Opinion | Why Debt Chicken Is Such a Dangerous Game

Orange Gatorades on ice and Ella Fitzgerald on the sound system singing “Something’s Gotta Give.” That’s how I imagine President Biden’s White House meeting with the House speaker, Kevin McCarthy, and other congressional leaders on Tuesday to discuss the debt ceiling.

In this game of chicken, there are four potential outcomes: 1. Both swerve at the last minute and there’s a compromise. 2. McCarthy alone swerves and Biden comes out grinning. 3. Biden alone swerves and McCarthy comes out grinning. 4. Both of them ignore Ella Fitzgerald, neither swerves, the federal government defaults on its debts, and many bad things ensue.

What makes the game so dangerous is that both players have a strong incentive to appear uncompromising right up to the last minute. That’s why you shouldn’t expect much progress out of Tuesday’s meeting: It’s not the last minute yet.

What you should expect to see on Tuesday and in the next few weeks is a lot of posturing. Each side will want to show, or bluff, that it has a good BATNA: best alternative to a negotiated agreement. That’s because if your fallback is as good as or better than the other side’s best offer, you’ll have no reason to back down. And if your opponent believes you absolutely won’t back down, he’ll conclude that his position is hopeless and he’ll swerve. You will win.

Consider Biden’s position first. He is refusing to negotiate with McCarthy on spending cuts. He’s demanding a “clean” — that is, unconditional — increase of the debt ceiling. He has to convince McCarthy that he has a strong fallback. He needs McCarthy to think that if there is a default, the Republicans will be blamed for it. He certainly doesn’t want a default but he’s happy to make like Clint Eastwood behind those aviator sunglasses: “Go ahead, make my day.”

Biden also benefits from all the talk about various things he could do unilaterally to wriggle out from under the debt ceiling, such as invoke Section 4 of the 14th Amendment, which says, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Biden doesn’t have to tell McCarthy that he’s thinking of invoking the 14th Amendment, or minting a trillion-dollar platinum coin, or some other move that might or might not work anyway. In fact, he can say it’s the furthest thing from his mind. But McCarthy will know that Biden might just fall back on one of those ploys in an emergency, and that will subtly strengthen the president’s bargaining position.

A downside for Biden is that his party is not entirely united behind him. Three House Democrats in Republican-leaning districts wrote to Biden and McCarthy last month urging them to “engage in genuine talks.” That’s not what Biden wants to do. The Problem Solvers Caucus, which has more than 60 members from both parties, isn’t asking Biden to negotiate now, but says that if the ceiling isn’t lifted in time, it should be suspended for six months while the two sides “negotiate deficit stabilization proposals in discretionary spending.”

McCarthy, on the other hand, has to convey the impression that a default would be worse for Biden than for him. Let’s say a default badly damaged the economy. That could hurt the Democrats’ chances in the 2024 presidential election even if a majority of voters blamed Republicans for it. Why? Because the party in the White House tends to do badly when the economy does badly, regardless of the reasons. McCarthy wouldn’t need to say a word about this on Tuesday: Both men know how politics work.

In his talks with Biden, McCarthy also benefits, paradoxically, from his own weakness. He barely won the vote to be speaker in January, and he could be voted out if he is perceived as losing to Biden. If that happened, the next speaker might be more of an extremist and even harder for Biden to work with. McCarthy can play “good cop, bad cop” with Biden: Make a deal with me, Mr. President, or I’ll step aside and the bad cop will come in and talk to you.

“Something’s Gotta Give” is about an irresistible force meeting an immovable object. It’s an ancient paradox: How can both things exist? The resolution of the paradox is that they can’t. Either the force isn’t actually irresistible or the object isn’t really immovable. What we’re seeing now is the game of chicken that will determine which is which.

The Readers Write

In the 1960s, I was all over improving education via computers. One of my teachers was named Isidor Bogen. He patiently listened while I explained how computer programming could make sure kids learned facts. He looked me in the eye and told me that it was the wrong direction entirely. He said what the kids needed most was humanity, knowing someone cared about them as an exact individual person. In my wildest dreams of chatbots imitating Socrates, I cannot imagine a student getting what they really need from A.I.

Saul Krasny
Dartmouth, Mass.

My take on economics-based election forecasts, and polling in general, goes back to my childhood in Chicago. As our mayor at that time, Hizzoner Richard J. Daley, used to say, the only poll that matters is the one that’s taken on Election Day.

Mark Mertes

Quote of the Day

“In physics there may one day be a Theory of Everything; in finance and the social sciences, you’re lucky if there is a usable theory of anything.”

— Emanuel Derman, “Metaphors, Models & Theories” (2010)

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