Congress Returns Amidst Infrastructure and Debt Ceiling Uncertainty
Congress, at least the Senate, returns on Monday; the House will not have any votes scheduled until a week from Monday on July 19. As both chambers have plans to leave DC for the month of August, it should be a busy few weeks.
In the Senate, Leader Schumer has indicated he would like to get an initial vote on a bipartisan infrastructure bill in July, the one catch at this point is that the bill doesn’t exist. With all leading Senators back in town next week it could be the last opportunity to see if a bipartisan infrastructure bill is really possible. The definition of bipartisan is getting 10 Republicans to vote to stop a filibuster and allow the bill to proceed. During the July 4 break Senate Republican Leader McConnell expressed some skepticism about funding, and again made clear there can be no rollback of the Trump 2017 tax cuts; but he stated that there was a “decent chance” an agreement could be reached on traditional infrastructure.
The White House and Congressional Democratic leaders continue to press ahead with a two-track strategy passing a bipartisan traditional infrastructure bill and a second human infrastructure bill carried exclusively by Democrats in the Budget Reconciliation Bill.
The two-track strategy carries some difficult choices for the House. If the Senate can cobble together a bipartisan bill it is likely to consist of many tough compromises. This will leave few options for the House to make changes. Senators, and likely the White House, will send the House the message that any Senate passed traditional infrastructure was a complex product and changes could destroy the carefully crafted coalition that passed the bill in the Senate. If the House balks, or the Senate in fact can’t pass a bipartisan bill, Democrats will need to revert to Plan B of putting both traditional infrastructure and human infrastructure into one gigantic Budget Reconciliation Bill. Senate Leader Schumer that the final strategy for the bill’s passage needs to be determined prior to the August break.
Debt Ceiling
The clock continues to count down to the August 1 expiration of the current debt ceiling suspension. At some point Congress will need to take action to raise or suspend the ceiling in order to allow the issuance of new debt and the payment of US Government bills. The debt ceiling expiration has become a regular item on the Washington calendar creating a crisis that only has one solution: suspending or increasing the ceiling. Over the years the Treasury has developed a toolbox of extraordinary measures that allows the government to pay bills for a period of time; however, eventually the measures become insufficient and Congressional action is needed. Raising the debt ceiling has become one of the most delicate votes many members must cast, and politics can trump policy.
Secretary Yellen has pointed out to Congress that the debt ceiling issue doesn’t impact spending or revenue; it merely allows the government to pay bills that have already been incurred. The idea that the government would not pay bondholders, vendors, social security recipients, the military etc. is unthinkable, but in the coming weeks I will track how the DC leadership finds an exit strategy to this mess they have manufactured.
