — which don’t use the term Bidenomics — cast the president’s policies as a work in progress. “All of the things that Biden fought to get passed helped the middle class,” a cement mason from Milwaukee says in an ad the campaign released last week.“It’s no secret that a lot of Americans are struggling with the cost of living, and that’s a reality that shapes their views about the economy more broadly,” said Geoff Garin, a pollster who conducts surveys for the Democratic National Committee.Explaining why Mr. Biden’s policies will help, Mr. Garin said, “is what campaigns are for.”This summer Mr. Biden has promoted “Bidenomics” at events around the country, often speaking in factories or with labor groups. Even some in friendly audiences of local Democratic leaders and supporters questioned whether his emphasis would resonate with the coalition that elected him in 2020.“Is Bidenomics the right thing to sell?” Mayor Katie Rosenberg of Wausau, Wis., said after seeing Mr. Biden speak in Milwaukee last month. “I just keep thinking, why aren’t they just doing Build Back Better still? That was a really good slogan. Bidenomics is just an effort to capitalize on the negativity around him.”Build Back Better, the mix of economic, climate and social policy that Mr. Biden ran on in 2020, was a bumper-sticker-length encapsulation of Mr. Biden’s ambitions as president. Significant elements became law, but the branding exercise failed, doomed in part by rising inflation.Mr. Biden’s “Build Back Better” slogan was a bumper-sticker-length encapsulation of his ambitions as president.Hannah Yoon for The New York TimesDemocrats rebranded their climate legislation as the Inflation Reduction Act, even though the bill had little to do with inflation. Even Mr. Biden recently said that he regretted the name, suggesting that it promised something the bill was not devised to deliver.Though the rate of inflation has slowed, it remains the chief drag on Mr. Biden’s economic approval ratings, said Joanne Hsu, the director of Surveys of Consumers at the University of Michigan.“We track people who have heard negative news about inflation,” Dr. Hsu said. “Over the past year, that number has been much higher than in the 1970s and ’80s, when inflation was so much worse.”One theme of Mr. Biden’s aides, advisers and allies is to plead for time. The economy will get better, more people will hear and understand what Bidenomics means and credit will accrue to the president, they say.“The public more and more is going to be seeing low unemployment and will continue to get more bullish on the economy,” said Representative Robert Garcia of California, a member of the Biden campaign’s national advisory board. “But I also understand it’s very hard for people now. We just can’t expect overnight for people to feel better about the economy.”For most Americans, their views on the economy are directly tied to their partisan leanings — a phenomenon that is particularly acute for Republicans. In 2016, before Mr. Trump took office, just 18 percent of Republicans rated the economy excellent or good, according to a Pew Research survey. By February 2020, just before the pandemic shut down public life in America, 81 percent of Republicans said the economy was excellent or good.An Associated Press/NORC Center for Public Affairs Research poll last month found just 8 percent of Republicans, along with 65 percent of Democrats, approved of Mr. Biden’s handling of the economy.Mr. Biden’s sympathizers say part of his problem on the economy is an unwillingness to promote its bright spots out of fear of seeming insensitive to Americans struggling with higher prices. Mr. Trump had no such restraint, describing the economy as the best in history and the envy of the world. Using “Bidenomics” as a framework lets the president take ownership of the economy, but it doesn’t exactly tell voters that the economy is great.“Trump chose people who were probably less experienced in terms of making policy, but some of them are quite good about talking up the president,” said Ben Harris, a former top Treasury official in the Biden administration who played a leading role in outlining the Build Back Better agenda during the 2020 campaign. “Biden’s taken a more modest and humble approach, and there’s a chance that’s come back to haunt him.”Jason Furman, who served as chairman of the Council of Economic Advisers in the Obama administration, said there was a regular debate in that White House about how much to sell the public on the idea that the economy was improving even if people didn’t feel in their own lives.Now he said it was difficult for the Biden administration to take victory laps over slowing inflation because wages haven’t kept pace, leaving a typical worker about $2,000 behind compared with before the pandemic.“The way to think about that is people were in an incredibly deep hole because of inflation and we’re still not all the way out of that hole,” Mr. Furman said. “The fact that you protected people in the bad times means the good times don’t feel as good.”Nicholas Nehamas More

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    Biden’s Debt Ceiling Strategy: Win in the Fine Print

