Debt crisis averted, but at what cost?

With Tuesday’s 219-206 vote along party lines to increase the U.S. debt limit by $480 billion, House Democrats averted a possible global financial meltdown just one week before Treasury Secretary Janet Yellen had warned that the United States would run out of funds and default. But Congress’ – and the country’s – problems remain far from resolved.

The increase will only cover the bills through early December, which is also the end date for a temporary extension of government funding that passed the Senate Sept. 30 with support from more than a dozen Republicans. 

At the same time, Democrats missed their own deadlines for passing a $1.2 trillion bipartisan infrastructure package that cleared the Senate in August, and for working out differences between moderates and progressives over the 2022 budget, a $3.5 trillion version of which includes many of President Joe Biden’s top domestic policy agenda items. 

That has deflated the momentum Mr. Biden had in August, when he held up the Senate’s 69-30 passage of the infrastructure bill as proof he could still broker bipartisan deals in a narrowly divided Congress, promising progressives that Part 2 – focused on “soft” infrastructure like health care, social programs, and family benefits – would be coming shortly.

The longer these negotiations drag on, the greater the challenge Democrats face as they seek to advance all three priorities, in part because the high-pressure wrangling has damaged already low trust between – and within – the two parties.

In a pointed speech from the Senate floor on Oct. 7, just before the Senate passed the temporary debt-limit increase, Majority Leader Chuck Schumer blamed Republicans for “playing a dangerous and risky partisan game,” and manufacturing a crisis. Sen. Mitch McConnell, the Republican leader, responded in an angry letter that Senator Schumer had “poisoned the well even further” and that Democrats should not look to Republicans for any help next time. 

The drama over the two other key bills also thrust Democrats’ intraparty conflicts into the spotlight.

In a sign of progressives’ growing influence, Speaker of the House Nancy Pelosi broke her promise to moderates and postponed a Sept. 30 vote on the infrastructure package. Progressives have refused to support that bill without a commitment from moderates to support the larger “Build Back Better” bill, which includes significant family and climate measures.

New Jersey Rep. Josh Gottheimer, who leads the bipartisan Problem Solvers caucus and has advocated strongly for the infrastructure package, called Speaker Pelosi’s decision “deeply regrettable” and accused the 96-member Congressional Progressive Caucus of using tactics similar to those of the GOP’s Freedom Caucus. 

Biden’s visit to Congress

A key question now is whether the Democrats are ready to work through their differences, or if the internal feuding – with members publicly disparaging aspects of both bills – has already undercut their ability to claim a significant victory for the president. 

Rep. John Yarmuth, the Democratic chairman of the House Budget Committee who recently announced he would not run for reelection next year, says Mr. Biden’s recent visit to the Capitol showed Democrats a path forward. 

“The president’s appearance up here really changed the dynamic, and I think it refocused both moderates and progressives on the bigger picture in a very good way,” the Kentucky Democrat says, adding that Mr. Biden underscored that the infrastructure and budget bills must be done together. “I think both sides now fully understand that the fates of their priorities are intertwined.”

Many interpreted the president’s message as signaling to moderates that he was not going to push for the infrastructure bill to be passed until they agreed to support his budget priorities.

Democrats plan to pass the Build Back Better Act through a process known as budget reconciliation, which allows them to circumvent the usual 60-vote threshold for legislation in the Senate and pass it with a simple majority. But that means they need all 50 Democratic senators on board, along with Vice President Kamala Harris as the tie-breaking vote. 

The key holdouts are Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, both of whom have balked at the $3.5 trillion price tag touted by Sen. Bernie Sanders, the Budget Committee chairman, who has outlined a way to pay for that spending without further running up the deficit. Senator Manchin, who called it “fiscal insanity” to spend trillions on new and expanded government programs, has said he would like to see the budget come down to $1.5 trillion. Senator Sinema’s demands remain a mystery to many in Congress, though she says she has communicated her position clearly to the White House. 

Democratic leaders are now talking about a bill in the range of $1.9 trillion to $2.2 trillion, and are negotiating cuts to their initial framework, which includes initiatives ranging from expanded health care benefits and paid family leave to free community college and climate change measures. One option could be trimming the number of programs; another would be to shorten their duration or use “means testing” to give the benefits only to those who need them most.

Speaker Pelosi, in a “Dear Colleague” letter Monday night, indicated there was greater support for the first option. “Overwhelmingly, the guidance I am receiving from Members is to do fewer things well,” she wrote. But on Tuesday, she suggested to reporters she actually favored keeping most measures in the bill and paring back the time frame. 

Debt limit crisis, Part 2

After weeks of what amounted to a dangerous game of political chicken over the debt limit, Senator McConnell surprised many in his own caucus by backing down at the last minute and allowing a short-term extension to pass. Texas Sen. Ted Cruz accused the minority leader of a “strategic mistake,” and demanded a recorded vote to end the GOP filibuster, forcing Senator McConnell to find at least 10 Republicans to join with Democrats to end the blockade.

But Senator McConnell has made clear that, come December, Democrats will have to raise the debt limit on their own, which means they may have to use the cumbersome reconciliation process. Majority Leader Schumer adamantly refused to use reconciliation in the recent standoff and has continued to rule it out in public statements. 

Some Democrats are urging their party to just take their lumps and quickly put the issue behind them. 

“I expect Senator Schumer to not lead us up to the precipice,” says Democratic Rep. Stephanie Murphy, a moderate from Florida. While calling the GOP position “terribly disappointing,” she says Democrats cannot expect Republicans to step in at the last minute again. “There should be a real plan on how to address the debt ceiling,” she adds. “There is no room for playing games with the full faith and credit of the U.S. government.”