Biden and McConnell have a debt limit past. Can they deliver another late-inning save?

Late in the musical Hamilton, President George Washington asks Alexander Hamilton to "help" him write his farewell speech. Hamilton desperately wants his longtime mentor to stay in office, but Washington presses the quill pen upon him insistently as he sings "One Last Time."

The city named for Washington still has a way of pressing certain distasteful responsibilities on its lead actors – even when they would rather be in a different role, or in a different drama altogether.

And that sets the scene that now confronts Mitch McConnell, the Senate Republican leader for the past 16 years.

On Tuesday, President Biden will commence a round of talks with the top leaders of the two parties in the two chambers of Congress. The sole topic will be the U.S. debt limit and the latest round in Washington's perennial crisis over raising its self-imposed limit on its borrowing.

The zoom-in camera focus will be on the president, as always, and for the first time on House Speaker Kevin McCarthy, who has the leading role after moving a bill to boost the debt ceiling through his chamber last month by a vote of 217-215.

His counterpart in the Senate, Republican Leader Mitch McConnell, has bowed to his colleague, saying just this week that McCarthy had been "sitting at the grown-ups table for months."

McConnell said he would "continue to lend my support to the speaker," repeating what he has been saying since January: "The Senate is not a relevant player at this time."

But the important words there were, and are, the last three.

McConnell may well wish to wash his hands of this year's blood-letting over the debt limit and all it entails. But he knows it will not be that easy. He may know that better than anyone. He has been here before, and more than once.

Setting the scene of historic conflict

The U.S. Treasury is running out of cash to pay creditors whose bonds are coming due at the same time Treasury must meet the federal payroll and pay bills for all the government buys. And all this while Treasury also sends checks to tens of millions of beneficiaries under Social Security, Medicare and other programs.

To meet all these obligations, the Treasury needs to renew its borrowing to fill the gap between the revenues it has been empowered to collect and the outlays that Congress and the president have ordered it to make. But it cannot do that when the debt limit has already been reached.

Everyone in the Capitol and the White House has known for months that the day was approaching when the U.S. Treasury would not only run out of cash but also run out of ways ("extraordinary measures") to get by with an empty till.

This week, Treasury Secretary Janet Yellen blew the whistle and announced the day of reckoning was arriving ahead of schedule — perhaps as soon as June 1.

Nothing focuses the mind like the prospect of the first sovereign debt default in U.S. history. Even talking about defaulting on U.S. obligations is already raising the interest rate the U.S. must pay on its bonds. It is literally courting disaster, not just for the U.S. but for credit and equity markets the world over.

It's scary stuff to contemplate. But at least we know we've been here before. And McConnell remembers.

A dozen years ago, when debt limit negotiations broke down between Barack Obama and House Speaker John Boehner, it was McConnell who established a dialog with the Oval Office through Obama's vice president – Joe Biden.

That is one more reason cooler heads are looking to McConnell to help them prevail.

Since becoming his party's leader in 2007, McConnell has been the fulcrum for many a deal between the parties and between the House and Senate. And he has been key to breaking through with the White House as well.

The situation in the nation's capital today offers a prime example of "Mitch McConnell Time.

Echoes of August 2011

In 2011, the national debt was roughly half as large as today, but the rhetoric about it was just as dire.

Obama was president at the time, in the third year of his first term (just as Biden is now) and the Republicans had just taken over the House in the most recent midterms. Then as now, there was a new speaker of the House. In 2011 it was John Boehner of Ohio, a veteran of the intraparty struggles of two decades. He was known as a negotiator as well as a survivor.

Boehner was in much the same position then as McCarthy is today, dealing with a Democratic Senate and a Democratic president who was beginning his bid for a second term.

The 2011 situation was also parallel to the present because the national debt had just ballooned as a percentage of the gross domestic product – both times reaching the highest percentage it had since the Second World War.

In the 2011 instance, the sudden spike in U.S. debt had resulted from the 2008 mortgage meltdown, the ensuing Wall Street crash and the seizing up of credit markets. The overall economy had sagged into what we now call "The Great Recession," increasing demand for government support while greatly reducing its tax revenue.

This time around, the debt has also seen a spike due to a sudden and unanticipated event – in this case the COVID-19 pandemic and consequent recession. Though not as deep or as enduring as its predecessor, that recession caused the same kind of demand for government money while once again depressing revenues.

And in both the 2011 instance and the current moment, revenues had also taken a hit from deep tax cuts enacted under the previous president – in both cases a Republican (George W. Bush, Donald Trump) few years earlier.

Back in 2011, there had been hope that Obama and Boehner would be able to reach a broadscale agreement that limited spending growth, including for "entitlements" such as Medicare and Social Security. It even contemplated new revenues, also known as taxes.

But this so-called "grand bargain" met resistance from a group of House Republicans calling themselves the House Freedom Caucus. Boehner would clash with this rather informal caucus regularly over the next few years until he suddenly resigned in frustration in the midst of the 2015 session of Congress.

When the grand bargain went bust, Obama turned to Biden, whom he had already tasked with holding dialogues with Republicans. One of his better contacts was McConnell, with whom he had served in the Senate through four six-year terms (1985-2009).

Although both men were born the same year (1942), Biden was already in his 13^th year as a senator when McConnell arrived.

At the time, McConnell was able to recruit his caucus to support a deal, in part because Republicans senators thought a shutdown would hurt their party's candidates in the 2012 elections (including for president). Many had been around in the mid-1990s, when GOP Speaker Newt Gingrich was held responsible for two government shutdowns that were seen as aiding the re-election of Democratic President Bill Clinton in 1996.

Just what is this debt limit thing?

Although the national debt is quite real and a national problem, the debt limit is an artificial device Congress created and could repeal.

It was first imposed in 1917 as part of a political bargain to get certain senators to go along with paying for the First World War. It has since been raised more than 100 times, including 78 times since 1960 and 18 times in the eight years Ronald Reagan was president.

But in the past few decades, as the forces of partisanship have grown stronger in Congress, the debt limit has become something else. It has become a time bomb that ticks down, periodically to near zero. It is also a source of anxiety that infects financial markets transmits deep tremors throughout the economy.

And defusing that bomb becomes a political problem at the highest levels when a Democratic president like Biden must deal with at least one chamber of Congress controlled by Republicans – as is now the case with the House.

Right now, both chambers have majority parties poised on historically narrow margins. The Senate Democratic majority relies on the votes of two independent senators, backed up by the tie-breaking power of the vice president.

In the House, McCarthy has only four votes to spare on a good day, and he still struggles to deal with the House Freedom Caucus that bedeviled Boehner (whose majority margin of 24 was six times larger than McCarthy's today).

Some of McCarthy's House colleagues have suggested the government should not raise the debt ceiling at all. Whether they are simply anti-Biden, or anti-Democratic Party or anti-government, they do not want to be bulldozed into a deal.

Some might reject the warnings of economists and investors about the importance of the U.S. credit rating or the effect default would have on global economics.

And surely they have observed how, by threatening default, they have already been empowered to aim high, proposing cuts and other budget changes they could not otherwise imagine enacting.

This much is clear. The return of the debt limit struggle in an era of narrow majorities gives individualists and outliers uncommon power. Indeed, it presents a moment of maximum leverage for those who would otherwise have little influence over the yearlong budgeting and appropriating process.

McCarthy would have the option of accepting some Democratic votes to make up for defectors in his own caucus. But if did that, a hardcore cadre of rebels in his own camp could force an immediate vote to remove him from the speakership.

Even one member can force such a vote. That was one of the concessions McCarthy made to be elected speaker back in January, on the 15^th ballot.

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