A High-Stakes Game of Chicken on the Debt Limit

Reaction to the Vote to begin Debate on the Bipartisan Infrastructure Bill in the US Senate
CNP
By Yuval Rosenberg

Hey, it’s almost Friday! With August
days rapidly slipping away, talks are reportedly underway in the
Senate about speeding to a final vote on the bipartisan
infrastructure bill as soon as tonight or Saturday. That would
allow senators to the turn to Democrats’ $3.5 trillion budget
resolution more quickly — and thereby avoid losing more of their
August recess. The move would require the agreement of all
senators, though, and some Republicans are reportedly still

asking for amendments, so we’ll see. In the
meantime, here’s what else you need to know while wondering where
soccer great
Lionel Messi will end up.

Senate Infrastructure Bill Will Add $256 Billion to Deficits:
CBO

The bipartisan infrastructure bill currently under debate in the
Senate would add $256 billion to deficits over 10 years, the
Congressional Budget Office said Thursday. Negotiators had claimed
that the $550 billion spending package would be fully offset, but
it's been clear that their financing proposals wouldn't cover all
the costs in the official score.

Since the result was largely anticipated, the CBO report
may not swing many votes — or at least not enough to affect passage
of the bill. One of the main Republican negotiators of the bill,
Sen. Rob Portman of Ohio, has reportedly been persuaded that the
infrastructure package would not add as much to the deficit as the
CBO was expected to report, and other Republican negotiators are
expected to follow his lead.

“The new spending under the bill is offset through a combination
of new revenue and savings, some of which is reflected in the
formal CBO score and some of which is reflected in other savings
and additional revenue identified in estimates, as CBO is limited
in what it can include in its formal score,” Portman said in a
joint statement released with fellow negotiator Sen. Kyrsten Sinema
(D-AZ).

Still, budget watchers are bound to be disappointed after
calling for any new spending to be paid for in full. “It’s easy to
get so wrapped up in it and so wrapped up with the things that you
see in the bill that are good … sometimes when you get so wrapped
up in that, it’s easy to lose sight of the fact that the pay-fors
are fake,” said Sen. Mike Lee (R-UT).

What comes next: A vote on the bill is expected in the
next few days. Sen. John Cornyn (R-TX), who said he will oppose the
bill, predicted it will advance. “I think the infrastructure bill
will pass,” he said, adding, “It’s got enough support.”

Oh, by the way: Democrats’ budget
resolution will likely also assume that the reconciliation package
will add “somewhere in the ballpark of $500 billion to $1 trillion”
more to deficits over the next 10 years, Roll Call
reports. Democrats have said that the full $3.5
trillion cost of their plan will be offset, and some in the party
have raised concerns about adding to the deficit.

Senate Careens Toward High-Stakes Game of Chicken on Debt
Limit

This right here is exactly what the facepalm emoji was made for:
It’s looking ever more likely that Republicans and Democrats are
headed for a September showdown over raising the debt ceiling.

A two-year suspension of the borrowing limit expired at the end
of July and the Treasury Department has started employing
“extraordinary measures” to enable the government to keep paying
its bills and avoid breaching the ceiling. Those extraordinary
measures may be exhausted shortly after Congress returns from
recess in September, Treasury Secretary Janet Yellen has warned.
Other estimates suggest lawmakers could have several weeks
longer.

Republicans have insisted that they won’t vote to raise the
borrowing limit if Democrats push ahead on a partisan basis with
their $3.5 trillion reconciliation package. They’ve also demanded
that a debt limit hike be accompanied by structural budgeting
reforms along the lines of the spending caps imposed after a
similar showdown in 2011. Some Republicans have also called for a
bipartisan commission on entitlement reform.

“You can’t keep increasing the debt limit over and
over again without some kind of reform that starts to address the
fundamental issue, and that is deficit spending that goes out as
far as we can see,” Sen. Steve Daines (R-MT) told Punchbowl News. “So the
most responsible thing that can be done is to attach some kind of
[budget] reform that we can get agreement as a condition of raising
the debt ceiling.”

Senate Majority Leader Mitch McConnell (R-KY) reiterated the GOP
position on Thursday. “If our colleagues want to ram through yet
another reckless taxing and spending spree without our input, if
they want all this spending and debt to be their signature legacy,
they should leap at the chance to own every bit of it,” he said.
“Let me make something perfectly clear: if they don’t need or want
our input, they won’t get our help. They won’t get our help with
the debt limit increase that these reckless plans will
require.”

