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“The Budget Farce”: Robert Kuttner on Why Biden Admin Can’t Give In to GOP Demands to Gut Safety Net

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With the United States just two weeks away from a possible default on its debt for the first time ever, President Joe Biden has cut short a trip to Asia to continue negotiations with congressional leaders in Washington over lifting the federal government’s debt ceiling. Republicans are seeking major budget cuts, as well as new work requirements for recipients of Medicaid and the Supplemental Nutrition Assistance Program, also known as food stamps, but prominent Democrats are pushing the White House to stand firm. For more, we speak with The American Prospect’s Robert Kuttner, who says the debt ceiling deadline and budget negotiations later this year are part of a larger effort by Republicans to shred the social safety net.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: With the United States just two weeks away from possibly defaulting on its debt for the first time ever, President Biden says he’s cutting short his Asia trip in order to continue negotiations with congressional leaders over lifting the debt ceiling.

PRESIDENT JOE BIDEN: It’s disappointing that in our discussions the congressional Republicans have not been willing to discuss raising revenues, but the policy differences between the parties should not stop Congress from avoiding default. I made clear again in today’s meeting that default is not an option. America pays its debts, pays its bills, and there’ll be plenty of time to debate the policy differences. But the country has never — we’ve never defaulted on our debt, and we never will.

AMY GOODMAN: On Tuesday, Biden met with House Speaker Kevin McCarthy and other congressional leaders at the White House, but little progress was reported. This is McCarthy.

SPEAKER KEVIN McCARTHY: The great thing about this is, in our bill, Limit, Save, Grow, not only are we able to grow our economy, we get more people into the workforce by work requirements, lift people out of poverty. It helps our supply chain, makes us less dependent upon China, lower the energy cost. That helps with the environment around the world, lowers the CO2 emissions globally.

AMY GOODMAN: Republican House Speaker McCarthy continues to push for sweeping budget cuts, as well as new work requirements for recipients of SNAP — that’s the Supplemental Nutrition Assistance Program.

Democratic Senator John Fetterman of Pennsylvania said Tuesday he, quote, “cannot in good conscience support a debt ceiling proposal that pushes people into poverty.” Democratic Congressmember Alexandria Ocasio-Cortez said Biden can, quote, “expect pushback on nearly any significant concession.” Meanwhile, Democratic Congressmember Jamaal Bowman of New York said, quote, “I’m frustrated that we even have to engage in these conversations because it gives credibility to what Republicans are trying to do, which is pretty much hold the global economy hostage to fake as if they are fiscally responsible when they’re not.”

Well, for more on all of this, we’re joined by Robert Kuttner, the co-founder and co-editor of The American Prospect. He wrote a piece Tuesday headlined “The Budget Farce: A Travesty in Two Acts.”

Bob, welcome back to Democracy Now! Start off by talking about where these budget talks are, what not raising the debt ceiling would mean, and why you’re calling it a farce.

ROBERT KUTTNER: Thank you. And it’s great to be back with you, Amy.

OK, let’s back up two steps. So, on January 19th, the United States technically reached the congressionally approved limit in the national debt. This happens all the time. And due to a bunch of gimmicks, they were able to keep paying interest on the debt through the month of May. June 1 is generally acknowledged to be D-Day, when the government can no longer pay interest on the debt, and the whole global economy explodes, because there’s about $20 trillion worth of Treasury bonds out there in the world that anchor the world economy. And most people think this is just inconceivable.

So, for the first 97 days, Biden did not negotiate with McCarthy, because McCarthy hadn’t passed a bill. And the White House calculated that the Republicans were so split that the Republicans would not be able to pass their version of a budget. Then McCarthy made all kinds of deals with the far, far, far right and passed this kind of crazy bill that basically ties an increase in the debt ceiling to budget cuts of trillions of dollars, about 22% of domestic spending.

