Debt ceiling: Lawmakers need to 'not take the country hostage' to avoid default

CAP Senior Director of Federal Budget Policy Bobby Kogan breaks down the state of debt limit negotiations between President Biden and lawmakers and highlights the history of debt limit default crises in previous administrations.

Video Transcript

SEANA SMITH: Well, the US is getting increasingly closer to reaching the day it will no longer be able to pay its bills, yet there still is no deal down in Washington, D.C. Well, joining us now to talk about this is Bobby Kogan. He's a Senior Director of Federal Budget Policy, the Center for American Progress.

Bobby, let's try this once again. So where things stand right now coming out of D.C.? How confident are you that we're going to see a deal come this weekend?

BOBBY KOGAN: Seana, thank you so much for having me on. I'm pretty confident, you know, you should always-- you should always hedge a little bit. But I think the fact that we're seeing a lot of folks not saying anything is an indication that no one wants to rock the boat. No one wants to do anything to accidentally cause an issue and the deal that's probably coming together.

AKIKO FUJITA: You know, we already kind of looking ahead here to, number one, the expectation that the deal can be reached, sort of, avoiding the worst case scenario. But in the case of a deal, that's got to have some kind of spending limits, is if you believe the reports that have been out there in terms of where the negotiations have been. I mean, what does that mean from a growth perspective? How are you looking at that?

BOBBY KOGAN: Thanks, Akiko. Yeah, I mean, obviously, you know, GDP, government spending is a component of GDP. And so if you're freezing that aspect of government growth, then that will taper back some of the-- you know, if you're freezing government spending, that's going to taper back some growth. We'll have to see, you know, kind of what happens.

Some of the reporting that came out last night indicates that, you know, it might be more tepid than obviously, Speaker McCarthy had originally called for. And we'll have to see what comes out of it. But yeah, I mean, obviously if you're pulling back government spending, then that slows down our growth.

SEANA SMITH: Bobby, in terms of what the reports are indicating, we could potentially see a cap on federal spending for two years. Also some of the budget that was allocated towards the IRS, some of that reduced. Do you think that is something that enough Democrats would support?

BOBBY KOGAN: I'm glad that I am not a Whip. And I'm glad that I don't have to-- I don't have to see. I'm sure that we'll get enough support to pass it. I'm not 100% sure what the composition is going to be. Is it going to be 2/3 Republicans, 1/3 Democrat, 3/4, 1/4, I couldn't tell you there. But obviously, there's a lot of people want to make sure that we don't default.

AKIKO FUJITA: You know, I wonder if we can move the conversation forward because it feels like this conversation that we've been having around this X date is just a very familiar one. I mean, you can attest to it having worked inside the government. How do we move the conversation forward here so that we're not sort of having this discussion about a potential default every few years?

BOBBY KOGAN: I guess what I would say is that the only real historical analog here is 2011. No one was really worried about default under President Trump or under President Bush or under President Clinton or under President H.W. Bush or President Reagan. you know, the debt limit is repeatedly raised with no preconditions. It was raised three-- or suspended three times under President Trump. Speaker McCarthy voted for all three, huge bipartisan things, seven times and under President Bush, again, all bipartisan.

The issue seems to be when there's a Democratic president. We almost defaulted in 2011. And there were major, major preconditions imposed by House Republicans, and we're seeing a repeat of that. So how do we make sure this doesn't happen again? Well, you need political actors to not take the country hostage. And that is a political problem rather than a process problem.

SEANA SMITH: Bobby Kogan from the Center for American Progress, thanks so much for joining us today.