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Democrats Hit Impasse on Biden Agenda, Debt Ceiling Increase

The U.S. Capitol in Washington, D.C., U.S., on Wednesday, Sept. 15, 2021. The top House Democrat overseeing tax policy said that President Biden's plan to substantially raise taxes on inherited assets lacks sufficient support in the lower chamber, further dimming its chances of inclusion in a $3.5 trillion economic package. Photographer: Stefani Reynolds/Bloomberg

Democrats hit a wall in their high-stakes effort to simultaneously avert a government shutdown, avoid a debt default and advance President Joe Biden’s $4 trillion agenda, as feuding gripped lawmakers and a looming economic catastrophe shook markets. 

A group of progressive Democrats on Tuesday said they would defy House Speaker Nancy Pelosi and oppose a bipartisan infrastructure bill in a planned Thursday vote without separate legislation for the bigger piece of Biden’s economic plans, which is still under negotiation.

In the Senate, Republicans for the second time in as many days blocked a Democratic move to raise the federal debt limit, escalating risk less than three weeks before the U.S. Treasury potentially runs out of capacity to avert a federal payments default.

Concern over the debt-ceiling impasse triggered a selloff on Wall Street, with stocks suffering their worst rout since May. Yields on Treasury bills maturing around Oct. 18 — the date the U.S. Treasury potentially runs out of capacity to avert a federal payments default — rose more than those on other securities.

Democratic Rift Persists Ahead Of Showdown On White House Agenda
Nancy Pelosi speaks during an event with climate activists to highlight the Build Back Better Act, on Sept. 28.

And still unresolved is the fate of a stopgap funding measure to prevent a government shutdown after the current fiscal year ends on Thursday.

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“Everybody’s waiting for Pelosi to pick another rabbit out of the hat. So we’ll see,” Representative Jimmy Gomez, a California Democrat, said.

Democrats have gathered behind closed doors since returning to Washington on Monday, trying to unite the warring progressive and moderate factions of the party behind a $550 billion infrastructure package and a larger social spending bill with a price tag of as much as $3.5 trillion.

Biden, who as a six-term senator was known for his legislative savvy, has been deployed to try to resolve the intra-party rift over the size and scope of the spending package.

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He summoned two moderate Democratic senators who balked at the $3.5 trillion price tag — Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — to another White House meeting in an attempt to get their agreement on elements of his economic plan.

After meeting for about 90 minutes with Biden, Manchin said he has no particular limit in mind for the spending plan.

“There were no commitments made at all,” he said. “Just good negotiations and talking about the needs of our country.”

Earlier Tuesday, Congressional Progressive Caucus Chair Pramila Jayapal said she has the votes to sink the roads-and-bridges bill Thursday if Democrats don’t first agree on and pass the larger social spending bill that encompasses much of their priorities.

“This is what’s called hard,” said Vermont Representative Peter Welch, summing up what he sees as a pivotal time for the Biden presidency. “Ultimately the success of the Biden administration depends on getting the infrastructure bill and the Build Back Better Agenda passed.”

The longer Democrats negotiate, however, the more divided the party appears. By Tuesday evening, progressives shrugged off the Thursday vote as little more than a bluff.

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Pramila Jayapal

Jayapal called Pelosi “a great vote counter and she knows that we don’t have the votes for the bipartisan bill without the reconciliation bill.”

“I trust that the speaker will not put forth a bill without having the votes,” Representative Ilhan Omar, a Minnesota Democrat, added.

‘Work a Miracle’

Dick Durbin of Illinois, the No. 2 Democrat in the Senate, said he hopes Biden “can work a miracle” and get a deal on a topline number for the social spending package this week.

“We’re reaching a point where we need to bring this to closure, I think that’s obvious,” he said.

Senate Republicans, meanwhile, made clear this week they would filibuster any effort to push through a suspension of the debt ceiling, even as Treasury Secretary Janet Yellen told Congress the U.S. government risks a catastrophic loan default by about Oct. 18.

Republicans are attempting to force Democrats to use an involved parliamentary procedure to raise the federal debt limit on their own. But Majority Leader Chuck Schumer said the procedure is “long and convoluted” and too risky for the debt limit.

Senate GOP leader Mitch McConnell has argued his caucus would not raise the debt limit to pay for Democratic priorities, even though some of the debt is a result of the Trump-era tax cuts.

The issue is “about the future and not the past,” McConnell said.

Democrats want Republicans to support the debt ceiling suspension, as Democrats did during the Trump administration. But Democratic leaders failed to get the votes Monday to advance a debt ceiling boost to the Senate floor, and Republicans immediately objected on Tuesday when Schumer proposed doing it with just 51 votes.

“What’s worse is McConnell’s now put himself in the position where, if he were to change his mind, he drives the bus over all of his members who echoed that position,” House Budget Committee Chairman John Yarmuth said. “So now, if there are 10 people on the Republican side who are reasonable and understand the dilemma that they’ve put us in, then they’re in a tough spot.”

Democrats Say Biden's Giant Stimulus To Easily Pass House
John Yarmuth

Perhaps the easiest of Democrats’ legislative problems, at least at the moment, is pushing through a stopgap spending bill before midnight on Friday. But to do so, they must abandon efforts to use it as a vehicle to suspend the debt ceiling or for other Republican-opposed provisions.

The bill Republicans blocked on Monday included both funding to keep the government running until early December and a debt-ceiling suspension until December 2022.

“Sometime today” Democrats will make the determination on “what the best strategy is to move it forward and get it done,” House Majority Leader Steny Hoyer said of the continuing resolution that will be needed to keep the government open.

McConnell said Republican would support a stop gap bill with hurricane aid and funding for Israel’s Iron Dome missile defense shield attached.

“We are doing everything we can to avoid a government shutdown,” Schumer said.


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