2020 Democrats Fear Debt Deal May Swamp Next President's Agenda

(Bloomberg) -- Democratic campaigns and party operatives are quietly expressing consternation that the budget agreement in Washington risks saddling the next president with a debt limit crisis that could hijack any chance to advance a first-term agenda..The deal announced by President Donald Trump on Monday afternoon would suspend the debt ceiling until July 31, 2021 — setting the stage for a bigger budget fight only six months into the next president’s tenure..In a joint statement, House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer said they were “proud” to secure the debt limit extension because lawmakers “must never let the full faith and credit of the United States come under threat.”.But Democrats are particularly concerned that if they defeat Trump in 2020, Republicans could hound his successor with demands to cut spending as a price for raising the borrowing limit. Such a scenario risks consuming the new president’s first year, which tend to be the most productive in terms of passing major legislation..Earlier: Trump, Congress Clinch Debt-Limit Deal After Tense Negotiations.“Sounds like a bad idea. Sounds like a bad idea to me,” said Stephanie Kelton, a senior economic adviser to the Bernie Sanders presidential campaign and a Stony Brook University professor..She said if deficit reduction is the “first order of business” for a new Democratic president, that will “undermine any ability to actually deliver on the agenda that they ran on.”.Other presidential campaigns also expressed similar concerns, but declined to say so publicly..In the first 16 months of their presidencies, George W. Bush pushed through a major tax cut, President Barack Obama got the Affordable Care Act passed and Trump signed the 2017 GOP tax law..The stakes are high. All four of the top Democratic contenders have promised costly expansions in government assistance — Sanders with Medicare for All legislation, Joe Biden with a clean energy plan, Kamala Harris with a $3 trillion middle-class tax cut, and Elizabeth Warren with universal child care..Kelton fretted that centrist Democrats in Congress who put a premium on deficit-reduction “would be willing to hold hostage a progressive agenda for the sake of flexing their fiscal street credibility on this issue” if their party controls the presidency in 2021..“My heart tells me no, Democrats have learned something. My head tells me that there are enough Democrats who’ve been fix-the-debters,” Kelton said..Why U.S. Is Having Yet Another Debt Ceiling Debate: QuickTake.Before Trump announced the deal, concerns had been rising in Washington over the urgency of raising the debt ceiling and avoiding a potentially catastrophic default before Congress departed at the end of the week for its August recess..Adam Jentleson, who served as deputy chief of staff to former Senate Democratic Leader Harry Reid, said Republicans would “rediscover their passion for deficit reduction” if they lose the White House..Jentleson’s prediction has grounding in modern history. Since 1981, the deficit has risen between the beginning and end of every Republican presidency (a trend that is continuing under Trump), but the party has been successful at arm-twisting Democratic Presidents Bill Clinton and Obama into cutting the debt..“The timing of it really bugs me. It sets up a crisis of the first year of the next president’s administration,” Jentleson said of the July 31, 2021, deadline for the borrowing limit. “We’re letting them light the fuse on another bomb and place it squarely in the middle of the next president’s first year in office.”.In 2011, a Republican-led House thrust deficit-reduction into the center of Obama’s agenda by threatening to default on the debt unless a debt limit increase was accompanied by spending cuts. Obama and the Democratic-led Senate acquiesced that summer to more than $1 trillion in spending cuts under the Budget Control Act, which established the “sequester” of automatic cuts that Congress has been overriding ever since..“They just handed” Senate Majority Leader Mitch McConnell “a major weapon to use against the next president if this deal goes through,” Jentleson added, arguing that the agreement would give Republicans “a massive amount of agenda-setting power” to thwart a progressive agenda at a time of “maximum leverage and maximum political capital” for a new president..To contact the reporter on this story: Sahil Kapur in Washington at skapur39@bloomberg.net.To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, John Harney.©2019 Bloomberg L.P.

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2020 Democrats Fear Debt Deal May Swamp Next President's Agenda

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