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Congressional Democrats Face Political Disaster, Financial Crisis

Congress is bracing itself for a potentially catastrophic week, as two deadlines are looming this week: the infrastructure/reconciliation bill and the debt ceiling. Congressional Democrats and the White House will have to handle two ticking bombs at the same time, and if they are successful they will be able to get a major piece of legislation ready to Biden’s desk and avoid a government shutdown, if not, they will have effectively torpedoed Biden’s legislative agenda and set the stage for a government shutdown during a pandemic.

The first issue is the ongoing fight between moderates and progressives within the Democratic Party over the Infrastructure bills which are the flagship of the Biden domestic policy agenda. Currently, there are two pieces of legislation that are front and center on the congressional Democrat’s civil war: the bipartisan infrastructure bill and the reconciliation bill.

Congressional Democrats fight a vicious civil war over $3 Trillion spending bill

The bipartisan infrastructure bill, which passed the Senate with the support of 19 Republican Senators, authorizes the expenditure of a little more than $1 trillion in infrastructure and was announced with big pomp by the Biden administration as a monumental win in their domestic policy agenda. However, there is one small detail over this bill: it is not enough for progressives.

Speaker Nancy Pelosi (D-CA) will try to make the divided Democrats to agree on the Infrastructure and reconciliation bills (EFE)

Progressive lawmakers have explicitly said that they will not support the bipartisan infrastructure bill (purposely torpedoing a policy win for Biden) if the massive $3 trillion reconciliation bill does not get approved as well. Moderates have argued that Democrats should vote on the infrastructure bill regardless of the fate of the reconciliation bill.

The problem is that Democrats have not agreed on a final language on the reconciliation bill that could be agreed by both the House and the Senate, with moderates like Senator Joe Manchin (D-WV) showing hesitance to support the enormous reconciliation bill.  

Speaker Pelosi has set Monday as the final day when the infrastructure bill will be put to a vote in the House of Representatives. However, progressives are already saying that the bill will not pass, with Rep. Pramila Jayapal (D-FL) saying that the bill “cannot pass” and that neither she nor her fellow progressives are bluffing.

Congress will decide if Biden’s legislative agenda gets done or not (Image: EFE)

The Democratic leadership will need every vote possible if they want any of the bills to get through Congress. Saying that their majorities in both houses of Congress are razor-thin is an understatement, democrats need all only have an eight-seat majority in the House of Representatives.  

If Democrats don’t get to manage an agreement between both their moderate and progressive wings of the party, it is very possible that a Democratic Congress will single-handedly defeat Biden’s “Build Back Better” agenda before it even started. While Democrats got into power ready to blame republicans for “obstructionism”, it appears that the most effective opponents of Biden’s agenda were in his own party.  

Debt ceiling, government shutdown looms in Democratic-controlled Congress

If the drama surrounding the bipartisan infrastructure bill and the $3 trillion reconciliation bill wasn’t enough, Congress is also facing a couple of extra problems that will need to solve this week. If lawmakers are unable to do so, they will be risking either a government shutdown or a potential financial crisis.

The first issue is that the funding of the government is set to expire by this Friday at 12:01 a.m and Congress has yet to approve legislation to continue funding the government after the deadline expires. Although Speaker Pelosi has assured that Congress will not allow a government shutdown, federal agencies have already begun preparing for a possible shutdown, Pelosi said that both houses of Congress would pass a temporary spending authorization (called Continuous Resolution) by this week. The Senate is expected to vote on such a measure this Monday, however, it is expected to fail because Democrats added a provision over raising the debt ceiling, which is the other time bomb that Congress will have to defuse this week.

Treasury Secretary Janet Yellen has warned that not raising the debt ceiling could cause financial catastrophe (Image: EFE)

For Democrats to keep the government open, they would probably have to pass a resolution that maintains the government funded until later this year without including any proviso over the fight to raise the debt ceiling.

The debt ceiling, which is the amount of money that the U.S Treasury is allowed to borrow to pay for its current obligations, is also set to be surpassed this week. If Congress does not authorize an expansion of the debt ceiling, then the US government would default on its debts, which would affect the financial credibility of the US and would likely make it more expensive for the government to acquire more debt in the future.

Janet Yellen, the Secretary of the Treasury, has warned that if Congress does not raise the debt ceiling then the government will be unable to pay its bills at some point in October, which could precipitate a “historical financial crisis” and could reverse the economic recovery post-COVID into a “recession”.

Republicans have opposed supporting a raise in the debt ceiling, with Senate Minority Leader Mitch McConnell (R-KY) arguing that if Democrats “want to tax, borrow and spend historic sums of money without our input, they will have to raise the debt ceiling without our help”. Democratic Senate Majority Leader Chuck Schumer (D-NY), has accused Republicans of hypocritical, saying that raising the debt ceiling is not about current spending but about paying money that has already been spent.   

Democrats can raise the debt ceiling without Republican support, they would need to add such provisions under the budget reconciliation legislation they have drafted, such a bill would not need any Republican vote to pass. However, it is unclear if Democrats have enough time to do that before the deadline passes.

Democrats celebrated that they were able to obtain all levels of federal power in Washington D.C. in 2020, with some oven comparing the Biden Administration with FDR. However, eight months after they assumed power, Democrats are facing a potentially disastrous week, which could leave Biden without its legislative agenda and the country in the brink of financial collapse.

Daniel is a Political Science and Economics student from the University of South Florida. He worked as a congressional intern to Rep. Gus Bilirakis (FL-12) from January to May 2020. He also is the head of international analysis at Politiks // Daniel es un estudiante de Cs Políticas y Economía en la Universidad del Sur de la Florida. Trabajo como pasante legislativo para el Representate Gus Bilirakis (FL-12) desde enero hasta mayo del 2020. Daniel también es el jefe de análisis internacional de Politiks.

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