Now, this is a complete nonstarter from the point of view of virtually every Democrat in the House or Senate. This put Biden in a bit of a tactical bind. Do you, on the one hand, continue to say, “This is crazy. I’m not going to negotiate”? Or do you go through the motions of negotiating, because Wall Street and the media and some corporate Democrats are saying, “Well, at least you have to try in good faith to see if you can reach accommodation”? Because, obviously, this is a fool’s game. It’s a farce. It’s a charade.

So, my criticism of Biden — and I should say I’ve been relatively favorable to Biden. I mean, he was a pleasant surprise. He was more progressive in a lot of his appointees than we expected. But Biden is screwing up the tactics of this, because he’s mixing his message. On the one hand, he’s saying, “Look, this is nuts. We’re not going to negotiate,” but, on the other hand, succumbing to the pressure to look like he’s negotiating, he’s going through the motions of negotiating. And you can’t have it both ways.

Bowman is right: There’s no way Democrats are going to vote for 22% cuts in domestic spending. And by the way, it’s not just SNAP. It’s Medicaid. It’s Medicaid. McCarthy wants work requirements for Medicaid. So, picture somebody in a Medicaid nursing home, which is the biggest single source of Medicaid outlays. You know, “Sorry, Grandma, you’re 90 years old, and you have dementia, but you’re going to have to go out and work.” This is nuts. And it would be much better strategically for Biden to keep pointing out just how nuts this is.

AMY GOODMAN: I wanted to read from New York Times columnist Paul Krugman, who slammed Democrats, writing, quote, “As soon as Republicans took control of the House last November, it was obvious that they would try to take the economy hostage by refusing to raise the federal debt limit. After all, that’s what they did in 2011 — and hard as it may be to believe, the Tea Party Republicans were sober and sane compared to the MAGA crew. So it was also obvious that the Biden administration needed a strategy to head off the looming crisis. More and more, however, it looks as if there never was a strategy beyond wishful thinking.” They’re talking about, well, we’re not linking one to the other, these are two separate conversations. What do you say to that, Bob Kuttner?

ROBERT KUTTNER: Well, two things. Number one — and this has been very widely reported, and Biden is mixing his message on this, as well — you can invoke the 14th Amendment, because after the Civil War, a clause in the 14th Amendment specifies that the debt of the United States shall not be questioned. Now, that was put in there to prevent some future Congress from repudiating the Civil War debt, if, you know, people who were friendly to Dixie ever got control of the U.S. Congress, which, tragically, they did. But that’s very broad language. And it wasn’t until 1917, during World War I, that Congress even contrived this ritual of having a separate vote on the debt ceiling. The preexisting premise was that if something has been negotiated and obligations have been incurred, it’s just automatic that the debt is increased.

So, the betting is that if Biden were to invoke the 14th Amendment clause and say, “Well, we’re just going to keep on paying bills, and if the Republicans want to sue us, go ahead,” people who have looked carefully at Supreme Court precedents think that at least five members of even this Supreme Court would uphold Biden.

So, unfortunately, Biden has spoken out of both sides of his mouth on this. He said, yeah, he’d consider it, but it would take too long. In fact, that’s not true. There would be expedited Supreme Court review of this. Janet Yellen, unhelpfully, has said, “Oh, that would cause a constitutional crisis.” So, Biden can’t control the messaging of his own team, and he can’t even control his own messaging, which sort of reinforces the view that maybe he’s too old to run for president again, but that’s another — that’s another conversation.

Now, there’s another part of this, which is the incredibly stupid precedent of 2011, where two separate things were mixed up, conflated by Republicans: the issue of increasing the debt ceiling — and again, that’s normally just routine — and the issue of using that leverage to extract draconian budget cuts. The Republicans really rolled the Democrats that time. And in 2011, they passed something called the Budget Control Act, which had 10 years of mandatory cuts, with a sequester system to enforce automatic cuts if Congress cannot agree on the details. And here’s the absolute worst part: The emissary of the Obama administration who negotiated this terrible deal with his old friend Mitch McConnell was a guy named Joe Biden, the vice president at the time.