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    The president and his negotiators believe they worked out a deal that allowed Republicans to claim big spending cuts even as the reality was far more modest.Shalanda Young couldn’t sleep.A small team of Biden administration officials had spent the past two days in intense negotiations with House Republicans in an attempt to avert a catastrophic government default. Ms. Young, the White House budget director, had been trading proposals on federal spending caps with negotiators deputized by Speaker Kevin McCarthy, whose Republican caucus was refusing to raise the nation’s $31.4 trillion borrowing limit without deep cuts.Now, as she scrolled Netflix in search of “bad television” to distract her racing mind, Ms. Young had a sinking feeling. What if she cut a deal to reduce spending and raise the debt limit, only to see Republicans attempt to force through much deeper cuts when it came time to pass annual appropriations bills this fall?At work the next morning, Ms. Young asked her staff how to stop that from happening. They settled on a plan, which in essence would penalize Republicans’ most cherished spending programs if they failed to follow the contours of the agreement. Then they forced Republicans to include that plan in the legislative text codifying the deal.That approach reflected a broader strategy President Biden’s team followed in the debt limit negotiations, according to interviews with current and former administration officials, some Republicans and other people familiar with the talks.On Saturday, that strategy reached its conclusion as Mr. Biden signed the Fiscal Responsibility Act of 2023 into law, just days before a potential default and following weeks of talks and a revolt from right-wing lawmakers in the House that put an agreement at risk of collapse.In pursuit of an agreement, the Biden team was willing to give Republicans victory after victory on political talking points, which they realized Mr. McCarthy needed to sell the bill to his conference. They let Mr. McCarthy’s team claim in the end that the deal included deep spending cuts, huge clawbacks of unspent federal coronavirus relief money and stringent work requirements for recipients of federal aid.But in the details of the text and the many side deals that accompanied it, the Biden team wanted to win on substance. With one large exception — a $20 billion cut in enforcement funding for the Internal Revenue Service — they believe they did.The way administration officials see it, the full final agreement’s spending cuts are nothing worse than they would have expected in regular appropriations bills passed by a divided Congress. They agreed to structure the cuts so they appeared to save $1.5 trillion over a decade in the eyes of the nonpartisan Congressional Budget Office. But thanks to the side deals — including some accounting tricks — White House officials estimate that the actual cuts could total as little as $136 billion over the two enforceable years of the spending caps that are central to the agreement.Much of the $30 billion in clawed-back Covid-19 money was probably never going to be spent, Biden officials say, including dollars from an aviation manufacturing jobs program that had basically ended.At one point in the talks, administration officials offered to include in the deal more than 100 relief programs from which they were willing to rescind money. The final list spanned 20 pages of a 99-page bill, and Mr. McCarthy championed it on the House floor. But because much of the money was repurposed for other spending, the net savings added up to only about $11 billion over two years. One of the programs had a remaining balance of just $40.Many Democrats remain furious that the deal included new work requirements that could push 750,000 people off food stamps, which the Biden team begrudgingly concluded it had to accept.That measure alone could have tanked Democratic support for the deal in Congress, officials knew. So they sought to counterbalance it with efforts to expand food stamp eligibility for veterans, the homeless and others, which Republicans agreed to do. The budget office concluded that the changes would actually add recipients to the program, on net.Some Democrats and progressive groups have sharply criticized Mr. Biden for negotiating over the debt limit at all, denouncing the spending cuts and work requirements and saying he cemented Republicans’ ability to ransom the borrowing limit whenever a Democrat occupies the White House.Republican negotiators sold the deal as a game-changing blow to Mr. Biden’s spending ambitions. “They absolutely have tire tracks on them in this negotiation,” Representative Garret Graves of Louisiana said before the House vote on Wednesday.Mr. Biden views it differently. As the Senate prepared to pass the agreement on Thursday evening, he huddled with his chief of staff, Jeffrey D. Zients, along with Steve Ricchetti, counselor to the president, and other aides, in Mr. Zients’s office in the West Wing of the White House. Mr. Biden asked them what you might call a scorecard question: What percentage of Democrats in the House had voted for the deal, and what share were expected to in the Senate?When Mr. Ricchetti told him the number of Democrats would be larger, in both chambers, than the share of Republicans supporting the deal, Mr. Biden was pleased. It was validation, in his view, that he had cut a good deal.Mr. Zients referred to that vote share in an interview on Friday. “If you go back a few months ago, no one would have thought this was possible,” he said.It was not an assured outcome. The negotiating teams came to the table with divergent views of the drivers of federal debt in recent years. White House negotiators blamed Republican tax cuts. Republicans blamed Mr. Biden’s economic agenda, including a debt-financed Covid relief bill in 2021 and a bipartisan infrastructure bill later that year.The dispute occasionally grew profane. At one point, after Mr. Biden’s negotiators criticized the 2017 Republican tax cuts, a “very mild-mannered” aide to Mr. McCarthy stood up, shook his finger at the Biden team and hotly responded that their argument was nonsense, using a vulgarity, Mr. Graves recounted.Mr. Biden had insisted for months that he would not negotiate