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

Capitol Hearings - Washington
Lamkey Rod/CNP/ABACA
By Yuval Rosenberg

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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