Today may be the first day of fall, but the
clouds have been gathering for a while now above President Joe
Biden and the Democratic majorities in Congress. Here’s the
latest.
Biden Scrambles to Save His
Agenda
With his economic agenda — and very possibly his presidential
legacy — hanging in the balance, President Joe Biden on Wednesday
jumped into the middle of the fray between progressives and
moderates in his party, hoping to quell disputes that threaten to
derail both a $1 trillion bipartisan infrastructure bill and a
larger package of social spending and tax increases.
Biden hosted a series of meetings Wednesday with Democrats, from
House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer
to
key members of the moderate and liberal factions
clashing over major elements of his agenda.
The centrist Democrats meeting with Biden included Sens. Joe
Manchin (WV) and Kyrsten Sinema (AZ) as well as Reps. Josh
Gottheimer (NJ), leader of the Problem Solvers Caucus, Suzan
DelBene (WA), leader of the New Democrat Coalition, and Stephanie
Murphy (FL), leader of the Blue Dog Coalition. Biden was then
scheduled to meet in the evening with liberals including a handful
of senators and Rep. Pramila Jayapal (WA), chair of the
Congressional Progressive Caucus.
The meetings come as the House is set to vote next week on the
Senate-passed infrastructure bill.
Pelosi had committed to hold a vote on the infrastructure bill
by September 27 in order to resolve an earlier revolt by a group of
moderates, who threatened to oppose the budget resolution paving
the way for the social welfare package. With that date rapidly
approaching, though, it’s not clear that Democrats will have the
votes they need.
"We're calm and everybody's good and our work's almost done,"
Pelosi
told reporters after her White House meeting. Schumer
was similarly effusive. “We made some good progress,” he said.
Move along,
nothing to see here.
Progressives playing hardball: Leadership’s assurances
aside, progressives are still threatening to vote against the
infrastructure bill as they seek leverage to ensure adoption of the
larger package — still far from being finished — that contains
their priorities on health care, education and climate change.
Democrats can only afford to lose three votes, and Jayapal told
reporters late Tuesday that perhaps half of her 95-member caucus is
willing to vote against the infrastructure bill. And Rep. Mark
Pocan (WI), another progressive set to meet with Biden Wednesday
evening, told CNN
that 50 Democrats would oppose the bill. “At the end of the day, if
we don’t have the reconciliation bill done, the infrastructure bill
will not pass,” Jayapal said.
House Republican leaders, meanwhile, are urging their members to
vote against the infrastructure bill, putting more pressure on
Democrats — and, Bloomberg’s Erik Wasson
suggests, raising the odds that Pelosi will have
to postpone the infrastructure vote.
But as Democratic leaders look to unite their caucus and avoid
an embarrassing defeat or retreat, Pelosi may be more likely to
press progressives to fall in line. She already signaled in a
letter
to colleagues earlier this week that the cost of the proposed $3.5
trillion budget reconciliation package may need to be trimmed in
order to pass the Senate.
“There will not be a positive reaction to help coalesce our
caucus if the infrastructure bill goes down,” House Majority Leader
Steny Hoyer (D-MD) said Tuesday. “I don’t agree with the judgment
of those who think that somehow it will compel the moderate wing of
the caucus to be more supportive. I think the moderate wing is
supportive.”
Progressives aren’t inclined to give in this time. “Try us,”
Jayapal told The Washington Post after a two-hour meeting with
Pelosi late Tuesday.
Eleven Senate Democrats voiced their support for the
progressive position in a joint statement Wednesday: “The House of
Representatives should wait to pass the bipartisan infrastructure
bill until the budget reconciliation bill, which enacts the rest of
the President’s Build Back Better agenda, is sent to the
President’s desk.”
Shutdown Watch: Eight Days and Counting
The House Tuesday night passed a stopgap measure to fund the
government through December 3 and suspend the federal debt limit
until December 22. But with Senate Republicans continuing to insist
that they won’t help raise the borrowing limit, the 220-211
party-line vote in the House only prolongs the high-stakes game of
chicken that’s been going on between the two sides.
The combined bill is likely to be blocked in the Senate later
this week, forcing Democrats to decide if they then want to turn to
a “clean” government funding bill — one without the suspension of
the debt limit — to avoid a shutdown on October 1.
Growing Alarm Over Looming Debt Default
Threat
Two former Treasury secretaries who served in Republican
administrations reportedly attempted to intervene in the
long-simmering standoff over the debt limit, meeting with current
Treasury Secretary Janet Yellen and Senate Minority Leader Mitch
McConnell (R-KY) in recent weeks in an attempt to find some kind of
compromise.