over raising the borrowing limit. But privately, many aides had been planning on talks all along — though they refused to admit those talks were linked to the debt limit. The Biden team reasoned that it would have to negotiate fiscal issues this year anyway, both on appropriations bills and on programs like food stamps that are included in a regularly reauthorized farm bill.Mr. Biden’s economic advisers, including Lael Brainard, the director of the National Economic Council, and Treasury Secretary Janet L. Yellen, were warning of catastrophic damage to the economy if the government could no longer pay its bills on time.The president appeared to score wins before the talks even started. He goaded Republicans into agreeing, in the midst of his State of the Union address, that Social Security and Medicare would be off limits in the talks — thanks to a spontaneous riff that grew out of a passage in his speech that he had worked on extensively in the days beforehand. He proposed a budget filled with tax increases on the rich and corporations that were meant to reduce debt, but he refused to engage Mr. McCarthy in serious talks until Republicans offered a spending plan of their own.In late April, the House passed a bill that included $4.7 trillion in savings from spending cuts, canceling clean-energy tax breaks and clawing back money for Covid relief and the I.R.S. It featured work requirements and measures to speed fossil fuel projects, and it raised the debt limit for one year.Mr. Biden, under fire from business groups and others who feared the standoff could result in the United States running out of money before the debt limit was raised, soon agreed to designate a team of negotiators. The White House team was led by officials including Ms. Young and one of her top aides, Michael Linden, who delayed his departure from the White House to help negotiate along with Louisa Terrell, the legislative affairs director, and Mr. Ricchetti.Mr. McCarthy’s negotiators gave Biden officials the impression that to reach agreement, they needed at least one talking point from every major aspect of the House Republican debt limit bill.The talks took a few surprising turns. Multiple White House officials say the Republican team briefly entertained relatively modest proposals to raise tax revenue, including closing loopholes that benefit some real-estate owners and people who trade cryptocurrency. Those discussions stalled quickly.Democrats agreed to fast-track a natural gas pipeline, in what officials concede was making good on a promise to Senator Joe Manchin III, Democrat of West Virginia, for backing Mr. Biden’s signature climate law last year.The spending caps ended up roughly where many Biden aides had predicted they would in private discussions months ago. But few White House officials believed they would have to give up $20 billion of the $80 billion that Democrats approved last year to help the I.R.S. crack down on tax cheats. Mr. Biden hammered out the amount in a final call with Mr. McCarthy.Ms. Young said that cut was painful. “And not just for me,” she added. “It’s something we talked to the president about many times. He cares deeply about this.”On Thursday evening in Mr. Zients’s office, the president and his team were focused on upsides. They had beaten back Republican attempts to cancel the climate law, to add new work requirements on Medicaid recipients and to impose binding spending caps for a decade. Mr. Biden was particularly pleased to spare key veterans’ programs from cuts.On Friday morning, Mr. Zients gathered core officials in his office, as he had every day, seven days a week, for several weeks running. Ms. Brainard and the economic team were relieved to have cleared the threat of default not just for this year, but through the next presidential election. Aides worked on honing Mr. Biden’s planned remarks in an Oval Office address on Friday evening.The speech started at 7:01 p.m., unusually promptly for Mr. Biden. By then, his staff was already celebrating. An hour earlier, happy hour had begun in Mr. Zients’s office.Catie Edmondson More

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    The Debt-Ceiling Deal Suggests Debt Will Keep Growing, Fast

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    The bipartisan deal to avert a government default this week featured modest cuts to a relatively small corner of the federal budget. As a curb on the growth of the nation’s $31.4 trillion debt load, it was a minor breakthrough, at best.It also showed how difficult — perhaps impossible — it could be for lawmakers to agree anytime soon on a major breakthrough to demonstrably reduce the nation’s debt load.There is no clear economic evidence that current debt levels are dragging on economic growth. Some economists contend that rising debt levels will hurt growth by making it harder for businesses to borrow money; others say spiraling future costs of government borrowing could unleash rapid inflation.But Washington is back to pretending to care about debt, which is poised to top $50 trillion by the end of the decade even after accounting for newly passed spending cuts.With that pretense comes the reality that the fundamental drivers of American politics all point toward the United States borrowing more, not less.The bipartisan agreement to suspend the debt ceiling for two years, which passed the Senate on Thursday, effectively sets overall discretionary spending levels over that period. The agreement cuts federal spending by $1.5 trillion over a decade, according to the Congressional Budget Office, by essentially freezing some funding that had been projected to increase next year and then limiting spending to 1 percent growth in 2025.But even with those savings, the