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Disagreement Over Debts, Spending Plunge Washington Into Crisis Mode 

The Biden administration and congressional Democrats are facing what may be the most politically fraught moment since they took unified control of Washington in January.

Lawmakers are battling to avoid a potential government shutdown and a default on the national debt at the same time that Democratic infighting is endangering two pieces of legislation meant to further the party’s key priorities.

The stakes, for both the U.S. economy and President Joe Biden’s domestic agenda, could scarcely be higher.

A combination of a few missteps or delays in passing a budget resolution and raising the amount of money that the Treasury Department is allowed to borrow could have catastrophic economic impacts on the United States and the world economy. An estimate by Moody’s Analytics found that the worst-case scenario, in which the U.S. defaults on its debts, could result in a loss of 6 million jobs and destruction of as much as $15 trillion in household wealth.

If House Democrats are unable to muster the votes to pass a $1.5 trillion infrastructure bill that has been approved by the Senate and a $3.5 trillion bill that would lock in spending on social services, climate change mitigation and other party priorities, they will face voters in 2022 with little to show for two years of Democratic control of Washington.

Likely outcomes unclear

For sure, there are few experts in Washington who expect the battle over the budget and debt limit to actually end in a government default. Lawmakers have gone down this path many times, and have always pulled back at the last minute.

On the spending bills so important to the Biden administration, expectations are not so clear. Wednesday afternoon, Biden brought Democratic lawmakers to the White House to try to hammer out an agreement.

“This is where the rubber meets the road — when it comes to how he can get them together,” said Dan Mahaffee, senior vice president and director of policy at the Center for the Study of the Presidency and Congress. “Can he be the same dealmaker that united progressives and centrists throughout the [presidential] campaign? He has to do that same thing now in the White House.”

Budget problems

The most immediate problem facing lawmakers is that the federal government will lose the authority to spend money on many of its key functions unless a new budget resolution is passed before a September 30 deadline.

The federal government has shut down before, but never in the midst of a pandemic, and it is unclear just how damaging a significant halt in federal operations would be to the country’s public health response to the coronavirus.

Democrats in the House of Representatives on Tuesday night passed a “continuing resolution” that would allow the government to continue operating until December, giving lawmakers time to pass separate budget bills for different parts of the government.

However, Republicans in the Senate are expected to block that bill by denying Democrats the 60 votes they will need to end debate. The reason is that Democrats have attached it to legislative language that would waive enforcement of the debt ceiling until December 2022.

Debt ceiling

Senate Republicans, led by Minority Leader Mitch McConnell of Kentucky, have said that they will not supply any votes to raise the debt ceiling — even votes to cut off debate so that Democrats can pass the bill on their own.

McConnell has publicly said that the debt limit must be raised and that the government must not be allowed to default. However, he is demanding that the Democrats take full responsibility for making that happen — historically a politically onerous task — by using a budget reconciliation bill, which is immune to the filibuster’s 60-vote threshold.

Democrats are refusing to use budget reconciliation for the debt limit because they believe Republicans should share responsibility for raising the debt limit, which will help pay for measures adopted and signed when Republicans had united control of Washington just a few years ago.

Battle lines firm

On Wednesday, six former Treasury secretaries wrote a letter to congressional leaders warning them that legislative brinkmanship might push the country into default, even accidentally, with dire consequences.

“Even a short-lived default could threaten economic growth,” they wrote. “It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services. It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair.”

On Tuesday night, McConnell said he had introduced a continuing resolution of his own that would fund the government through December, but that “removes the debt limit language [which waives enforcement until December 2022] that Democrats have known since July will not receive bipartisan support from Senate Republicans.”

On Wednesday morning, however, Senate Majority Leader Chuck Schumer of New York said it would be the House bill, not McConnell’s, that he brings to a vote in the Senate.

“That’s the bill that will be on the floor,” he said. “Those who will vote yes will vote to avoid default, to avoid a government shutdown. Those who vote no will be saying, ‘We’re OK with default and we’re OK with the government shutdown.’ To say, ‘Do it another way,’ that doesn’t cut it. This is what’s on the floor.”

Democratic squabbling

At the same time that lawmakers are trying to navigate around a government shutdown and potential default, Democratic leaders are working to avoid a derailment of the Biden administration’s domestic policy agenda.

Early in his term, Biden had insisted that Democrats in Congress find a way to compromise with Republicans on an infrastructure bill. As a result, the Senate passed a bipartisan $1.5 trillion bill funding infrastructure basics like roads, highways and bridges. That allowed Biden to claim that he had kept his campaign promise to work across the aisle.

However, the Senate bill left out an enormous number of provisions that Democrats wanted and on which Biden had campaigned, including increased social spending, funding to fight climate change and more.

As a result, progressive members of the House of Representatives announced that they would not support the $1.5 trillion Senate bill until the House and Senate both passed a separate $3.5 trillion package that contained all of the Democrats’ other priorities — something they expected to accomplish by using a budget reconciliation bill to bypass the filibuster.