And so, there are two ways of looking at where Biden is now. Either, because he loves to cut deals, he is in danger of recapitulating, repeating the really dumb strategy of 2011, or, conversely, you could say, well, things are different now. He’s president. He’s got $5 trillion of spending to defend. This is his legacy. And if he can just figure out how to keep his lines straight, maybe he’ll hang tough.

AMY GOODMAN: Treasury Secretary Janet Yellen has dismissed the proposal to mint a $1 trillion platinum coin to keep the U.S. from defaulting on the national debt, and said the Federal Reserve is unlikely to consider it. In The Wall Street Journal interview this past January, Yellen said, quote, “It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that’s a gimmick. … The Fed is not required to accept it, there’s no requirement on the part of the Fed. It’s up to them what to do.” Is this a gimmick, Bob?

ROBERT KUTTNER: Let me put it this way: It’s a tactic. I think invoking the 14th Amendment is probably a better tactic. And given the crazy things the Fed has done with interest rates and with failing to regulate banks, I wouldn’t trust the Fed. So, I’d rather see President Biden invoke the 14th Amendment. I think that probably would pass muster with the Supreme Court. It would solve the crisis for now.

But the other thing I pointed out in this article is, even if we get through the June 1st deadline for increasing the national debt, then the next installment in this two-part farce is the fiscal '24 budget negotiations. The current budget expires on September 30, 2023, and then you've got to negotiate next year’s budget. And the problem is that Democrats control the Senate very, very narrowly. We got Manchin, Sinema. So, they just barely control the Senate. And, of course, Republicans barely control the House. But given the fact that you have divided control of Congress, it’s almost certain that there will be some budget cuts in the 2024 budget.

Now, as somebody who thinks that Bill Clinton was one of the worst things ever to happen to the Democratic Party and the country, it pains me to credit Bill Clinton for anything. But in ’95, ’96, when Newt Gingrich was speaker and the Republicans played this game of holding the debt ceiling hostage and then shutting down the government, first for six days, then for 15 days, Clinton hung tough. And it was Gingrich who had to cave in. Gingrich eventually lost his speakership. The fact that Gingrich made a fool of himself by shutting down the government actually helped Clinton get reelected.

So, that’s the role model. If the president hangs tough and lets the government do stupid things, like threatening the collapse of the world economy or shutting down the government, the Republicans take the blame for that. And I just hope that when this — if Biden gets through June, he’s going to face a version of this again in October, although, granted, shutting down the government is not quite as catastrophic as shutting down the world economy. But I hope he reads his history. I hope he keeps his lines straight. And if he can hang as tough as Clinton did, maybe this will rebound to the benefit of the Democrats, and the budget cuts will not be all that catastrophic.

AMY GOODMAN: And finally, if you could just underscore — we just have a minute — how this connects and deepens inequality in this country?

ROBERT KUTTNER: Well, all of the elements that the Republicans want to cut from the budget are things that make this a slightly better country, everything from Section 8 housing aid to Medicaid to food stamps to college aid. I mean, the so-called discretionary domestic programs, these are the things that make the country a slightly less unequal place. And, of course, as you would expect, that’s the stuff that the Republicans are targeting for the steepest cuts.

AMY GOODMAN: Robert Kuttner, I want to thank you for being with us, co-founder and co-editor of The American Prospect. We’ll link to your piece, “The Budget Farce: A Travesty in Two Acts.” Bob Kuttner’s latest book is titled Going Big: FDR’s Legacy, Biden’s New Deal, and the Struggle to Save Democracy. Robert Kuttner is also a professor at Brandeis University’s Heller School.

Next up, “The U.S. Should Be a Force for Peace in the World.” That’s the headline of a full-page New York Times ad signed by 15 former high-ranking national security officials calling for a diplomatic end to the Russia-Ukraine war. We’ll speak with the lead signatory, Dennis Fritz, retired command chief master sergeant of the U.S. Air Force. Stay with us.

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