Given the split control of Congress, and the slim majorities in both chambers, some sort of bipartisan compromise is inevitable if default is to be avoided. The right-wing zealots who control the House Republican caucus are never going to agree to raise the debt ceiling without deep spending cuts and the unwinding of other Biden-era initiatives — demands that even the most centrist Democrats are unlikely to accept.
For Democrats, who lack the votes in both chambers for a simple debt ceiling increase, the next-best outcome is one that allows them to avoid default while blocking most extreme budget cuts and raising additional revenue from rich individuals and businesses.Any such compromise is unlikely to be hashed out by Speaker Kevin McCarthy and President Biden. Given his tenuous hold on his caucus, McCarthy can’t associate himself with a deal that most Republicans will vote against.
A deal will almost certainly start with a simple, short-term increase in the debt ceiling — anywhere from a few weeks to a month. That will provide time to write and pass a budget resolution mandating the broad outlines of future spending cuts and revenue increases. If Congress fails to follow through with necessary appropriations and tax changes — a not unlikely outcome — automatic across-the-board spending cuts and tax increases will kick in.