The leadership of both the Democrat progressive wing and the Republican reactionary wing voted against passing the legislation to allow the debt ceiling to be raised.
However, most of the progressive D’s held back their votes until it was clear that the deal would pass. Their vote was a symbolic protest vote. That was not true for the Rs opposing the settlement. They were prepared to hold another vote past Yellen’s claimed deadline.
In the end, the pragmatic legislators from both parties carried the victory of passing the settlement to allow the debt ceiling to be lifted. They may have studied history more than their right and left-wing caucuses. Polls from the Republican-driven shutdowns in 2011 and 2013 showed that over three-quarters of the population opposed a government shutdown, and certainly a default, over accepting something less than perfect in the budget.
Democrats rightly argued that when Congress passed all the appropriation bills in 2022, any negotiation would be a retreat from prior commitments.
However, those bills were passed with the Ds controlling the Senate and the House. If they had the votes, the Rs would have blocked appropriation bills until they were seriously compromised. It was inevitable that a vote to raise the debt ceiling would be contested after the November elections, considering that the Rs were expected to control at least one of the chambers.
So, who can out on top in this negotiation? First and foremost, the nation’s economy. Even though the Feds could have continued paying interest on their loans, they would have had to take drastic actions to shift cash from services to pay them. For instance, the Feds could close the national parks as people headed into them as summer begins. That would have been a black eye for the Rs if they were the lead party voting against raising the ceiling. But, McCarthy and mainline Rs did not want that hanging around their neck come the next election day.
More importantly, even if the Feds continued to pay interest on their loans, the capital market would dive, and future interest costs would jump since the US could not provide a dependable rate of return on their loans.
If the R’s House Freedom Caucus and the Progressives had gotten enough votes to kill the negotiated treatment, even without a default, the disruption would have been a repeat…