Pelosi in Power: What’s on the Dems’ Agenda

Plus, the shutdown could last ‘months and months’

A New Era Begins as Pelosi Reclaims Speaker's Gavel

A new era of divided government dawned in Washington on Thursday as the 116th Congress convened at noon, with Democrats in control of the House for the first time in eight years and Republicans adding to their slim majority in the Senate. The shake-up in the balance of power sets the stage for amped-up confrontations between Congress and President Trump’s administration, even as the ongoing partial government shutdown stretches toward the two-week mark.



As expected, Nancy Pelosi was elected speaker of the House, becoming the first representative to reclaim the gavel since the legendary Sam Rayburn in 1955. She will preside over a House that includes a record number of women, 102, and is the most racially and ethnically diverse ever. Among the firsts in the new Congress, per CNN:

  • Kansas and New Mexico elected the first Native American women to Congress, Democrats Sharice Davids and Deb Haaland.
  • Democrats Rashida Tlaib of Michigan and Ilhan Omar of Minnesota are the first Muslim women elected to Congress.
  • Democrat Alexandria Ocasio-Cortez of New York, 29, becomes to youngest woman ever in Congress.
  • Republican Marsha Blackburn will be the first female senator from Tennessee.
  • Republican Cindy Hyde-Smith is the first woman elected to Congress from Mississippi.
  • Democrat Kyrsten Sinema became the first female senator representing Arizona. She is also the first openly bisexual senator.
  • Democrats Veronica Escobar and Sylvia Garcia will be the first Latinas to represent Texas.
  • Democrat Ayanna Pressley is the first black congresswoman to represent Massachusetts while Democrat Jahana Hayes is the first black congresswoman from Connecticut.

What to Expect from the Democratic House

“Trump has had two years to set the country's sole policy agenda - that dynamic changes today,” analyst Chris Krueger of the Cowen Washington Research Group wrote, adding that House Democrats will be working along two tracks, one legislative and the other focused on investigations and oversight of the Trump administration.

“The Democratic majority is largely due to Democrats in Trump-won districts from 2016,” Krueger says, “so expect a lot of legislation with high approval ratings first in the queue: infrastructure, drug pricing, immigration reform (protections for DREAMers), shoring up the ObamaCare exchanges/protecting pre-existing conditions, gun control, voting rights, etc.”

Those legislative priorities might already have been delayed or derailed by the ongoing shutdown, Krueger says — and they could soon be overwhelmed by numerous investigations into Trump.

Shutdown Could Last ‘for Months and Months,’ Key Senator Warns

The Democratic-led House was set to quickly pass a package of funding bills aimed at reopening the government. The legislation would provide money for most shuttered departments and agencies through September while funding the Department of Homeland Security through February 8, allowing the parties more time to negotiate over border security. The package would provide $1.3 billion for border fencing and $300 million for additional border security enhancements.

But the House votes won’t end the shutdown.

The Senate would have to pass the bills, and Majority Leader Mitch McConnell (R-KY) says he won’t bring them up for a vote if Trump won’t sign them, even though Senate Republicans had at one point last month supported a similar stopgap with no added funding for a wall. "Let me say this again, the Senate will not take up any proposal that does not have a real chance of passing this chamber and getting a presidential signature," McConnell said Thursday.

Trump has rejected the Democratic plan because it provides no additional money for a wall on the border with Mexico, and on Wednesday he reportedly told Senate Minority Leader Chuck Schumer that he can’t agree to the offer because he “would look foolish” if he did.

Against that backdrop, Senate Appropriations Chairman Richard Shelby (R-AL) warned Thursday that the partial shutdown could last “for months and months.”

"I'm thinking we might be in for a long haul here,” Shelby told reporters, according to The Hill. “A long haul. In other words, I don't see any quick resolution to this.”

The White House invited congressional leaders to another meeting on Friday after what was billed as a briefing on border security Wednesday yielded no progress, instead devolving into a tense exchange between the two sides.

What’s in the New House Rules Package

The new Democratic-controlled House is also expected to adopt a rules package Thursday, with provisions covering a variety of issues ranging from wearing religious headgear on the House floor (to be allowed) to the Holman rule, a 19th century regulation that allows lawmakers to reduce salaries of specific federal employees (revived in the previous Congress, to be ended).

The new rules address important fiscal issues, including:

The debt ceiling: The House is reviving the Gephardt Rule, which allows the lower chamber to automatically pass a resolution suspending the debt ceiling whenever it votes for a budget resolution that exceeds the existing limit. Roll Call said the new rule will “turbocharge the old ‘Gephardt rule’ into something completely new” since it treats the debt ceiling suspension as an independent piece of legislation and doesn’t require the Senate to agree to the same budget resolution. In another change from the original, the debt suspension will be limited to the current fiscal year.

Dynamic scoring: The previous Republican-controlled House required the Congressional Budget Office and Joint Committee on Taxation to analyze the economic impact of major legislation, including dynamic feedback effects. Worried that the dynamic models overestimate the positive economic effects from tax cuts, Democrats are eliminating the requirement.