agreement provides clear evidence that the nation’s overall debt load will not be shrinking anytime soon.Republicans cited that mounting debt burden as a reason to refuse to raise the limit, risking default and financial crisis, unless Mr. Biden agreed to measures to reduce future deficits. But negotiators from the White House and House Republican leadership could only agree to find major savings from nondefense discretionary spending.That’s the part of the budget that funds Pell grants, federal law enforcement and a wide range of domestic programs. As a share of the economy, it is well within historical levels, and it is projected to fall in the coming years. Currently, base discretionary spending accounts for less than one-eighth of the $6.3 trillion the government spends annually.The deal included no major cuts to military spending, which is larger than base nondefense discretionary spending. Early in the talks, both parties ruled out changes to the two largest drivers of federal spending growth over the next decade: Social Security and Medicare. The cost of those programs is expected to soar within 10 years as retiring baby boomers qualify for benefits.While Republicans at first balked when Mr. Biden accused them of wanting to cut those politically popular programs, they quickly switched to blaming the president for taking them off the table.Asked on Fox News on Wednesday why Republicans had not targeted the entire budget for cuts, Speaker Kevin McCarthy replied, “Because the president walled off all the others.”“The majority driver of the budget is mandatory spending,” he said. “It’s Medicare, Social Security, interest on the debt.”Negotiators for Mr. McCarthy effectively walled off the other half of the debt equation: revenue. They rebuffed Mr. Biden’s pitch to raise trillions of dollars from new taxes on corporations and high earners, and both sides wound up agreeing to cut funding for the Internal Revenue Service that was expected to bring in more money by cracking down on tax cheats.Instead, Republicans attempted to frame mounting national debt as solely a spending problem, not a tax-revenue problem, even though tax cuts by both parties have added trillions to the debt since the turn of the century.Republican leaders now appear poised to introduce a new round of tax-cut proposals, which would likely be financed with borrowed money, a move Democrats decried during the floor debate over the debt-ceiling deal.“Before the ink is dry on this bill, you will be pushing for $3.5 trillion in business tax cuts,” Representative Gwen Moore, Democrat of Wisconsin, said shortly before the final vote on the Fiscal Responsibility Act, as it is called, on Wednesday.Those comments reflected a lesson Democrats took from 2011, when Washington leaders last made a big show of pretending to care about debt in a bipartisan deal to raise the borrowing limit. That agreement, between President Barack Obama and Speaker John Boehner, limited discretionary spending growth for a decade, helping to drive down budget deficits for years.Many Democrats now believe those lower deficits gave Republicans the fiscal and political space they needed to pass a tax-cut package in 2017 under President Donald J. Trump that the Congressional Budget Office estimated would add nearly $2 trillion to the national debt. They have come to believe that Republicans would happily do the same again with any future budget deals — putting aside deficit concerns and effectively turning budget savings into new tax breaks.At the same time, both parties have grown more wary of cuts to Social Security and Medicare. Mr. Obama was willing to reduce future growth of retirement benefits by changing how they were tied to inflation; Mr. Biden is not. Mr. Trump won the White House after promising to protect both programs, in a break from past Republicans, and is currently slamming his rivals over possible cuts to the programs as he seeks the presidency again.All the while, the total amount of federal debt has more than doubled, to $31.4 trillion from just below $15 trillion in 2011. That growth has had no discernible effect on the performance of the economy. But it is projected to continue growing in the next decade, as retiring baby boomers draw more government benefits. The budget office estimated last month that debt held by the public would be nearly 20 percent larger in 2033, as a share of the economy, than it is today.Even under a generous score of the new agreement, which assumes Congress will effectively lock in two years of spending cuts over the full course of a decade, that growth will only fall by a few percentage points.Groups promoting debt reduction in Washington have celebrated the deal as a first step toward a larger compromise to reduce America’s reliance on borrowed money. But neither Mr. McCarthy nor Mr. Biden has shown any interest in what those groups want: a mix of significant cuts to retirement programs and increases in tax revenues.Mr. McCarthy suggested this week that he would soon form a bipartisan commission to scour the full federal budget “so we can find the waste and we can make the real decisions to really take care of this debt.”The 2011 debt deal produced a similar sort of commission, which issued recommendations on politically painful steps to reduce debt. Lawmakers discarded them. There’s no evidence they’d do anything else today. More

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    How to Enforce a Debt Deal: Through ‘Meat-Ax’ Cuts Nobody Wants

