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OUR PERSPECTIVES

Crisis Averted...But What Will We Learn From the Debt Limit Negotiation



The debt limit agreement between House Republican negotiators and the White House is making the rounds among policymakers and analysts. Policymakers are emerging on all sides of this agreement -- some ardently opposed, others supportive, and a few in between. While there has not yet been a formal vote count on the agreement, both sides seem very confident that enough votes will be gathered in the House and Senate to send the bill to the President for his signature. This has been an interesting (albeit predictable) process, which can help inform the policy making landscape going forward:


Congress is Motivated by Deadlines: No surprise here. Without a deadline (and occasionally even with a deadline), Congress has little motivation to come to the negotiating table. The threat of near-term impacts (in this case defaulting on the nation's debt) is more real when the deadline is around the corner and serves as a forcing mechanism to get policymakers to find a solution. Would it be better to do so in advance? Of course, but the motivation (and leverage) is not there on either side of the aisle, and it would be malpractice for any analyst to predict anything other than deadlines continuing to drive decision-making going forward.


Messaging is Key in Policymaking: The debt limit negotiations were not preceded by formal discussions and rounds of meetings to help outline what is at stake...they were driven by a messaging bill passed by House Republicans and an onslaught of communications by both sides around why the other side is misguided The messaging was not an effort to claim a short-term, "we are right" victory, but rather to build enough pressure to get the other side to negotiate and ultimately move their position. Republicans claimed that the White House had no proposal, and Democrats claimed the Republican proposal would have enormous impacts on the economy and the many beneficiaries of federal programs that needed the assistance. This messaging helped both sides to eventually come to the table. Is moving the negotiation to the public before formal talks begin the right thing to do? It may not be the most conventional route, but it worked and will continue to be a part of the playbook when the next issue emerges.


Party Unity Will be Tested: Some policymakers on both sides of the aisle are frustrated with this agreement and a handful have vowed to oppose the legislation. This will be the first major test of the 118th Congress on whether such a division fractures the caucuses. This is especially important on the Republican side, which has a vocal crowd of Republicans that helped change the rules to ensure their positions had more impact. What will happen in the aftermath of this vote will be a key indicator of how the "teams" will or will not stick together as a few tough policy issues (i.e. NDAA and FY 2024 spending) and the election nears.


The White House and House Republicans Drove the Negotiation: While the White House was certainly having side conversations with House and Senate Democrats (and they were part of some meetings), House Republicans were clearly the power players that the President felt the need to negotiate directly with. They were, of course, the biggest hurdle to overcome. They were also the most unpredictable since this was their first major policy dispute (with both a deadline and real ramifications) since taking the majority. This can be really frustrating for those not in the room and that may change over time, but the Speaker drives the agenda in the House and the White House understands the need to negotiate directly with them.


The Legislation Isn't Final Until it's Final: Policymakers will return to DC this week for the first time since an agreement was announced and will be able to connect with their colleagues, praise or argue with their leadership, and report back on how the early news of the deal is sitting with their constituents. There are also a few points that could cause some heartburn before the legislation is finalized -- the vote in the House Rules Committee, the vote on the House floor, and the vote on the Senate floor being the biggest hurdles. Leaders still feel like they will gather the votes needed, but it may be a bit painful to get there and it may require some "family discussions" beforehand.


The debt limit negotiation is a good example of how bipartisanship works in today's political and legislative landscape. It may be a bit ugly at times and the awkward dance between (and within) parties can get a little uncomfortable, but at the end of the day votes will be coming from both sides of the political aisle. Of course, there will also likely be opposition from both sides of the aisle, but bipartisanship is not necessarily everyone supporting the solution (and there should not be an expectation that such an outcome would ever happen). Nevertheless, negotiation brought both sides together and, despite the fairly dysfunctional process that got us here, they were able to pull together an agreement that ultimately accomplished the core goal (assuming it passes...).

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