McConnell has suggested that Democrats include a provision to
raise or suspend the debt limit in their budget package, which
could pass with only Democratic votes. But some moderate Democrats
are concerned about the political optics of going that route,
preferring to raise the debt ceiling as part of bipartisan
legislation to fund the government. Democrats also point out that
they didn’t play debt ceiling politics when Donald Trump was
president and Republicans added nearly $2 trillion to the debt with
their 2017 tax cuts, so they don’t want to reward GOP brinksmanship
now.

“The rules that existed under Donald Trump, that we
weren’t going to mess with the full faith and credit of the United
States of America, was the appropriate and prudent thing,” Sen.
Mark Warner (D-VA) said, according to Punchbowl. “To create a fake
crisis at this moment, with this much going on in the world, with
this much going on in this country, coming out of Covid and dealing
with the variant, would be the epitome of irresponsibility.”

That sets up a high-stakes game of chicken, with most
Republicans opposed to extending the debt limit as part of a
stop-gap spending bill called a continuing resolution.

The bottom line: Whether we see a debt limit showdown
this fall should become clear within days as Democrats decide if
they’ll include a provision to address the issue in the budget
resolution they expect to take up next week.

US Health Care System Worst Among Wealthy Nations: Report

The U.S. spends more on health care relative to the size of its
economy than any other nation, but its health care system ranks
dead last among a group of its peers, according to a new analysis
from the Commonwealth Fund.

Researchers compared 11 high-income countries: Australia,
Canada, France, Germany, the Netherlands, New Zealand, Norway,
Sweden, Switzerland, the United Kingdom and the United States. They
ranked their health care systems on 71 variables, clustered in five
broad thematic areas: access to care, the care process,
administrative efficiency, equity and health-care outcomes. In four
of the five areas, the U.S. ranked last. In the one exception, the
care process, the U.S. ranked second.

The top performing countries overall were Norway, the
Netherlands and Australia. But the top 10 nations were clustered
together on many measures, leaving the U.S. in a class all its own,
as the chart below indicates.

Where the U.S. falls short: The researchers said
the top-performing systems have four characteristics that
distinguish them from the U.S.:

1. universal coverage with no cost barriers;

2. excellent primary care that is available equally to
all;

3. minimal administrative burdens that distract from
care;

4. investment in social services, especially for children
and working-age adults.

Cost and equity are particularly glaring problems for the
U.S., where the wealthy are usually able to purchase excellent
medical services but the non-wealthy face difficulties. “We’ve set
up a system where we spend quite a bit of money on health care but
we have significant financial barriers, which tend to dissuade
people from getting care,” the study’s lead author, Eric Schneider,

told The Washington Post.

The result is the least affordable health care system in the
advanced world, which fails large portions of the population. “We
have almost two health-care systems in America: one for people with
means and insurance, and another one that falls short for people
who are uninsured or don’t have adequate insurance coverage,”
Schneider said.


Read the Commonwealth Fund report here.

Income Inequality Increased Over Past 40 Years: CBO

Household incomes in the U.S. became less equal between 1979 and
2018, both before and after interventions by the government, the
Congressional Budget Office said in a
new analysis released Wednesday.

The top 20% of households saw their pre-tax and pre-transfer
incomes grow by 111% over that time, with an average income of
$321,700 in 2018. By comparison, households in the bottom 20% saw
their pre-tax and pre-transfer incomes grow by 40%, to $22,500,
while the middle quintiles saw growth of 37%. (Transfers refer to
means-tested aid programs, including Medicaid, food assistance,
rental subsidies, and aid to needy families.)

The tax and transfer systems reduced the overall level of
inequality, boosting incomes at the bottom while reducing those at
the top. After taxes and transfers, the poorest 20% of households
saw incomes increase by $15,200 on average, or 68%, to $37,700. At
the other end of the spectrum, the top 20% of households saw
incomes decrease by $77,800 on average, or 24%, to $243,900.

The CBO noted, however, that the averages conceal
considerable variation, especially at the very top, where the 1%
saw much greater income growth. “In 2018, real income after
transfers and taxes for that income group was 268 percent greater
than it was in 1979,” the report says.

Quote of the Day

“The record amount of stimulus in the economy has led
to the most inflation momentum in 30 years, and our economy has not
even fully reopened yet. I am deeply concerned that the continuing
stimulus put forth by the Fed, and proposal for additional fiscal
stimulus, will lead to our economy overheating and to unavoidable
inflation taxes that hard working Americans cannot
afford.”

– Sen. Joe Manchin (D-WV) in a letter urging
Federal Reserve Chair Jerome Powell and the Federal Open Market
Committee to immediately reassess their monetary policy and start
“tapering” stimulus measures including the bank’s purchases of
Treasuries and mortgage backed securities.

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