House to Vote Next Week on Debt Limit Suspension
Majority Leader Steny Hoyer (D-MD) said Friday that the House
will vote on a measure to suspend the debt ceiling next week. He
did not say, however, whether the bill would be paired with a
measure providing funding for the federal government, which could
shut its doors when the new fiscal year starts on October 1 if
Congress fails to act before then.
The House Rules Committee is set to take up a bill Monday to
fund the government through either December 3 or 10. Democratic
leaders have reportedly been considering whether to tie the debt
limit legislation to the must-pass stopgap funding bill.
“Decoupling government funding from the debt limit would leave
many Republicans more willing to back a short-term government
funding bill that includes billions of dollars in disaster aid for
hurricane-battered red states across the southeast, which was
requested by President Joe Biden,” Politico’s Caitlin Emma
reports.
The bottom line: Republicans have
vowed not to support any efforts to raise the debt limit, arguing
that Democrats must do it on their own. Next week’s vote could
bring that standoff to a head, and force one side or another to
change its tactics.
White House Warns Debt Default Could Cause Recession
The Biden administration on Friday issued fresh warnings about
the potential damage that could result from a U.S. debt
default.
“Hitting the debt ceiling could cause a recession,” a White
House letter addressed to state and local governments said.
“Economic growth would falter, unemployment would rise, and the
labor market could lose millions of jobs.”
The recession would hit state and local governments hard, the
White House warned. “If the U.S. defaults on its debt — cities and
states could experience a double-whammy: falling revenues and no
federal aid as long as Congress refuses to raise or suspend the
debt limit,” the letter said. “This means critical state services
will be at risk for budget cuts, from education to healthcare to
pensions.”
A plea for bipartisan cooperation: At a meeting of the
U.S. Conference of Mayors Friday, Democratic Mayor Nan Whaley of
Dayton, Ohio, issued a plea for lawmakers to work together to
address the debt ceiling.
“Both parties in Washington have added to our debt, and
both parties have an obligation to make sure the United States can
continue to pay its bills,” Whaley said. “This is one of the most
basic responsibilities of Congress, and there is no good reason for
lawmakers to create a crisis that undermines the full faith and
credit of the United States.”
Column of the Day: Democrats Grow Squeamish About Taxing the
Rich
Polls consistently find broad support for taxing the rich — but
what exactly does that mean? Washington Post columnist Catherine
Rampell points out that Democrats’ definition of “rich” has shrunk
over time to “a teeny — and vanishing — group.”
President Obama drew the line for tax hikes at $250,000 in
annual income. President Biden has moved it to $400,000. And Rep.
Alexandria Ocasio-Cortez (D-NY), who wore a much-discussed gown
that said “Tax the Rich” while attending the Met Gala this week,
responded to critics in part by
saying: “They want you to think that when we talk about
rich, we’re talking about doctor or a lawyer instead of someone
with hundreds of millions of dollars if not billions of
dollars.”
Rampell notes that Democrats’ narrowed focus on the wealthiest
of the wealthy comes as the Democratic base has changed to include
more high-earning, college-educated constituents — but the tax
changes proposed by House Democrats this month also leave plenty of
breaks in place for the ultrawealthy.
The House plan, for example, stops well short of raising the
capital gains tax to the match the tax rate in income, as President
Joe Biden had called for, and it doesn’t eliminate the “stepped-up
basis” provision that allows assets that have appreciated in value
to be passed along to heirs untaxed. “This is a huge boon to anyone
with dynastic-level wealth, since it means their fortunes can
escape capital gains taxes,” Rampell explains. Democrats are also
considering options to repeal or raise the $10,000 limit on state
and local tax (SALT) deductions, another change that would benefit
top-earners (see more on this below).
“Yes, Democrats plan to raise top rates on personal and
corporate income taxes,” Rampell writes. “That’s not nothing. But
it’s not nearly sufficient to pay for the generous welfare state
Democrats want to build. Paying for that would ultimately require
levying higher taxes on the middle class, too, as other countries
with more expansive safety nets do.”
Read the full column at The Washington Post.
Restoring SALT Deduction Would Slash Dems’ Tax Hikes for Top
Earners: Report
If Democrats’ budget plan restores the full deduction for
state and local taxes, it would leave top earners facing much
smaller overall tax hikes — or even tax cuts — according to data
from the right-leaning Tax Foundation cited by
Bloomberg News.
The top 1% of earners, those making more than $401,600, would
see their after-tax incomes fall by 5% under the House Democratic
plan. But if the $10,000 cap on SALT deductibility is eliminated,
their after-tax hit would be just 1.9%. Taxpayers making between
$165,181 and $401,600 would see an after-tax hit of 0.3% with the
SALT cap in place turn to a gain of 0.9% with the cap lifted.
Restoring the full SALT deduction would cost about $85 billion a
year over the next five years, according to the Committee for a
Responsible Federal Budget, with most of the benefits of the change
flowing to the top 1% of earners.
House lawmakers are reportedly considering options other than a
full repeal of the cap, including a two-year suspension or an
increase in the $10,000 deduction limit.
Ocasio-Cortez Calls for Unemployment Benefit Reform in $3.5
Trillion Spending Bill
Reps. Alexandria Ocasio-Cortez (D-NY) and Cori Bush (D-MO) are
calling for the inclusion of major unemployment insurance reforms
in the $3.5 trillion spending package that contains much of
President Joe Biden’s domestic economic agenda.
In a letter Thursday to Democratic leaders, the pair, joined by
11 other House Democrats, said they wanted to “express the urgency
of including unemployment insurance (UI) reforms in the Build Back
Better Act to protect the millions of unemployed workers across
this country.”
Citing the success of the temporary programs passed by Congress
during the Covid-19 crisis, the group called on Democrats to revise
the unemployment system so that it permanently includes part-time
workers and establishes a minimum duration of benefits, among other
reforms. The changes would be particularly important for workers
from minority groups, who disproportionately work in low-wage jobs
and live in states with weak unemployment systems, the group
said.
“A strong and responsive UI system not only helps our
entire economy more quickly and equitably recover from future
recessions, it is also an essential tool to help dislocated workers
stay connected to the workforce and to provide for their families
as they seek new employment,” they said.
Number of the Day: $2.1 Billion
The Biden administration on Friday announced a plan to spend
$2.1 billion to improve infection prevention and control across the
U.S. health care system, the largest such investment in the
country’s history.
“This funding will dramatically improve the safety and quality
of the healthcare delivered in the United States during the
pandemic and in the future,” said Dr. Rochelle Walensky, the
director of the Centers for Disease Control and Prevention.
The CDC plans to distribute $1.25 billion of the funding to 64
state, local and territorial health departments over the next three
years with the aim of helping prevent infections at health care
facilities including hospitals and nursing homes. Another $880
million will be used over several years to “support healthcare
partners, academic institutions, and other nonprofit partners” in
developing measures to prevent and control infections.
There were 647,000 infections associated with care in acute care
hospitals in 2015, including 72,000 deaths, according to the CDC
estimates cited by Bloomberg News.
The new funding is part of the $1.9 trillion American Rescue
Plan enacted in March.