Tax increases: There will no longer be the requirement for a 3/5 supermajority to approve revenue-enhancing tax hikes.

Appropriations amendments: Lawmakers will be able to offer amendments to appropriations bills that increase overall spending.

Pay-as-you-go: Speaker Nancy Pelosi will restore the pay-as-you-go rule that requires increases in mandatory spending and tax cuts to be offset by spending cuts or revenue increases, to ensure that the federal deficit doesn’t grow. The rule can be waived with a majority vote. (See below for more on the controversy surrounding this rule.)

Progressives Rebel Against Pelosi’s Deficit Rules

 

The new speaker faced a minor rebellion from the progressive wing of her party on reinstating PAYGO, with some Democratic lawmakers arguing that the rule creates an unnecessary impediment to moving forward with ambitious – and costly – new programs such as Medicare for All.

 

Vox’s Tara Golshan says that “to progressives, PAYGO is like trying to fit progressive talking points into a Paul Ryan-esque worldview, where only balanced budgets and austere entitlement cuts lead to economic growth.”

 

The imposition of deficit-based restrictions is particularly galling for some Democrats in light of the recent Republican tax cuts that will increase the federal debt by more than $1 trillion. If Republicans can run up the debt with tax cuts for the rich, they ask, why can’t Democrats spend more on social programs without pesky budget rules getting in the way?

 

While the rebellion against PAYGO failed to truly threaten the Democratic rules package, the issue will likely crop up again as Democrats hash out their agenda for the next two years and beyond.

 

Here’s a rundown on the Democrat’s intraparty PAYGO fight:

 

Who supports PAYGO: Fiscal hawks love the PAYGO rule. “We strongly support PAYGO rules that encourage fiscal responsibility,” the Committee for a Responsible Federal Budget said Wednesday. The sense of fiscal discipline the rule creates is embraced by many mainstream Democrats, as well as Republicans, at least when they’re out of power and can’t pass deficit-increasing tax cuts. Pelosi has embraced the PAYGO rule as part of an approach meant to signal to voters that Democrats will govern responsibly, and keep the deficit under control, unlike the GOP. “Democrats believe that you must pay as you go,” she said last year. “Whatever you want to invest in, you must offset.” 

 

Who’s opposed: Progressives have for months made clear their opposition to Pelosi’s plan to include the PAYGO rule. After the Democratic rules package was released, lawmakers Ro Khanna (CA) and Alexandria Ocasio-Cortez (NY) announced that they wouldn’t support it because of the PAYGO rule. Khanna tweeted, “It is terrible economics,” adding that “PayGo would be a terrible policy that unilaterally disarms the incoming Democratic majority’s ability to govern.” Ocasio-Cortez tweeted that she sees PAYGO as “a dark political maneuver designed to hamstring progress on healthcare+other [legislation]. We shouldn’t hinder ourselves from the start.”

 

Some academics who reject the idea that deficits should be a primary concern for lawmakers. Economist Stephanie Kelton of Stony Brook University, a leading critic of the deficit hawks, tweeted, “Why should a Democratic majority operate on the basis of a Republican ideology that even the Republicans don't believe in. Reject #PAYGO as a House rule, then repeal the statute.” Arguing that PAYGO is ultimately about political power, not economics, Mike Konczal of the Roosevelt Institute wrote that, “PAYGO isn't about debt, it's about who gets to exercise power over the legislative process.”

 

Why it may not matter much one way or another: Whatever political signals the PAYGO rule may send, it may not have as much impact as either its supporters or critics think it will, since the rule can be suspended with a simple majority vote. Rep. Pramila Jayapal (D-WA), who co-chairs the Congressional Progressive Caucus but supports the PAYGO rule, said that the rule won’t get in the way of “advancing key progressive priorities” in the new Congress. “The critical thing here is: Do we have a commitment to waive paygo on critical bills? I think we do,” she said. “I think we’ve not only got a commitment for that, but for hearings on those bills, and we’ve never had that before.” 

 

Progressives see this fight as a sign of progress: “Fortunately, the mere existence of a divisive, intraparty fight over PAYGO is a sign of vital progress,” writes New York’s Eric Levitz. “For decades, a belief in the necessity of long-term deficit reduction was a source of consensus within the Democratic Party. Democrats might fight about whether spending cuts were necessary — but the idea that new spending would have to be paid for with tax hikes wasn’t controversial. Now it is. And that fact is more important that the details of the House’s ultimate rules package. Khanna and Ocasio-Cortez lost a battle that didn’t matter — and, in so doing, made some tangible progress toward victory in a wider war that does.”

Quote of the Day

"The world is now incapable of shouldering a 10-year Treasury yield above 3%.”

– Moody’s Analytics, in a research note suggesting that slowing global business activity now more than offsets upward pressure on interest rates from the Federal Reserve and from rapidly rising U.S. debt issuance. The stock market’s ongoing plunge has left 10-year yields at 2.552 percent.

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