Biden Faces Another Intraparty Revolt

U.S. President Joe Biden delivers remarks on the October jobs report at the White House
EVELYN HOCKSTEIN
By Yuval Rosenberg

Happy Friday! At least it
started out as a happy day for President Joe Biden, with a strong
jobs report offering signs that the economy is strenghtening. It
may not end up that way, though, as continued Democratic infighting
threatens to again delay the president's agenda.

Here's what's happening.

Biden Faces Another Intraparty
Revolt

President Joe Biden explicitly called on the House to
deliver him two legislative victories today by advancing both a $1
trillion bipartisan infrastructure bill and a $1.85 trillion
package pairing social and environmental programs with tax changes.
Members of his party weren’t able to overcome intraparty divisions
to do it.

“I'm asking every House member, member of the House of
Representatives to vote yes on both these bills right now,” Biden
said Friday morning in remarks from the White House touting the
economic recovery and a strong October jobs report. “Send the
infrastructure bill to my desk, send the Build Back Better bill to
the Senate.”

Democrats still scrambling to line up votes: House
Democratic leaders, having postponed a vote on the Build Back
Better plan Thursday night, scrambled Friday to line up the votes
for both bills, but their efforts were frustrated by an ongoing
split between centrists and progressives that forced them to hold
off on the planned vote on the social spending bill.

A group of six centrist House Democrats, concerned about
the costs of that plan, continued to insist that they wanted to see
a formal Congressional Budget Office analysis of the bill before
they would vote on it. With Democrats only able to lose three
votes, that demand effectively delayed the planned Build Back
Better vote.

Progressives responded by saying they would be willing to
wait and then pass both bills together. “A full accounting of the
spending and revenue has been provided by the White House, numerous
pieces of the legislation have already been scored, and the [Joint
Committee on Taxation] has put out analysis that Build Back Better
will contribute to reducing the deficit,” Rep. Pramila Jayapal
(D-WA), the Congressional Progressive Caucus chair, said in a
statement. “However, if our six colleagues still want to wait for a
CBO score, we would agree to give them that time — after which
point we can vote on both bills together.”

But with Democrats eager for some sort of progress, the
Congressional Black Caucus then offered up a compromise: hold a
vote on the infrastructure package — BIF, in congressional parlance
— and a procedural vote on the social spending plan.

“We had hoped to be able to bring both bills to the floor
today,” House Speaker Nancy Pelosi told reporters Friday afternoon.
“Some members want more clarification or validation of numbers that
have been put forth, its top line – that it is fully paid for — and
we honored that request. So today we hope to pass the BIF and also
the rule on Build Back Better, with the idea that before
Thanksgiving – it should take another week or so to get the numbers
that they’re requesting…. Then we will have a Thanksgiving gift for
the American people.”

Putting pressure on progressives: The leadership
plan put pressure on progressives to fall in line and support the
infrastructure plan even without the assurances they want on the
larger package. President Biden reportedly called Jayapal Friday
afternoon to discuss strategy, but Jayapal apparently told the
president she would still not vote for the infrastructure bill. In
all, about 20 progressives reportedly have indicated that they are
ready to buck Pelosi — and Biden —and vote against the
infrastructure bill today.

What’s next: Pelosi typically doesn’t bring up
bills that don’t have the votes to pass — and while Pelosi told
reporters she’s keeping her own whip count of votes, it’s not clear
yet whether Democrats will be able to get the infrastructure bill
to Biden’s desk. In the meantime, the delay on the Build Back
Better act, which House leaders now hope to pass the week before
Thanksgiving, adds to an already packed calendar toward the end of
the year.

The bottom line: The lack of trust among Democrats
continues to derail Biden’s agenda.

“If the House sends Biden the bipartisan infrastructure
bill today- on top of the jobs report & recent COVID news, you
could argue it’s one is the best days of his presidency,” Garrett
Haake of NBC News
tweeted. “If they don’t pass anything, it’s basically
the third round of last week of September process
fumble.”

Asked if she worries that the continued uncertainty over the
status of votes makes it look like Democrats can’t get out of their
own way, Pelosi acknowledged the challenge but added that her party
isn’t “a lockstep party” and respects different opinions. “Welcome
to my world,” she said. “This is the Democratic Party.”

Would the Build Back Better Bill Really Cost $4 Trillion?

Conservative Democratic lawmakers have slowed the progress of
the Build Back Better bill, citing concerns about the ultimate cost
of the spending package. Some critics have referred to a new
analysis of the bill by the Penn Wharton Budget Model, which finds
that under certain assumptions the bill could cost as much as $4
trillion over 10 years, or roughly twice the cost projected by the
White House and the bipartisan Joint Committee on Taxation.

The assumptions, though, bear closer examination.

In order to arrive at their eye-opening $4 trillion figure, Penn
Wharton analysts assume that virtually all of the programs in the
bill will be extended, rather than ending after two or three years,
as many of the programs are scheduled to do. While there’s little
doubt that many of the bill’s supporters would prefer to see the
programs extended or even made permanent, there’s at least some
reason to be skeptical that will happen, especially given the
growing expectation that Republicans will gain at least some
control in Washington after the 2022 midterm elections. And if some
of the programs were to be extended, lawmakers could — could
— still provide new funding, in whole or in part.

As David Dayen of the liberal publication The American Prospect
notes, “this is a highly unorthodox way to judge legislation,
especially given a Congress that needs to be insistently pushed and
prodded to do almost anything.”

