Key Points

  • Afghanistan policy takes center stage while Congress must deal with budget and infrastructure.
  • House returns from August break for short session to unlock Budget Reconciliation process by passing the Senate approved $3.5T Budget Resolution.
  • 9 moderate Democrats threaten to block action if Speaker doesn’t change course and allow a vote on passing the $1T Senate approved bipartisan infrastructure bill. Pelosi sticking to her position of no vote on infrastructure until Senate passes Budget Reconciliation Bill.  Week of high stakes votes.
  • Fed Chair Powell’s term ends early next year as President Biden must make tough choice to re-nominate or put forward a new candidate for Chair.


The House has been in recess for their traditional August break, but after the Senate passed a Budget Resolution and the bipartisan infrastructure package it placed pressure on Speaker Pelosi to bring back the House; however, it is lining up to be a week full of tension and a high wire act by the Speaker.

First, since the Senate passed the bills President Biden has dramatically removed US troops from Afghanistan and the world has witnessed the lightning speed by which the Taliban took over the country. While the House has big issues to consider there will obviously be a lot of questions about the strategy of the Biden Administration in ending America’s longest war.

Over the many years I have been involved in politics and policy I have learned how conducive it is for issues to explode when Congress is in DC. For reporters rather than Members being spread out all over the country, suddenly there are 435 Members of the House, who love to see their name in print, all gathered in three office buildings. It makes life a lot easier for DC based reporters. Hence, while the White House and Democratic House Leadership are focused on the legislative agenda of the Budget Resolution and Infrastructure, be prepared for a rush of news on Afghanistan as Members of the House, back in town, want to get their face on television and their names in news articles.

But for Speaker Pelosi the issue is following up on the action by the Senate approving the $3.5T Budget Resolution. The Budget Resolution in a non-binding blueprint where Congress sets the ground rules for approving a Budget Reconciliation Bill. Under the Budget Act of 1974 after the Congress approves a Budget Resolution it unlocks the Budget Reconciliation process allowing Congress to make changes in existing law consistent with the framework created by the Budget Resolution.

In plain English, the Democrats can’t pass the $3.5T Reconciliation Bill unless it is preceded by a Budget Resolution. It is all sort of Kabuki theater as the Budget Resolution does nothing and does not even guarantee that there will be a Budget Reconciliation Bill. Moderate Senators like Manchin and Sinema, who voted for the Budget Resolution, have made clear they will not be supporting a $3.5T Budget Reconciliation Bill. Hence, even though the Resolution would allow for a $3.5T bill there is likely to be much wheeling and dealing, and the likely outcome could be a Reconciliation package smaller than $3.5T, something that is allowed under the Congressional Budget rules.

Speaker Pelosi has made clear she plans to force a vote on the Senate passed Budget Resolution, but not have a vote on the Senate passed $1T infrastructure bill. The Speaker, in keeping the progressive wing of her party in line, has long promised that she will not pass the infrastructure bill until the Senate passes the massive Budget Reconciliation Bill which is expected to include a broad range of Democratic priorities ranging from universal childhood education to pieces of the Green New Deal. But that isn’t likely to happen until October.

However, Democrats have a razor thin majority of only 3 votes, and 9 moderate House Democrats have publicly declared that they will not vote for the $3.5T Budget Resolution unless there is a vote on the Senate Infrastructure Bill. The moderate Democrats make the point that bipartisanship in Washington is in short supply, and the House leadership should embrace the Senate bill and pass it now.

This is a very high stakes game of chicken with big implications. Speaker Pelosi has a good track record of winning, and there is a lot of skepticism as to the ability of the 9 moderates to stick to their guns; but over the weekend they declared they are committed to their position. Should be an interesting week in the House of Representatives.

Fed Chairmanship

Current Fed Chair Jerome Powell took office in February of 2018 after being nominated by President Trump. With the four-year term expiring early in the new year there is growing speculation as to what action President Biden may take. A Fed Chair remains in office until a replacement is confirmed by the Senate.

Chair Powell has gotten high marks across the political spectrum for the policies he and the Board have taken during the pandemic and responding to the cliff recession of 2020. Over the weekend there were reports that Treasury Secretary Yellen, a former Fed Chair herself, has recommended the re-nomination of Powell to the President. However, with the growing influence that the progressive wing of the Party is wielding, re-nominating Powell might be a tough call for the White House as they try to keep the Democratic Party in Congress united with their very thin majorities.

On the other hand, with the pandemic on an uncertain course, the mounting criticism of Biden’s Afghan policy, and the need to pass his legislative agenda, the Powell re-nomination is likely to meet with support on Wall Street and keep markets calm – not creating a market decline that would just add to the Democrats’ woes as they enter the 2022 election year.

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