The Debt Ceiling Deal: A Hopeful Model

Joshua M. Javits

Arbitrator and Mediator

Former Chair of National Mediation Board

Many people will see the debt ceiling negotiations as a messy, distracting and unnecessary trauma to the body politic. It diverted attention from important national issues and was conducted in a seemingly chaotic manner.

However, despite partisan temptations, the negotiators were focused and addressed fiscal issues often swept under the rug. In fact, the negotiating process could become a model for bipartisan bargaining. The essential legitimate goals of both parties were met, and they finally did reach agreement under trying circumstances.

I am a labor arbitrator and former Chair of the National Mediation Board. The process used in these negotiations employed some essential principles for successful bargaining.

1. Clearly state goals at the outset: Each side identified its central interests and concerns.   

For President Biden and the Democrats this was to not default; and to treat the debt ceiling independently and separately from any other issue, including the budget. 

For Speaker McCarthy and the Republicans, it was budget containment and fiscal responsibility. 

2.  Find common ground. Discern the other sides’ central concerns that can be accommodated.

Stage 1: Biden recognized McCarthy's primary need - that budget issues were negotiable - which was eventually accepted by Biden. He retreated because he recognized the reality that to avoid chaos he had to agree to address budget issues. That in turn invested McCarthy with the authority to make a deal supported by his own fractious caucus. Consequently Biden agreed to negotiate budget matters along with the debt ceiling. That move opened the door to effective negotiations. It justified a concession from McCarthy, namely to accept that the extreme spending cuts contained in the House’s “Limit, Save, Grow Act” would have to go. 

Stage 2: From Biden’s point of view, spending caps and selective budget cuts were a realistic and acceptable goal and one that was inevitable anyway as a result of the impact of divided government on the upcoming fall budget process. Thus, the table was set for a “zone of reasonableness” which would demarcate the parameters of a deal.

This led to Stage 3 which was to tease out the nature and extent of spending cuts and caps. At this point the “ballpark” for a deal was clearly identified and both sides recognized that they had to choose from a limited menu of items.

3. Establish a rule of reciprocity. One side in a negotiation will not make a concession – or alter its demands - unless it is confident the other side will respond in kind.

Biden made major concessions by agreeing to negotiate budget issues instead of a standalone debt ceiling bill.

McCarthy reciprocated by withdrawing most of the House bill’s spending reductions, which amounted to $4.8 trillion over 10 years. McCarthy was able to do this because he had obtained "wins" from Biden to satisfy the Republican caucus.

McCarthy then insisted on some reductions to IRS funding and unspent Covid relief as well as other items like work requirements for food stamps. These were relatively modest requirements in accord with the tenor of the give and take of the bargaining.

4. Focus on what is do-able, not differences: Under the deal, the Administration’s $80 billion IRS funding proposal is to be reduced by the $20 billion (25% of the total) and unspent Covid relief funds will revert to the Treasury. These items were relatively easy for Biden to concede since the IRS funds will be spent over the next 10 years not immediately. Much of the Covid funds were already spent and in any case were intended as stimulus to the economy, which is not a current concern.  

Nonetheless, while these spending caps and cuts appear to be major concessions, they were in fact relatively minor compared with the far reaching House bill’s cuts. They could be considered “strawmen” -- not really important to one side but perceived as such by the other side – and thus used as chips in bargaining in exchange for Republicans withdrawing other savings demands.

In the end, the CBO determined that the deal’s total savings amounted to $1.5 trillion over 10 years, one third the $4.8 trillion in cuts called for in the previously passed House bill.

5. Bring along constituencies especially the moderates. Isolate the “take no prisoners” hardliners on both sides. Both parties kept their caucuses informed of the progress and major bargaining moves, but included key respected leaders of all factions in the high-level talks. In this way back biting and “Monday morning quarterbacking” would be kept to a minimum and progress could be made.

In order to achieve final congressional approval, the goal of the negotiators was to capture the broadest possible middle of both sides.  Any deal would have been impossible if “negotiated” by 537 members of Congress and 100 Senators.

6. The advantages of a deadline: The urgency triggered by a deadline is generally helpful. Neither side wanted to be blamed for a US or global economic meltdown that was fast approaching.

Usually, a short time frame is disadvantageous for the resolution of complex issues, since the devil is in the details. But in this case, the sense of urgency necessitated that serious negotiators refrain from posturing in the interests of reaching an agreement. 

7. The parties focused on substance rather than superficial appearances. While recognizing that politics and showmanship is an intrinsic part of any bargaining, the tight time frame led negotiators to look for win/win options, to focus on the big issues and to leave the finer points to staff.

8. Keep moving at all times: It has been said that a parliamentary multi-party system works productively through coalitions, which are more flexible than our two-party voting blocks. However, in this case the process revealed multiple divisions within each party, mimicking a multi-party system. That may have actually added to the successful result by allowing for more flexibility in the negotiations. In the end, it was probably a good deal for the middle rather than the extremes, and reflects the moderation of the majority of the US population, even though it may frustrate the more progressive and conservative hardliners on both sides. 

9. Results: The results of the negotiation have been endorsed by the overwhelming House vote (314 to117), despite the very real threat of it being killed there. The Senate also approved it 63-36. We can conclude that both sides’ basic interests were addressed and accommodated. The hallmark of a successful negotiation is that the parties come away with an agreement they can live with. This also means that neither side will be completely happy.

Crisis negotiations are not intrinsic to the normal legislative process, but should give strength to those legislators who want to accomplish something as opposed to obstruct to get their way. Here, the negotiators successfully persuaded the maximum number of legislators to be invested in the success of negotiations and have given them reason to assure its success. It was a big win for bipartisan representative government.

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