According to The Washington Post’s Jeff Stein Wednesday, the
talks involving the Bush administration’s Henry Paulson and the
Trump administration’s Steven Mnuchin did not produce any
breakthroughs, and the threat of default on the country’s payment
obligations continues to hang over the U.S. economy.
After his meeting with McConnell, Paulson reportedly told the
Biden administration that the Kentucky Republican is not bluffing
when he says Republicans will not support any efforts to raise the
debt ceiling, and that Democrats must handle the debt limit on
their own.
Mnuchin reportedly came to the same conclusion after speaking
with McConnell.
“The backchanneling by Mnuchin and Paulson — who had previously
worked together at Goldman Sachs — reflects the widespread alarm
among economists and U.S. business interests about the consequences
of an unprecedented default on the federal debt,”
Stein writes.
A letter to Congress: In another sign of the growing
alarm over the failure to resolve the looming crisis, six former
Treasury secretaries sent a
joint letter to Congressional leaders Wednesday
urging lawmakers to act quickly to raise or suspend the debt
ceiling
The letter from former Treasury Secretaries Paulson,
Timothy Geithner, Lawrence Summers, Jack Lew, Robert Rubin and
Michael Blumenthal warned that the country was running the risk of
“serious economic and national security harm” if Congress fails to
act swiftly. (As Reuters noted, the letter’s signatories did not
include former Republican Treasury Secretaries Mnuchin, John Snow,
Nicholas Brady or James Baker.)
“Even a short-lived default could threaten economic
growth,” the former Treasury secretaries warned. “It creates the
risk of roiling markets, and of sapping economic confidence, and it
would prevent Americans from receiving vital services. It would be
very damaging to undermine trust in the full faith and credit of
the United States, and this damage would be hard to
repair."
Yellen appeals to Wall Street: Treasury Secretary
Yellen called the leaders of major financial firms in recent days
as part of an effort to pressure Republicans to work with Democrats
on a bipartisan solution to the debt ceiling crisis, Bloomberg’s
Joe Light and Hannah Levitt
report.
The executives contacted by Yellen include Jamie Dimon of
JPMorgan Chase, Jane Fraser of Citigroup, Charlie Scharf of Wells
Fargo and Brian Moynihan of Bank of America. Yellen reportedly
asked them to speak out publicly on the issue.
“The calls are the latest sign of mounting pressure on the U.S.
government to avert a potential crisis if it’s no longer able to
borrow money to pay its bills,” Light and Levitt say. “Yellen has
said the Treasury could exhaust its capacity to pay U.S.
obligations sometime in October.”
Quote of the Day
“We took on this debt in a bipartisan way. We’re prepared to
expand the debt in a bipartisan way. I don’t see why it’s justified
to refuse to acknowledge reality. Reality is not a partisan thing.
Raising the debt limit is acknowledging reality, not making a
partisan choice.”
— Former Treasury Secretary Lawrence H. Summers, speaking to
The Washington Post about the Republican refusal
to help raise the debt limit.
Poll of the Day: The Debt Limit Blame
Game
A new Politico/Morning Consult
poll finds that more voters say they’d blame
Democrats than Republicans if the United States was to default on
its debt. While 42% of those polled said they’d blame both parties
equally, another 33% pointed the finger at Democrats, compared to
16% who said they’d blame Republicans more.
The same poll also finds that nearly 70% of voters support
raising taxes on the wealthy while more than 60% support raising
the corporate tax rate.
Nearly 60% of voters say they back the Democratic plan to raise
more than $2 trillion over 10 years through higher taxes, though a
smaller percentage, 42%, favors using the taxes to offset the $3.5
trillion cost of Democrats’ proposals to expand the social safety
net and combat climate change.
Fed Signals It Could Slow Bond Purchases
Federal Reserve Chair Jerome Powell said Wednesday that the
central bank could start to taper its recession-fighting purchases
of bonds as soon as the next Fed meeting in November, and that the
$120-billion-per-month asset-purchasing program could be unwound by
the middle of next year.
“With progress on vaccinations and strong policy support,
indicators of economic activity and employment have continued to
strengthen,” the Federal Open Market Committee said in a statement.
However, the “path of the economy continues to depend on the course
of the virus. Progress on vaccinations will likely continue to
reduce the effects of the public health crisis on the economy, but
risks to the economic outlook remain.”
Assuming the economy continues to improve, “the Committee judges
that a moderation in the pace of asset purchases may soon be
warranted.”
The Fed also announced, as expected, that it would not raise
interest rates this month, keeping them near zero. However, members
of the Federal Open Market Committee signaled a growing likelihood
of raising interest rates at some point in 2022, with half of them
projecting rate increases at some point by the end of next
year.