(Bloomberg) -- President Joe Biden’s concern that voters could blame him for a US default helps explain why he’s doing something he resisted for months: engaging with Republicans over spending cuts and budget constraints.
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Biden and House Speaker Kevin McCarthy plan to speak daily following a Monday night meeting at the White House that both sides described as productive but which ended without a deal to raise the federal debt limit.
Democrats may now have to swallow a series of pandemic funding clawbacks, work requirements for social programs and other spending limits to secure a bill that can clear Congress — a far cry from the White House’s initial demand for a debt-limit increase with no conditions.
But those budget-related concessions will almost certainly be less costly for Biden and his party than the political consequences if the nation were to default on its obligations under his watch, with the president acknowledging he would likely shoulder some of the responsibility as he seeks reelection.
“On the politics of it, no one would be blameless,” Biden told reporters Sunday in Hiroshima, Japan.
And, Biden acknowledged, some Republicans in Congress are convinced that the damage inflicted by a default would blow back in his direction.
“Because I am president and presidents are responsible for everything, Biden would take the blame and that’s the one way to make sure Biden is not reelected,” Biden said.
Biden’s fears are not unfounded with polls showing a significant portion of Americans would hold him at least partly responsible for a default.
A NPR/PBS NewsHour/Marist Poll released Tuesday found that 45% of US adults would blame congressional Republicans for a default, while 43% say Biden would mostly be to blame. Seven percent said both would be to blame..
Even more Americans are now apt to lay blame solely on Biden or Congressional Republicans than they were a few weeks ago. An Economist/YouGov poll earlier this month found a third of Americans said Biden was at fault for the lack of an agreement versus 32% who blamed the president and House Republicans equally and just 27% who said the GOP was most responsible.
White House Press Secretary Karine Jean-Pierre noted Tuesday that during the last major debt limit showdown in 2011, polls showed more voters ultimately blamed congressional Republicans for the brinkmanship.
“There’s just utter exasperation that this is just the way that federal policy works now,” said Wendy Edelberg, the director of the left-leaning Hamilton Project, about the public’s response to the negotiations. “They’re sick of paying attention to the squabbles that all seem to get resolved at the last minute.”
A White House official discounted the notion that a default would hurt Biden more than the GOP, noting that Trump had openly agitated for default if House Republicans weren’t given everything they wanted in negotiations. The president and his party have enjoyed success in the two most recent elections by painting Trump as an extremist and the Republican Party as beholden to him.
Still, there’s no doubt that failure to strike an agreement would add to the economic headwinds Biden is already facing with inflation — which has remained stubbornly high despite Federal Reserve rate hikes — and the recent failure of several regional banks.
If a default does occur, economists project it could throw the US into recession, spark widespread job losses and other economic consequences that would spill well into the coming election year.
Biden has made his stewardship of the economy a key aspect of his reelection pitch.
House Republicans, despite their narrow majority and infighting, in late April passed a bill to increase the debt ceiling, with a slew of conservative priorities attached. That forced the White House to reconsider its insistence it would not negotiate, said Gordon Gray, director of fiscal policy at the right-leaning American Action Forum.
Republicans “had a narrow, narrow path, and they managed to not stumble off it, which everyone was betting on, and that changed the dynamic,” he said. “It’s wildly inconvenient for the White House, I get it.”
McCarthy said he believed voters would reward Republicans for forcing the White House off its original debt ceiling position after meeting with Biden on Monday evening.
“I hope at the end of the day, when you would sit back and look that the Democrats said they would never negotiate, that it’d just be a clean debt ceiling, I think those in America would say, ‘Good job. You know what, it’s not that,’” McCarthy said.
White House officials argue ongoing negotiations are separate from a conversation on the debt ceiling. They note that recent debt ceiling hikes were paired with budget agreements, and that the parameters of the deal being discussed by the president and House Speaker are within the bounds of the give-and-take traditionally seen in budget negotiations. Biden’s team does not intend to cede any ground they wouldn’t during regular spending talks, one official said.
Even if there is a deal, there would still be risks for investors — and Biden — to consider, including a potential US credit rating downgrade, said Isaac Boltansky, director of policy research at BTIG LLC.
“Downgrade risk is real,” he said, citing the first-ever US credit rating reduction in 2011. “We should keep in mind that the last time it happened it was after the deal was inked.”
--With assistance from Justin Sink.
(Updates to add new polling numbers in paragraphs 9-10)
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