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    The debt-limit legislation includes a provision meant to force both sides to pass additional bills following through on their deal: the threat of automatic cuts if they fail to do so.The bipartisan legislation Congress passed this week to suspend the debt ceiling and impose spending caps contains an arcane but important provision aimed at forcing both sides to follow through on the deal struck by President Biden and Speaker Kevin McCarthy.The 99-page measure suspends the $31.4 trillion borrowing limit until January 2025. It cuts federal spending by $1.5 trillion over a decade, according to the Congressional Budget Office, by effectively freezing some funding that had been projected to increase next year and then limiting spending to 1 percent growth in 2025.But it also contains a number of side deals that never appear in its text but that were crucial to forging the bipartisan compromise, and that allowed both sides to claim they had gotten what they wanted out of it. To try to ensure that Congress abides by the agreement, negotiators used a time-tested technique that lawmakers have turned to for decades to enforce efforts to reduce the deficit: the threat of automatic, across-the-board spending cuts if they do not finish their work.Here’s how it works.A 1 percent cut unless spending bills are passed.Congress is supposed to pass 12 individual spending bills each year to keep the government funded. But for decades, lawmakers, unable to agree on those measures, have lumped them together into one enormous piece of legislation referred to as an “omnibus” spending bill and pushed them through against the threat of a shutdown.The debt-limit agreement imposes an automatic 1 percent cut on all spending — including on military and veterans programs, which were exempted from the caps in the compromise bill — unless all dozen bills are passed and signed into law by the end of the calendar year. Mandatory spending on programs such as Medicare and Social Security would be exempt.A wrinkle is that, because the fiscal year that drives Congress’s spending cycle ends before the calendar year does — on Sept. 30 — Congress would still need to pass a short-term bill to fund the government from October through December to avoid a shutdown.Republicans and Democrats both dread the cuts.The measure is a version of a plan offered by Representative Thomas Massie, Republican of Kentucky, a key vote to advancing the bill through the Rules Committee, who said he believed it would help avoid the Democratic-controlled Senate using the specter of a shutdown to force the House to swallow a bloated spending bill at the end of the year.“You get threatened and ransomed with a shutdown,” Mr. Massie said in an interview in late April describing the plan. “They’ll tell you, ‘If you don’t pass the Senate bill, there’s going to be a shutdown.’ I think we need to take that leverage away from anybody who would risk a shutdown to get more spending. Just take that off the table.”Some Republicans, including defense hawks, are livid about the measure, arguing that it would subject the Pentagon to irresponsible cuts. Senator Susan Collins of Maine, the top Republican on the Appropriations Committee and its defense subcommittee, called it a “harmful” provision that would leave a “threat hanging over” the Defense Department.“It would trigger an automatic, meat-ax, indiscriminate, across-the-board cut in our already inadequate defense budget and in the domestic, discretionary nondefense funding,” Ms. Collins said.Democrats, too, have a major incentive to avoid the cuts, since they have resisted reducing funding for federal programs all along.Without spending bills, major parts of the debt deal will die.Both parties stand to lose victories gained through handshake agreements during negotiations if Congress cannot pass its appropriations bills. Neither the White House nor House Republicans have published a full accounting of the agreements that do not appear in legislative text, but some have become clear.The deals allow Republicans to claim they are making deep cuts to certain spending categories while letting Democrats mitigate the pain of those cuts in the funding bills.One unwritten but agreed-upon compromise allows appropriators to repurpose $10 billion a year in 2024 and 2025 from the I.R.S. — a key priority of Republicans, who had opposed the additional enforcement funding championed by Mr. Biden and Democrats.Another side agreement, sought by Democrats, that would evaporate if the spending bills were not written designated $23 billion a year in domestic spending outside military funding as “emergency” spending, basically exempting that money from the caps in the deal.Jim Tankersley More

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    Military Spending Emerges as Big Dispute in Debt-Limit Talks

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    President Biden has offered to freeze discretionary spending, including for defense. Republicans want to spend more for the military, and cut more elsewhere.Funding for the military has emerged as a key sticking point in reaching an agreement to raise the nation’s borrowing limit and prevent a catastrophic default, with Republicans pushing to spare the Defense Department from spending caps and make deeper cuts to domestic programs like education.President Biden has balked at that demand, pointing to a long series of past budget agreements that either cut or increased military spending in tandem with discretionary programs outside of defense.How the sides resolve that issue will be critical for the final outcome of any debt deal. It remains possible that in order to reach a deal that prevents a default, Democrats will accept an agreement that allows military spending to grow even as nondefense spending falls or stays flat.Mr. Biden’s aides and congressional Republicans deputized by Speaker Kevin McCarthy are trying to negotiate an agreement to