President Biden turned up the pressure on
Democratic lawmakers Thursday as he rallied them to support his
$3.5 trillion economic package. “This our moment to deal working
people back into the economy,” Biden said in remarks at the
White House. But some Democrats warned that it will take
time to work out all the issues that have cropped up as the party
tries to enact the president’s domestic agenda.
Here’s what else is going on.
McConnell Warns Yellen That Republicans Won’t
Help Raise the Debt Ceiling
Facing a potential default on U.S. debt payments in a matter of
weeks, Treasury Secretary Janet Yellen called Senate Majority
Leader Mitch McConnell on Wednesday to ask for his bipartisan
cooperation in passing an increase or suspension of the debt
ceiling. But the Kentucky Republican rejected her request,
according to reports Thursday, and stuck to his position that the
GOP will not help Democrats address the debt limit.
“This is a unified Democrat government, engaging in a partisan
reckless tax and spending spree,” a McConnell spokesman said late
Wednesday after the call. “They will have to raise the debt ceiling
on their own and they have the tools to do it.”
In an
interview with Punchbowl News published Thursday,
McConnell explained why he is refusing to support any effort to
raise or suspend the debt limit: “Let me make it perfectly clear.
The country must never default. The debt ceiling will need to be
raised. But who does that depends on who the American people
elect,” McConnell said. “So the only issue is, whose responsibility
is it to do it? A Democratic president, a Democratic House, a
Democratic Senate. ... It's their obligation. They should step up.
It's hard being in the majority. They are the ones who will raise
the debt limit.”
McConnell tipped his hat to earlier bipartisan efforts – “I have
voted a number of times to raise the debt ceiling in divided
government,” he said – but insisted that Democratic control
absolves the Republican Party of any responsibility to help avoid
what could be a global financial calamity, should the U.S.
default.
Democrats push back: Not for the first time, Democrats
rejected McConnell’s argument, pointing out that they voted several
times to raise the debt ceiling during the Trump administration and
that the debt that must be paid now was incurred in the past.
“Senators from both parties overwhelmingly voted in support of
the many laws that contributed to this obligation,” Senate Majority
Leader Chuck Schumer (D-NY) said. “So neither party can wash its
hands of responsibility to pay the bills.”
According to an analysis by the Associated Press, nearly 98% of
the country’s $28.4 trillion national debt was created before
President Joe Biden took office. And the total includes more than
$7 trillion that was added during the Trump presidency.
A strategic gamble: While there’s more than one way for
Democrats to attempt to raise the debt limit, including attaching
it to the reconciliation bill they plan to use to pass President
Biden’s $3.5 trillion economic package, their current strategy
appears to be to include an increase in a must-pass bill that will
keep the government open after September 30 and provide assistance
to hurricane victims and Afghanistan war refugees – while waiting
for Republicans to lose their nerve and vote to support the
measure.
However, Sen. Roy Blunt, a Republican from Missouri who voted to
raise the debt limit during the Trump presidency, told reporters
Thursday that bipartisan cooperation isn’t likely, despite Biden’s
oft-spoken desire for lawmakers to work across the aisle. “I don’t
think anything in the last month has increased the likelihood that
he can now create an atmosphere of: Let’s work together,” Blunt
said.
And McConnell doesn’t sound like he’s in any mood to change his
mind. “I’m not voting [for a debt limit increase],” he told
Punchbowl. “How many different ways do I need to say this?”
Forecast of the Day
A forecast by analysts at JPMorgan,
cited by James Pethokoukis of the American Enterprise
Institute Thursday, gives a good sense of just how much is going on
in Washington right now, and how complicated the political and
economic playing field is:
Effective Tax Rates for High-Income Households
Have Fallen Sharply Since WWII: Report
At the end of World War II, the top 0.1% of households in terms
of income were paying an effective tax rate of about 50%, according
to an
analysis by Robert McClelland of The Tax Policy
Center. That rate declined over time, falling to roughly 25% by
1985, about where it stayed through 2015, with some
fluctuations.
The top 1% of households have followed the same pattern, with
their effective tax rate falling from nearly 40% in 1945 to about
25% in 2015.
By contrast, average effective tax rates for all households
showed remarkable stability between 1945 and 2015, ranging between
12% and 15%.
Number of the Day: $279 Billion
Individual Retirement Accounts were introduced in the 1970s to
help workers save for their golden years, but some lawmakers are
concerned that they are being abused by wealthy investors.
According to the nonpartisan Joint Committee on Taxation, there are
now nearly 29,000 IRA accounts worth more than $5 million each,
with a total value of $279 billion. About 500 of the accounts hold
more than $25 million.
Democrats want to introduce limits into the system, and
restrictions on IRS accounts worth more than $10 million are
included in the tax plan approved by the House Ways and Means
Committee this week. “Lawmakers’ concern, shared by some tax
experts, is that a system created to help the middle class retire
now lavishes too many perks on the richest of the rich,”
says Bloomberg’s Ben Steverman.
Connect the dots between financial policy, politics, and
citizen and legislative action, with the latest from The American
Prospect. Read it HERE.
News
At an Economic ‘Inflection Point,’ Biden Leans Into
Expansive, Populist Agenda – Washington
Post
Biden’s Economic Plan at Risk of Delays as Democrats
Squabble – Bloomberg
Budget Bill Reopens Moderate vs. Progressive Divide for
Dems – Associated Press
Manchin Keeps Washington Guessing on What He Wants
– The Hill
Dems Call in Big Gun as They Face Huge Hill Tests
– Politico
His Economic Agenda on the Line, Biden Prepares to Fight for
Tax Increases on the Wealthy – CNBC
As G.O.P. Digs In on Debt Ceiling, Democrats Try Shaming
McConnell – New York Times
U.S. Initial Jobless Claims Rose Last Week, Led by
Louisiana – Bloomberg
Inflation Soared in Some U.S. Cities, Barely Budged in
Others – Bloomberg
To Retake Congress, the GOP Plans to Attack Democrats on the
Economy – NPR
Almost 450 Economists Signed a Letter in Favor of Extending
the Enhanced Child Tax Credit – CNBC
A Paid Family Leave Policy Could Be Coming to the US. Here’s
What It Would Look Like – CNBC
Views and Analysis
Mitch McConnell’s Debt Limit Game-Playing Is Lunacy, and We
Should Say So – Greg Sargent, Washington
Post
Democrats Should Heed Mitch McConnell’s Advice
– Karl W. Smith, Bloomberg
Democrats’ $3.5 Trillion Spending Plan Flunks Its Own
Test – Michael R. Strain,
Bloomberg
Can American Politics Allow for Long-Run
Investment? – Lee Harris, American
Prospect
Joe Manchin Doesn’t Know What He’s Missing –
Bryce Covert, New York Times
No, the Richest One Percent Don’t Pay 40 Percent of the
Taxes – Jonathan Chait, New
York
Infrastructure Summer: A Surprisingly Radical Housing
Bill – Alexander Sammon, American
Prospect
Families Planned to Use Child Tax Credit to Pay Bills but
Some Were Confused About Eligibility – Elaine Maag
et al, Tax Policy Center
Peter Thiel Gamed Silicon Valley, Donald Trump, and Democracy
to Make Billions, Tax-Free – Max Chafkin,
Bloomberg Businessweek