In an analysis that sticks closer to the legislation as written,
Penn Wharton finds that at least one version of the Build Back
Better plan would cost about $1.87 trillion, while bringing in
$1.56 trillion in revenue, over 10 years — results much closer to
the ones provided by the Joint Committee on Taxation earlier this
week.

But even that analysis does not include key provisions,
including savings provided by drug price negotiations in Medicare
and proposed changes to the state and local tax (SALT) deduction.
To top it all off, a spokesperson told Dayen that the Penn Wharton
analysis is based on an older version of the proposal from the
White House, not the latest House bill.

The bottom line: Projecting the true long-term costs of
the Build Back Better bill might require a crystal ball. And the
Penn Wharton model, in particular, has been criticized by those on
the left for some questionable or problematic assumptions.

Still, the latest version of the legislation does unquestionably
rely on budget gimmicks decried by fiscal hawks for obscuring the
potential long-term costs of its provisions, arguing that providing
only temporary funding for programs intended to stay in place
long-term — no matter what the legislative text says — only creates
policy uncertainty. Fiscal hawks also warn about the budgetary risk
of enacting such plans while existing programs like Social Security
and Medicare already face financial shortfalls.

Job Market Bounces Back Strongly in October

U.S. payrolls increased by 531,000 in October, the Labor
Department announced Friday, as the national unemployment rate fell
to 4.6%. The stronger-than-expected results are boosting confidence
that the recovery from the Covid-19 pandemic continues to gather
steam.

“This is the kind of recovery we can get when we are not
sidelined by a surge in Covid cases,” economist Nick Bunker of the
job search site Indeed told CNBC. “If this is the sort of job
growth we will see in the next several months, we are on a solid
path.”

In addition, the numbers from previous months were revised
upward, indicating the jobs recovery may have been stronger in late
summer than economists initially thought. The job growth number for
August was revised to 483,000, an increase of 117,000 from the
initial reading, and the number for September is now 312,000, an
increase of 118,000.

Employers continue to report difficulty hiring workers, and the
demand for workers amid a persistent shortage helped push wages
higher, with average hourly wages for private-sector workers rising
0.4% from September to October. On an annual basis, wages are up
4.9% — an exceptionally high level that is largely being erased by
exceptionally high inflation.

The long-term trend: The U.S. has now recovered 81% of
the jobs lost during the pandemic, with more than 18 million people
returning to work, leaving the economy about 4.2 million jobs below
the pre-pandemic peak of February 2020. However, if lost job growth
is taken into account — that is, the jobs that would have been
created in the absence of the pandemic — the hole is quite a bit
deeper. According to Ian Shepherdson of Pantheon Economics, the
number of missing jobs is nearly 9 million. “That should be the
goal,” Shepherdson tweeted Friday.

In an increasingly worrying sign, the labor force participation
rate has seen little change. About 61% of the potential labor force
is currently working or looking for a job, roughly the same level
as a year ago and close to lows not seen since the 1970s.

“Initially we thought it would be the end of unemployment
insurance with 25 states ending those over the summer, but we
really didn’t see an increase in participation,” Veronica Clark, an
economist at Citi, told
The Washington Post. “It’s childcare issues. It’s
Delta. It’s almost like we keep making up stories why the
participation rate isn’t coming back. But it could be something
more structural."

The persistent weakness in labor force participation has more
economists thinking about whether it may be driven in part by the
early retirement of millions of baby boomers during the pandemic.
“While the strength of employment was an encouraging sign that
labor demand remains strong, labor supply remains very weak,”
economist Michael Pearce of Capital Economics wrote in a note to
clients. “We’re increasingly convinced that the fall in
participation since the beginning of the pandemic will prove
permanent.”

Joseph Brusuelas, chief economist at the consulting firm RSM,
said he will be watching two demographic groups carefully in the
coming months: baby boomers and prime-working-age women who have
dropped out of the labor force in significant numbers. In the past,
those groups have started to trickle back into the workforce once
the unemployment rate drops below 5%. If they don’t come back, that
would “signal what lasting structural damage there is to the
workforce from the pandemic," Brusuelas told
CNN.

Point-Counterpoint: Are Democrats Doing Too Much or Too
Little?

The New York Times Editorial Board writes that this week’s
election results indicate that Democrats should stop their
intraparty squabbling and refocus on the “moderate policies and
values” that can unite Americans:

“Tuesday’s results are a sign that significant parts of the
electorate are feeling leery of a sharp leftward push in the party,
including on priorities like Build Back Better, which have some
strong provisions and some discretionary ones driving up the price
tag. The concerns of more centrist Americans about a rush to spend
taxpayer money, a rush to grow the government, should not be
dismissed. …
“Many Americans, across party lines, are concerned about crime
and border security and inflation. The high price of gas is causing
particular pain. More than
60 percent of voters hold the Biden administration
responsible for inflation. Polls show that many independents
already think that the government is
trying to do too much to deal with the nation’s
problems.”

Times columnist Paul Krugman presents a counterargument today.
“What the public perceives isn’t a party doing too much, but a
party doing too little, and Biden and his allies need to end that
sense of drift,” he writes, adding:

“There’s no evidence of a significant voter backlash against
Biden’s social spending proposals. True, most people have no idea
what these proposals are — all they’ve heard are top-line numbers,
with even those often reported without context ($1.75 trillion
would be only 0.6 percent of
gross domestic product over the next decade).
Beyond that, however,
issue polling suggests that the main components of
the proposed spending range from fairly popular to extremely
popular.”

Read the
full editorial and the
Krugman column at The New York Times and let us
know your takeaways from the elections by emailing us here.

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