lift the borrowing limit before the government runs out of money to pay its bills on time, which could be as soon as June 1. Republicans have refused to raise the limit unless Mr. Biden agrees to cuts in federal spending outside of the military.The talks over spending cuts have narrowed in focus to mostly cover a relatively small corner of the budget — what is known as discretionary spending. That spending is split into two parts. One is money for the military, which the Congressional Budget Office estimates will total $792 billion for the current fiscal year. The other half funds a wide range of domestic programs, like Head Start preschool and college Pell Grants, and federal agencies like the Interior and Energy Departments. It will total $919 billion this year, the budget office estimates.A separate category known as mandatory spending has largely been deemed off limits in the talks. That spending, which is the primary driver of future spending growth, includes programs like Social Security and Medicare.Administration officials have proposed freezing both halves of discretionary spending for next year. That would amount to a budget cut, compared with projected spending, under the way the budget office accounts for spending levels. Spending for both parts of the discretionary budget would be allowed to grow at just 1 percent for the 2025 fiscal year. That could also amount to a budget cut since 1 percent would almost certainly be less than the rate of inflation. That proposal would save about $1 trillion over the span of a decade, compared with current budget office forecasts.Republicans rejected that plan at the bargaining table. They are pushing to cut nondefense spending in actual terms — meaning, spend fewer dollars on it next year than the government spent this year. They also want to allow military spending to continue to grow.“It just sends a bad message and Republicans feel like it would not be in our best interest to cut spending at this juncture, when you’re looking at China and Russia and a lot of instability around the world,” said Representative Robert B. Aderholt, Republican of Alabama, who sits on an Appropriations panel that oversees Pentagon spending. “That’s been the basic position that most Republicans have.”Mr. McCarthy sounded a similar note when speaking to reporters on Thursday. “Look, we’re always looking where we could find savings and others, but we live in a very dangerous world,” he said. He added, “I think the Pentagon has to actually have more resources.”Republicans included 10-year caps on discretionary spending in a bill they passed last month that also raised the debt ceiling through next year, and party leaders said they would exempt the military from those caps. Mr. Biden has vowed to veto the bill if it passes the Senate in its current form, which is unlikely.White House officials have hammered Republicans over concentrating their proposed discretionary savings on domestic programs, saying their bill would gut spending on border enforcement, some veterans’ care, Meals on Wheels for older Americans and a host of other popular programs.“Speaker McCarthy and I have a very different view of who should bear the burden of additional efforts to get our fiscal house in order,” Mr. Biden said on Thursday at the White House. “I don’t believe the whole burden should fall on the backs of the middle class and working-class Americans.”Congressional Democrats, including members of committees that oversee military spending, have attacked Republicans for focusing largely on nondefense programs.“If you’re going to freeze discretionary spending, there’s no reason on earth why defense shouldn’t be part of that conversation,” said Representative Adam Smith of Washington, the top Democrat on the Armed Services Committee. Republicans, he said, “are taking a hostage to advance their very narrow agenda. I’m not a fan of that. That’s not something I’m going to want to support.”Any agreement that increased military spending while freezing or cutting other discretionary spending would break from a budget-deal tradition that dates to 2011, when House Republicans refused to raise the debt limit until President Barack Obama agreed to spending cuts. The deal that avoided default was centered on spending caps that split their reductions evenly between defense and nondefense programs.The push to increase military funding while cutting more heavily elsewhere reflects a divide in the House Republican caucus. It includes a large faction of defense hawks who say the military budget is too small, alongside another large faction of spending hawks who want to significantly shrink the fiscal footprint of the federal government.Mr. McCarthy needs both factions to retain his hold on the speakership, which he narrowly won this year after a marathon week of efforts to secure the votes. And he will need to navigate them both as he tries to pass any debt-limit agreement with Mr. Biden through the House.Catie Edmondson More

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    Debt Limit Negotiators Debate Spending Caps to Break Standoff

