Welcome to Hell Week on Capitol Hill. The next few days are packed with critical deadlines for lawmakers — and pivotal decision points for Democrats that could determine the fate of President Joe Biden’s economic agenda, and potentially his presidency. Oh, and Congress has until Friday to keep the government from shutting down. Here’s where things stand.
A Make-or-Break Week for Biden’s Agenda
President Joe Biden and Democratic leaders have three days and counting to unite their party and ensure that their economic agenda doesn’t collapse into chaos.
Pelosi sets a deadline: Speaker Nancy Pelosi (D-CA) announced Sunday night that the House would begin debate on the Bipartisan Infrastructure Framework passed by the Senate on Monday on then vote on it Thursday — the same day on which current funding for surface transportation programs is set to expire.
Pelosi last month promised a group of centrists that she would bring the infrastructure bill to a vote in the House by Monday. Her goal in setting the vote for Thursday instead is reportedly to buy a little more time for Democrats to pull together their budget reconciliation package focused on health care, education, paid leave and climate change — or, far more likely, at least agree on a solid enough framework that will convince progressives to back off threats to tank the infrastructure bill.
Dozens of progressives are insisting that they will not vote for the infrastructure package without the larger budget bill. “The speaker is an incredibly good vote counter, and she knows exactly where her caucus stands, and we’ve been really clear on that,” Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus, told CNN on Sunday. “The votes aren’t there. I don't think she's going to bring it up.”
Pelosi, though, continued to try to project confidence. “Let me just say we're going to pass the bill this week," she said Sunday on ABC's "This Week." She later added, though: "I'm never bringing a bill to the floor that doesn't have the votes."
A topline less than $3.5 trillion … but how much less? To get the votes, Pelosi is rushing to make progress on the budget bill. The House Budget Committee on Saturday advanced the $3.5 trillion package, but Democrats still have a long, long way to go before it can be finalized and brought to a vote. They have yet to agree on the ultimate size and scope of the legislation and remain divided on many key details.
Pelosi acknowledged on Sunday that the package will end up being smaller than the $3.5 trillion maximum they had set. “That seems self-evident,” the speaker told ABC News. “Adding up what our priorities are should take us to a number where we find common ground. Can we shorten the time or some other things to make these numbers smaller? That's our discussion now, but we're ready for it.”
Pelosi has also promised her members that the House will not vote on a budget bill costing more than the Senate version. And Biden is reportedly prepared to compromise. “The president has made it clear he is willing to accept less than the $3.5 trillion that has been the sticker price for his Build Back Better plan, even as his aides publicly say that the cost will ultimately be nothing since it will all be paid for,” Politico reports.
Sticky sticking points: As for the details, The Wall Street Journal’s Gabriel T. Rubin on Saturday provided a breakdown of five major areas of disagreement: health care, long-term home care and child care, climate, immigration and taxes.
On health care, for example, Democrats are reportedly wrestling with how best to expand access to care. Pelosi is pushing to bolster Affordable Care Act subsidy programs while House Majority Whip Jim Clyburn (D-SC) wants to expand Medicaid in sates that haven’t done so on their own. Sen. Bernie Sanders (I-VT), meanwhile, is pressing to add dental, vision and hearing coverage to Medicare. Democrats are also divided over a cost-saving proposal to allow Medicare to negotiate drug prices with pharmaceutical companies.
And on taxes, Democrats remain split over what the corporate tax rate should be, whether the top individual rate should be restored to 39.6% and how to address demands from some in the party to eliminate the $10,000 cap on the deductibility of state and local taxes, among other issues.
Not exactly stuff that can be hammered out quickly over a working lunch.
What do Machin and Sinema want? That all means that Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) remain critical players in determining whether Democrats can craft a package that can pass the Senate and what it will ultimately look like.
Biden and congressional Democrats have been pressing to pin down the two centrists on their demands and red lines. “The main goal is to get all 50 of us together which means that we really need to get down to what are the things that will enable Joe and Kyrsten to say yes,” Sen. Mazie Hirono (D-HI) told The Wall Street Journal. “I personally am not sure what it is programmatically that they can support. I’d like to get that identified.”
