Manchin Fires Warning Shot Over Dems’ $3.5 Trillion Spending Plan

Manchin Fires Warning Shot Over Dems’ $3.5 Trillion Spending Plan

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Plus, 46 Republican senators vow not to help raise the debt ceiling
Wednesday, August 11, 2021

Senate Democrats got it done. They passed their budget blueprint early Wednesday morning just hours after they, along with 19 Republicans, passed a bipartisan infrastructure bill. And now the Senate is in recess, with no votes scheduled until September 13, while the action turns to the House, which will interrupt its own summer break to vote on the budget resolution on August 23. Here’s what you need to know.

As Dems Adopt $3.5 Trillion Budget Blueprint, Joe Manchin Fires a Warning Shot

The Senate adopted Democrats’ $3.5 trillion budget resolution just before 4 a.m. Wednesday morning in a 50-49 vote along party lines. Republicans uniformly voted against the blueprint that could open the door to a massive spending package calling for an expansion of Medicare and federal safety net programs along with sweeping changes to the country’s child care, education and climate change efforts. Those changes would be financed at least in part by tax hikes on the wealthy and corporations.

“Senate Democrats just took a massive step towards restoring the middle class in the 21st Century, and giving more Americans the chance to get there,” Senate Majority Leader Chuck Schumer (D-NY) said after the vote. “The Democratic budget will bring a generational transformation for how our economy works for average Americans.”

Wednesday’s vote followed some 14 hours of debate over Democrats’ plans and their potential effects on the federal budget deficit — and that debate will still rage on now that the budget blueprint has been passed.

“This was one of the most significant legislative days we’ve had in a long time here in the United States Senate, but we still have a long road to travel,” Schumer told reporters Wednesday, a giant cup of coffee by his side. “It’s as if we caught a nice long pass at midfield, but we still have 50 yards to go before we score a touchdown.”

Democrats must still put together the full reconciliation package outlined in their resolution instructions. Individual committees will produce those more detailed legislative plans that will then get stitched together into a massive omnibus bill that is voted on by both the House and Senate. Schumer said he wants the reconciliation bill written by September 15, but the process will be rife with challenges to maintaining the party unity Democrats will need to bypass any Senate Republican filibuster.

Manchin being Manchin: Case in point: Sen. Joe Manchin (D-WV), a critical swing vote in the evenly divided Senate, reiterated in a lengthy statement Wednesday that while he voted for the budget resolution he still has “serious concerns” about the path of the economy and the cost of the Democratic plan.

Here’s Manchin’s argument, which echoes those made by Republicans:

“Over the past year, Congress has injected more than $5 trillion of stimulus into the American economy – more than any time since World War II – to respond to the pandemic. The challenge we now face is different: millions of jobs remain unfilled across the country and rising inflation rates are now an unavoidable tax on the wages and income of every American. These are not indications of an economy that requires trillions in additional spending. Every elected leader is chosen to make difficult decisions. Adding trillions of dollars more to nearly $29 trillion of national debt, without any consideration of the negative effects on our children and grandchildren, is one of those decisions that has become far too easy in Washington.

“Given the current state of the economic recovery, it is simply irresponsible to continue spending at levels more suited to respond to a Great Depression or Great Recession – not an economy that is on the verge of overheating. More importantly, I firmly believe that continuing to spend at irresponsible levels puts at risk our nation’s ability to respond to the unforeseen crises our country could face. I urge my colleagues to seriously consider this reality as this budget process unfolds in the coming weeks and months.”

Sen. Kyrsten Sinema (D-AZ) has also said she’s troubled by the $3.5 trillion price tag of the reconciliation package.

Other Democrats have said that their new spending will be paid for, and they’ve countered inflation concerns by pointing out that the trillions of dollars in their reconciliation bill would be spread out over many years, lessening the chance of “overheating” that Manchin still cited. “If your primary concern right now is the cost of living, you should support this plan,” President Joe Biden said Wednesday. “A vote against this plan is vote against lowering the cost of health care, housing, child care, elder care and prescription drugs for American families.”

At the other end of the Democratic spectrum from Manchin, progressives say that the $1 trillion bipartisan infrastructure bill alone falls far short of what the country needs, and they insist that they’ll only pass it if it’s accompanied by the larger package. The Congressional Progressive Caucus said Tuesday that a survey of its 96 members found that most will not vote for the bipartisan bill until the Senate passes a “robust” reconciliation bill.