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    The strategy, which was used in 2011, could allow both sides to save face but would most likely do little to chip away at the national debt.As negotiators for the White House and House Republican leaders struggle to reach a deal over how to raise the nation’s debt limit, a solution that harks back to old budget fights has re-emerged as a potential path forward: spending caps.Putting limits on future spending in exchange for raising the $31.4 trillion borrowing cap could be the key to clinching an agreement that would allow Republicans to claim that they secured major concessions from Democrats. It could also allow President Biden to argue that his administration is being fiscally responsible while not caving to Republican demands to roll back any of his primary legislative achievements.The Biden administration and House Republican leaders have agreed in broad terms to some sort of cap on discretionary federal spending for at least the next two years. But they are hung up on the details of those caps, including how much to spend on discretionary programs in the 2024 fiscal year and beyond, and how to divide that spending among the government’s many financial obligations, including the military, veterans affairs, education, health and agriculture.What could a spending cap deal look like?The latest White House offer would hold military and other spending — which includes education, scientific research and environmental protection — constant from the current 2023 fiscal year to next fiscal year, according to a person familiar with both sides’ proposals. That move would not reduce what is known as nominal spending, which simply means the level of spending before adjusting for inflation. Republicans are pushing to cut nominal spending in the first year.One reason the White House is willing to entertain holding spending essentially flat has to do with politics. Given that Republicans control the House, getting an increase in funding for discretionary programs outside the military would have been nearly impossible. Congress would not have approved increases through the appropriations process, the normal way in which Congress allocates money to government programs and agencies.Republicans have repeatedly said that they will not accept a deal unless it results in the government spending less money than it did in the last fiscal year. They have said that simply freezing spending at current levels, as the White House has proposed, does not enact the kind of meaningful cuts many in their party have long called for.But Republican negotiators have shown some flexibility around how long they would require those spending caps to last. House G.O.P. leaders are now looking to set spending caps for six years, rather than 10. Still, that is longer than the White House is proposing, with Democrats offering to cap spending for two years.“The numbers are foundational here,” Representative Garret Graves, Republican of Louisiana and one of Speaker Kevin McCarthy’s lead negotiators, said on Sunday. “The speaker has been very clear: A red line is spending less money and unless and until we’re there, the rest of it is really irrelevant.”The approach is evoking debt limit déjà vu.If spending caps sound familiar, that is because they were employed during the last big debt limit fight in 2011.During that episode of brinkmanship, lawmakers agreed to impose limits on both military and nonmilitary spending from 2012 to 2021. The Budget Control Act caps were somewhat successful at keeping spending in check, but not entirely.A Congressional Research Service report published this year noted that during the decade that the caps were in place, Congress and the president repeatedly enacted laws that increased the spending limits. Certain types of expenditures — for emergencies and military engagements — were exempt from the caps and the federal government spent $2 trillion over 10 years on those programs. And spending on so-called mandatory programs such as Social Security was not capped, and those make up about 70 percent of total government spending.Still, the Congressional Research Service pointed out that spending was lower each year from 2012 to 2019 than had been projected before the caps were put in place.The strategy is no fiscal panacea.Caps that limit spending around current levels will help slow the growth of the nation’s debt, but will not cure the government’s reliance on borrowed money.The Congressional Budget Office said this month that annual deficits — the gap between what America spends and what it earns — are projected to nearly double over the next decade, totaling more than $20 trillion through 2033. That deficit will force the United States to continue to rely heavily on borrowed funds.Marc Goldwein, the senior policy director for the Committee for a Responsible Federal Budget, estimated that it would require $8 trillion of savings over 10 years to hold the national debt to its current levels. However, he said that did not mean that enacting spending caps would not be worthwhile.“We’re not going to fix this all at once,” Mr. Goldwein said. “So we should do as much as we can, as often as we can.”The group has called for spending caps to be accompanied by spending cuts or tax increases as a plan to reduce the national debt.Spending caps are not the only issue.Finding an agreement on the extent and duration of spending caps will be a critical part of getting a deal.But negotiators are still working to resolve several other issues, including whether to put in place tougher work requirements for social safety net programs including food stamps, Temporary Assistance for Needy Families and Medicaid, and whether to expedite permitting rules for energy projects, two key Republican priorities that White House negotiators have shown some openness to.Jim Tankersley More

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    If Debt Ceiling Standoff Can’t Be Resolved, Both Parties Will Share the Blame