Manchin has resisted such pressure and has instead called for lawmakers to “pause” on the budget package. “What’s the need? There is no timeline. I want to understand it,” he told Politico in an interview last week. “Everybody knows me pretty well. My mind is my mind, not theirs.”
Progressives, meanwhile, say that any framework must include details on what the centrists will support, including a consensus topline number and spending figures for key items, according to a Congressional Progressive Caucus obtained by Politico. “Without both these pieces, it is simply impossible for the legislation to move forward, and we cannot come to an agreement only for it to be undercut after the fact,” the group said in its memo.
Lawmakers look for more from Biden: As irritated as some Democrats are with Manchin and Sinema, frustration is also reportedly growing with Biden. The president and other administration officials reportedly worked the phones this weekend to try to drum up support for the social welfare and climate package. But some Democrats are saying that the president needs to do more. One centrist told Politico that the White House needs to move past “listening mode” and start banging heads to get the infrastructure bill passed.
Biden didn’t do that in public remarks on Monday. Instead, he acknowledged that Democrats may not be able to reach a deal and pass his economic agenda in the next few days. "It may not be by the end of the week. I hope it’s by the end of the week," the president told reporters after getting a Covid-19 vaccine booster shot on camera. "But as long as we’re still alive, we’ve got three things to do: The debt ceiling, continuing resolution, and the two pieces of legislation. If we do that, the country is going to be in great shape."
The bottom line: House Democrats are holding a private caucus meeting Monday evening to try to find a path forward. Pelosi reportedly assured her members that the House won't pass a bill that won't be able to pass the Senate, but it's still far from clear what can pass either chamber.
Republicans Block Bill to Prevent Shutdown, Suspend Debt Limit
Senate Republicans just blocked a bill passed by the House that would prevent a government shutdown at the end of the month because it also would have suspended the debt ceiling. Minority Leader Mitch McConnell of Kentucky, the Republican leading the effort to sink the bill, continues to insist his party has no responsibility for dealing with the debt limit, though he admits that a failure to do so could cause enormous damage to the U.S. economy.
Economists have warned that a U.S. default on its obligations would be calamitous. “If you actually crossed that line and got to a place where the government wasn’t paying off its obligations, I think it would create a very negative dynamic not only in the US but around the world,” New York Fed chief John Williams said Monday.
Federal Reserve Governor Lael Brainard encouraged lawmakers to act. “Congress knows what it needs to do. It’s done it before. It needs to step up; it has responsibilities,” she said at a meeting of business economists. “The American people have had enough drama over the last two years.”
The global consulting firm RMS ran simulations of what could occur if the U.S. defaulted, and the results were not pretty. “This would be the first artificially induced debt ceiling crisis since the 2011 debacle, and has the potential to hurt the real economy, global financial markets and the credit rating of the United States,” the RMS analysts wrote. “Even a short-term default crisis carries with it the probability of a 0.99 percentage point decrease in fourth-quarter growth this year and up to a 1.76 percentage point decrease in the annual growth rate next year.”
Democrats on their own: Assuming Republicans cannot be persuaded to back a debt limit suspension, Democrats are expected to take steps to avoid default by using the reconciliation process to increase the debt limit. That process would take time, though — as long as two weeks, coming perilously close to a default date that could potentially arrive in mid-October.
Democrats have been slow to move on the reconciliation option. Though it may be part of a bluffing game, Senate Budget Chair Bernie Sanders (I-VT) said last week that there is “no backup plan” for the debt limit.
“It is incomprehensible to me … that you have a Republican Party that would allow the largest economy to default on our loans and money that has already been spent, especially spent during the Trump administration,” Sanders said. “But I don’t think that’s going to happen,” he added. “I think Republicans may be a little bit crazy, but they’re not that crazy.”
Shutdown Scramble as Deadline Looms
With government funding set to expire when the fiscal year ends at midnight Thursday, Democrats are expected to rewrite a stopgap bill to provide a “clean” continuing resolution that would prevent a shutdown, as well as provide roughly $20 billion for hurricane victims and Afghani refugee settlement expenses.
Republicans said they would back such an approach. “We will support a clean continuing resolution that will prevent a government shutdown," Sen. McConnell said.
Still, the deadline is just days away, and some experts think a brief shutdown over the weekend is not out of the question given the tight timeframe.