Good Morning from Washington, D.C…. The next few months will be the busiest legislative period in Congress in years (read more in last week’s MMM). In addition to passing the White House Build Back Better Agenda, Congress faces a handful of critical fiscal and legislative deadlines—next Thursday, September 30th, government funding runs out, the National Defense Authorization Act, and Surface Transportation and National Flood Insurance Programs all expire. All of those come before what is perhaps the most high profile issue: that the U.S. will run out of cash to pay its debts sometime later this fall (the debt limit extension from 2019 expired earlier this summer leaving the Treasury to act on extraordinary measures over the past few months). Adding to the calendar, the House of Representatives plans to debate and vote on legislation aimed at stopping states from enacting tough anti-abortion regulations like the one in Texas, Speaker Nancy Pelosi said on Thursday, but the bill’s prospects in the Senate are slim.
This week, the House will vote on both a continuing resolution to fund the Federal Government through December 10th and to raise the debt ceiling. However, Democrats will need 10 Republican Senators to vote for both packages in the Senate—something that will not happen on debt ceiling. Republicans see the debt ceiling as their best opportunity to stop/stall/highlight their opposition to Democratic spending, especially the $3.5 trillion reconciliation package. Senate Minority Leader Mitch McConnell (R-Ky.) said last week, “Democrats keep boasting about how wild and revolutionary their partisan vision is! So, our friends across the aisle should not expect traditional bipartisan borrowing to finance their nontraditional reckless taxing and spending spree. That’s not how this works.” Meanwhile the White House is sounding the alarm with a new fact sheet warning that any delays could send ripples through U.S. financial markets and halt billions of dollars in aid for disaster relief efforts, infrastructure and education funding, not to mention upending the COVID response. “Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs,” the White House said. “We expect Congress to act promptly.”
- Progressive-Moderate Showdown—Senator Joe Manchin (D-WV) and Senator Bernie Sanders (I-Vt) very clearly disagree on the size of a reconciliation package (Manchin saying his ideal package is $1-1.5 trillion, while Sanders contends he is “confident” in the ability of Congress to get a $3.5 trillion package done.) Furthermore, Manchin is taking issue with a number of the policies in the bill that are priorities for progressives—including universal pre-K, extending the Child Tax Credit (where he wants to add a means test—something that will not fly with progressives in the House), and reducing child care costs for most parents.
- Obamacare Redux?—The House reconciliation bills include a slew of healthcare expansions with a major price tag and very slow phase in timelines. At the moment, one of the top priorities is to add dental, vision, and hearing benefits to Medicare which, in some cases, wouldn’t kick in until 2028 and the CBO estimates would cost $238 billion. If you recall, one of the early political problems with the Affordable Care Act was its slow phase in. In some cases, most Americans didn’t see expanded benefits until 2014 (almost four years after the Act passed.) The healthcare conversation is so fraught that it could for all intents and purposes drag the entire bill down. Heading into midterms, this is especially precarious for Democrats.
- BIF Promises Made, BIF Promises Broken?— While Moderates and Progressives squabble on the size and scope of the reconciliation package, the House prepares to vote on the BIF next week. However, progressives in the House have said they will not vote for the BIF without a corresponding reconciliation package and moderates have said the same for reconciliation without the BIF. Who will blink first? And will they blink before the end of the year?
In the State Capital…
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