Hardball on Debt Ceiling; Manchin Sets His Price
Author: Greg Valliere
September 8, 2021
THE INFRASTRUCTURE SPENDING BILLS may stall until early winter, but a debt ceiling extension needs to be resolved within the next two months. So this may prompt a change in strategy at the White House.
POLITICAL HARDBALL: Joe Biden and his top aides are considering this quid pro quo: if at least some Republicans don’t agree to hike the debt ceiling, they would jeopardize emergency aid for hurricane victims and Afghan refugees, which may be combined with a debt ceiling extension. And who would want to vote against aid to hurricane victims?
SO THIS SUMMER’S STRATEGY of attempting to raise the debt ceiling in a separate, stand-alone bill may be scrapped, wisely, because there probably aren’t enough votes for that. The need to pass a stop-gap budget resolution, keeping the government open when the new fiscal year begins on Oct. 1, changes the dynamics.
WHAT A DIFFICULT CHOICE for the two Republican Senators from Louisiana — they hate the idea of raising the debt ceiling, but are they prepared to accept blame for a government shutdown on Oct. 1 if they don’t pass a continuing spending resolution by then? And, more importantly, would they be willing to delay federal aid to their storm-ravaged Louisiana constituents? Now that’s hardball.
WE THINK THERE WILL BE SOME BRUTAL ARM-TWISTING to pass a continuing resolution by Oct. 1, accompanied by the debt ceiling hike and hurricane aid. But the mammoth infrastructure bills are another story, as Joe Manchin once again becomes the key player.
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JOE MANCHIN’S PRICE: While a debt ceiling deal can get hammered through Congress, getting $3.5 trillion in new social spending may be more difficult. Moderate Democratic Sen. Joe Manchin, always in the spotlight, dropped this bombshell yesterday — he will accept only a $1.5 trillion social spending bill, and might not approve much above $1 trillion.
MANCHIN OFTEN POSTURES, because his conservative constituents in West Virginia don’t like big government and spending (both of which help those constituents). Manchin could be bluffing, but our sense is that $1.5 trillion really is his limit; same with Sen. Kyrsten Sinema, another moderate Democrat.
THIS ENRAGES PROGRESSIVES IN THE HOUSE, who will not agree to a measly $1.5 trillion. Thus we think that a “pox on both your houses” mood may prevail, with the massive $3.5 trillion social spending bill gridlocked for weeks to come — a source of uncertainty for the markets, which want to see more stimulus as the economic outlook turns cloudy because of Delta.
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