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    While each party tries to blame the other for the crisis, some acknowledge that they would both share responsibility for a default.Is it the Biden default? Or the Republican Default on America?Even as negotiators push forward with halting talks to resolve the federal debt-ceiling standoff, members of both parties are positioning themselves to try to dodge the blame for the economic fallout if things go south. Democrats lambaste Republicans for taking the debt ceiling hostage to appease “extreme MAGA” conservatives bent on shrinking government spending. Republicans hit Democrats for waiting too long to open talks and not taking G.O.P. demands seriously.But deep down — and in some cases not so deep — officials in both parties know they are all going to pay if they don’t get a deal, the government defaults and Americans lose money and jobs and confidence about their financial well-being and future.“I would hate to be the politician trying to explain to people when the economy is in the toilet that it’s not my fault, it’s their fault,” said Senator Lindsey Graham, Republican of South Carolina. “Yeah, that ain’t going to work. They will flush us all.”Polls have suggested Mr. Graham’s view is correct. A Washington Post-ABC News Poll released earlier this month shows that the public is divided about who will bear the blame, with a significant chunk of independents saying the two sides should share it equally.And some on Capitol Hill say the political backlash will be well deserved if Congress and the White House manage to mangle the situation so badly that public officials careen into a completely avoidable crisis and send both the economy and the retirement accounts of millions of Americans reeling.“I can’t comprehend that anyone who had the ability to prevent this much damage to our country, our economy and our world standing would allow that to happen,” said Senator Joe Manchin III, Democrat of West Virginia, who had been among those pressing his party to engage in negotiations earlier. “It would be absolutely reprehensible. Everyone should get hammered.”But those likely reverberations haven’t yet motivated negotiators to come to an agreement and clear the way for an economic sigh of relief. Representative Garret Graves of Louisiana, the point man for House Republicans in the talks, abruptly exited a Friday negotiating session with administration representatives in the Capitol, accusing them of being “unreasonable,” and the talks were temporarily suspended. Suddenly, the path to a quick agreement that Speaker Kevin McCarthy had seen on Thursday was newly cluttered with obstacles. By the evening, talks had resumed.Such ups and downs in budget negotiations are fairly standard and can be performative as well as substantive. Both sides need to flex to show their respective forces that they are hanging tough and pushing for all they can get. But there are real differences in the positions of Democrats and Republicans on a host of issues on the bargaining table. A positive outcome is no certainty, despite regular high-level assurances that the United States cannot and will not default in the coming days.Still, should that occur, lawmakers and administration officials would like you to know that they didn’t do it.“Here we are on the brink of a Biden default,” Senator Shelley Moore Capito, Republican of West Virginia, declared this week both in person and via news release, sounding a refrain becoming increasingly popular with Republicans — that this was all Mr. Biden’s doing because he refused to engage with them earlier and allow enough time to work out an agreement.Not so, counter the Democrats. “We find ourselves in the midst of a G.O.P.-manufactured default crisis because House Republicans have chosen to try and hold our economy, our small businesses, everyday Americans hostage to unreasonable ransom demands,” Representative Hakeem Jeffries, Democrat of New York and the minority leader, said.Republicans have a retort. They argue that since they squeezed legislation through the House last month that would raise the debt limit and enact spending cuts, they have bragging rights as well as immunity from any criticism because they are the only ones who have acted thus far — though it was widely known the bill could never pass the Democratic-majority Senate.“I don’t know how we own it if we raised the debt limit,” Mr. McCarthy said at the White House when asked if he was ready to face the consequences for a default. His colleagues share his view.“In my district I don’t think it would be a huge problem,” said Representative Tom Cole, Republican of Oklahoma. “I did vote to raise the debt ceiling. Show me one person on the other side who did.”In addition, Republicans know it is traditionally the president who gets credit or fault for the state of the economy even if circumstances are well beyond control of the executive branch.Democrats scoff at the Republican claims. Senator Chuck Schumer, the New York Democrat and majority leader, dubbed the House legislation the Default on America Act, to try to capture both its impact and its dead-on-arrival status in the Senate. He and his fellow Democrats say they refuse to reward Republicans for what they view as highly irresponsible actions that are putting the nation’s economy at risk — even though both parties have used the debt limit for bargaining leverage over the years.“From the beginning, Democrats have said — I have said — that this process demands bipartisanship,” Mr. Schumer said this week. “It’s how we avoided default under President Trump. It’s how we have avoided default under President Biden, and it’s how we should avoid default this time too. Brinkmanship, hiding plans, hostage-taking — none of that will move us closer to a solution.”The two parties can continue to trade shots. But until they trade negotiating positions they can come to terms on, the threat of default hangs over Washington and the nation. And if that happens, those involved may find that the public won’t distinguish between who did or said what when, but will hold them all accountable. More