“Our caucus is clear: The bipartisan bill will only be passed if a package of social, human, and climate infrastructure — reflecting long-standing Democratic priorities — is passed simultaneously through budget reconciliation,” Rep. Pramila Jayapal (D-WA), chair of the caucus, said in a statement.

House Speaker Nancy Pelosi has also linked the two bills. She confirmed to her caucus on a call Wednesday that she won’t bring the bipartisan infrastructure bill up for a House vote this month, rejecting calls from moderates to schedule a quick vote. “The president has said he’s all for the bipartisan approach ... bravo! That’s progress, but it ain’t the whole vision,” Pelosi reportedly said on the call. “The votes in the House and Senate depend on us having both bills.”

The bottom line: President Joe Biden’s economic agenda has scored a couple of major wins this week, but Democratic divisions may be the biggest threat to cementing those victories.

46 Republican Senators Pledge Not to Help Democrats Raise the Debt Ceiling

All but four Republican senators have signed a pledge that they will not vote to raise the debt ceiling, sending another warning to Democrats that they are on their own on the pressing issue.

Sen. Ron Johnson (R-WI) circulated a letter during the chamber’s vote-a-rama on the $3.5 trillion budget resolution Wednesday, signing up a majority of his fellow Republicans in an effort to link the Democrats’ proposed spending package with the statutory debt limit imposed on the federal government by Congress, which covers spending that has already been approved and must be paid by the U.S. Treasury.

In the letter, which is addressed to “Our Fellow Americans,” the Republican signatories claim that Democrats are responsible for increased federal spending and so must be responsible for raising the debt limit. “We will not vote to increase the debt ceiling, whether that increase comes through a stand-alone bill, a continuing resolution, or any other vehicle,” the letter says. “Democrats, at any time, have the power through reconciliation to unilaterally raise the debt ceiling, and they should not be allowed to pretend otherwise.”

The Republicans who didn’t sign the letter are Sens. Susan Collins of Maine, John Kennedy of Louisiana, Lisa Murkowski of Alaska and Richard Shelby of Alabama.

Why now: A two-year suspension of the debt ceiling expired at the end of July, forcing the U.S. Treasury to begin taking “extraordinary measures” to keep paying its bills as it waits for Congress to either raise or suspend the limit before the country is forced to default. Democrats opted not to include an increase in the debt ceiling in their budget resolution, which would have made it possible to raise the limit without Republican support, though they still have the option of revising the resolution to include such a provision.

What Democrats say: Democrats point out that much of the increased debt in recent years was produced during former President Trump’s administration. “I cannot believe that Republicans would let the country default,” Senate Majority Leader Chuck Schumer (D-NY) said Wednesday. “It has always been bipartisan to deal with the debt ceiling. When Trump was president I believe the Democrats joined with him to raise it three times.”

President Biden told reporters Wednesday that trillions in debt were added “on the Republicans’ watch” but said he was confident that the GOP would act in time. “They are not going to let us default,” he said.

The bottom line: No one expects Congress to allow the U.S. to default, but it looks like we could be in for a high-stakes game of chicken in the coming weeks — and the markets are starting to notice. According to Reuters Wednesday, “Some U.S. Treasury bill yields are beginning to reflect concerns that lawmakers may wait until the last minute to increase or suspend the debt ceiling.”

Deficit Totals $302 Billion in July, Tops $2.5 Trillion Over First 10 Months of Year

The U.S. budget deficit came to $302 billion in July, the Treasury Department reported Wednesday.

Outlays were $564 billion during the month, down 10% from the year before but still at an unusually high level due to ongoing pandemic relief programs. At $262 billion, receipts were 54% lower than a year earlier, though much of that drop is related to the delay of the tax deadline for most filers in 2020, which caused receipts to balloon last July.

For the first 10 months of the 2021 fiscal year, the deficit totaled $2.54 trillion, down 10% from the year before. Treasury officials said the smaller deficit is driven in part by the tapering of some Covid relief efforts. The cost of enhanced unemployment benefits, for example, fell by 8% to $359 billion compared to a year earlier.

The Congressional Budget Office expects the deficit to total $3 trillion this fiscal year, down slightly from last year’s all-time high of $3.1 trillion.

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