What Biden Can Learn from FDR for Today’s Debt Ceiling Fight
May 22, 2023
By Felicia Wong
[W]e should remember that FDR recognized that a president’s foremost responsibilities are to democratic means of governing, to the well-being of the people, and to a government strong enough to prioritize those things in the face of business self-interests.
With the debt ceiling deadline—the so-called “x-date”—just weeks away, all eyes in Washington are glued to the day-to-day reports of negotiations between President Biden and Speaker McCarthy. Will the president agree to major cuts? Does McCarthy have the votes if they strike a deal? And will Senate Democrats go along if he does?
Moments like these—with so much at stake for the American people and for our standing in the world—call us to reflect on the urgency of these negotiations within a broader political and historical context.
The stakes are extraordinarily high. President Biden is seeking to execute government’s basic functions and carry out spending as authorized by Congress, but disagreement over a weaponized debt ceiling has brought us to the brink of default. As Joseph Stiglitz explains, “a failure to increase the debt limit risks bringing about a recession,” and could cost as many as 8.3 million jobs with a longer default.
In addition to grave economic fallout, there is another threat: Leaders from around the world are already concerned that the United States is unable to govern itself. International experts now consider the US to be a “backsliding” democracy. Authoritarianism is on the rise, and is being fueled within Congress itself.
This is the backdrop against which President Biden is negotiating. I describe it this way not merely to sympathize with the very difficult political hand he has been dealt—though I certainly do. The context of rising illiberalism compels a strong executive response, because America’s standing in the world rests in large part on whether our democratic system can withstand authoritarian challenges. The risks are especially grave when the authoritarians have, in fact, taken over a major part of our government.
There’s a lot to learn from President Franklin Roosevelt, who faced his own debt ceiling battle in 1943. The circumstances that Biden faces are, of course, fundamentally different than those FDR confronted. But we should remember that FDR recognized that a president’s foremost responsibilities are to democratic means of governing, to the well-being of the people, and to a government strong enough to prioritize those things in the face of business self-interests.
For FDR, this meant marshaling the full power of government in service of the American people.
In 1943, faced with paying the expenses of fighting World War II, FDR was forced to ask Congress to increase the debt ceiling. In so doing, he insisted that the way to pay for this was to increase taxes on the wealthy and to cap salaries by imposing a 100 percent effective rate on the richest Americans. The president shamed congressional politicians who “had authorized the drafting of men into the armed forces at $600 a year regardless of what they had earned in civilian life,” but “refused to reduce the salary of a man not drafted no matter how high his income might be.” This “salary maximum” was popular. As the Los Angeles Times has reported, the film star Ann Sheridan lamented, “I regret that I have but one salary to give to my country.”
Conservatives, of course, did not agree. Roosevelt’s standoff with Congress lasted for months, though ultimately Congress did increase the debt limit. And although the salary cap limit was not part of that deal—surely, FDR knew that the 100 percent tax was unlikely to prevail—the president’s continued insistence on higher taxation of the wealthy was a core strategic weapon in the fight. And by the end of the war, the richest Americans were paying a 94 percent top marginal tax rate.
Let’s remember: This fight came after the 1942 election, which was very bad for Roosevelt. It was an unprecedented third midterm for the president and his party, and a war-weary nation handed him significant congressional losses. But even given his weakened hand, Roosevelt’s approach was to continue to pressure Congress.
FDR understood the stakes. He was leading the world’s democracies in a war against Nazism and fascism. Production of planes, tanks, and ammunition was critical to a war victory—the US was the “arsenal of democracy.” And the best way to finance the fight for democracy was to demand that every person pay their fair share.
These observations about FDR’s strategy when faced with an intransigent Congress are not to say that Biden must do exactly what FDR did. But it is worth remembering, as Joey Fishkin describes, that Biden has been granted enormous power and responsibility to exercise his constitutional authority on behalf of the American people in ways that prevent the economic and democratic calamity that is now before us.
Let’s be clear—President Biden faces no good choices. Critics have pointed out the many risks, including market instability and the inevitability of court challenges, should the president choose to exercise the authority granted to him by the Constitution. It is undeniably true, as Deputy Treasury Secretary Wally Adeyemo said last week, that the best outcome for US market credibility would be for Congress to raise the debt limit. But if Congress will not do that in any reasonable fashion, then there are reasons to believe that the markets and major bond purchasers would stand behind a Treasury that continues to pay its bills—based on the ongoing strengthening of the American economy—after the x-date. President Biden should take courage that, to date, he has made many economic bets that have paid off, especially for working Americans.
As noted commentator George Will said: “The presidency is like a soft leather glove, and it takes the shape of the hand that’s put into it.” FDR stretched the glove, and stretched the office. Today, “we are all living today with an office enlarged permanently by Franklin Roosevelt.” For Will, who has a conservative notion of fewer government powers, and more market power, that was a lament. But those of us who want to fight back against an attack on governance itself can take comfort in FDR’s approach. In the 1940s, faced with global war, Franklin Roosevelt stretched the role of the presidency and shaped American institutions to meet the moment.
President Biden is faced with an untenable situation, with some politicians committed to undermining our democratic ability to govern. And now, as then, he has the opportunity, and constitutional obligation, to represent what the people want: To prevent economic catastrophe, and to pay what Congress has already promised—from social security checks to soldiers’ salaries.