Centrist Dems revolt

In both the Senate and the House, more centrist members objected to both the progressives’ tactics and their demands. House centrists demanded and received assurances from Democratic leaders that the $1.5 trillion bill would get a vote no later than September 27.

Months ago, it seemed at least possible that the larger $3.5 trillion bill could be passed by that date. However, in the Senate, Democratic lawmakers Joe Manchin of West Virginia and Kyrsten Sinema of Arizona said that they would not support the larger bill, blocking progress.

Now, without the $3.5 trillion bill in hand, Democratic progressives are threatening to withhold support for the $1.5 trillion bill, raising the possibility that the Biden administration could be left with neither.

Losing bills ‘deadly for Biden’

Some experts are still expecting that the Democrats will find some sort of agreement, if only because the alternative is so bad.

“My assumption all along has been that Democrats know losing these bills is deadly for Biden, and for them,” said Larry Sabato, director of the Center for Politics at the University of Virginia.

“My sense of it is that in the end, reluctantly, they’ll find something to agree on, because the alternative is so disagreeable,” he said. “The compromise may not be tasty, but the alternative is poisonous.”
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Lawmakers Urge Justice Department to Act Against Rising Hate Crimes in US

Two members of the U.S. Congress instrumental in the passage of anti-hate crime legislation this year are pressing the Department of Justice to step up enforcement of the measure, warning that reinstatement of pandemic-related restrictions is likely to provoke more attacks — particularly on Asian Americans. 

The new law seeks to accelerate the Justice Department’s reviews of alleged hate crimes reported to federal authorities. 

“As the pandemic wears on and COVID-19 variants cause states, localities, or private entities to reinstate restrictions or public safety mandates, frustration with the virus will undoubtedly resurface,” Sen. Mazie Hirono, a Democrat of Hawaii, and Representative Grace Meng, a New York Democrat, wrote Monday in a letter directed to Attorney General Merrick Garland. 

“We fear the impact this could have on perpetuating hate-based violence against people,” they added. “Full implementation of the COVID-19 Hate Crimes Act will help stem the tide against further violence.” 

Advocates for the Asian American and Pacific Islander community blame rhetoric from political leaders, especially former president Donald Trump, who relentlessly blamed the coronavirus pandemic on China, for driving up anti-Asian bias during the pandemic. 

Hate crimes rose sharply in 2020 

The letter comes not long after a report that hate crimes in the United States spiked sharply in the first year of the coronavirus pandemic, rising by about 14% to 8,305, the highest level since 2001 and the third-highest since the Justice Department began tracking bias crimes. 

The rise was driven by sharp increases in bias crimes against Asian and Black individuals and was far higher than the Federal Bureau of Investigation originally reported when it released 2020 crime statistics late last month showing only a 6% increase. 

The discrepancy in the numbers, reported by the Washington Post, was blamed on a technical problem that incorrectly under-reported data from the state of Ohio.

Anti-Black bias most prevalent 

Black people are far and away the most common victims of bias crimes in the United States. Including the updated information from Ohio, there were nearly 2,900 recorded incidents of bias crimes against Blacks in 2020. That’s an increase of more than 45% from the previous year. Hate crimes resulting from anti-Black bias accounted for about 35% of all hate crimes in the U.S. in 2020. 

Asians in the U.S. experienced the highest percentage increase in hate crimes last year. Between 2019 and 2020, the number of crimes rooted in anti-Asian bias jumped by 70%. The roughly 274 anti-Asian crimes reported in 2020 reflected about 4% of the country’s total. 

Hate crimes targeting White people make up the second largest total category measured by the FBI, at about 10% of the total. Crimes against Jewish people made up about 9%.

Reporting system deeply flawed 

It is important to recognize that there are significant flaws in the reporting system that combine to significantly understate the extent of the problem.

In addition to the fact that many bias attacks are never reported to law enforcement in the first place, nearly one in five of the 18,623 law enforcement agencies in the country do not report hate crime statistics to the FBI. 

Further, there is a strong likelihood that even many of those that do report statistics to the FBI are undercounting the real prevalence of bias crimes. In any given three-month period, a large majority of law enforcement agencies that do participate in tracking hate crimes report that there were none in their jurisdiction during that time period. In 2020, 64 jurisdictions with populations of more than 100,000 people reported not a single hate crime.

“The fact that so many law enforcement agencies did not participate is inexcusable, and the fact that 64 jurisdictions with populations over 100,000 affirmatively reported zero hate crimes is simply not credible,” Anti-Defamation League CEO Jonathan A. Greenblatt said in a statement when the FBI data was released. 

“Data drives policy and without having a complete picture of the problem, we cannot even begin to resolve the issues driving this surge in hate and violence,” Greenblatt added. 

COVID-19 Hate Crimes Act 

The law that Hirono and Meng helped pass, the COVID-19 Hate Crimes Act, is meant, in part, to remedy the poor reporting of hate crimes in the U.S. The bill directs the Department of Justice to issue guidance to law enforcement agencies around the country on how to establish effective hate-crime reporting regimes. 

It also tells the FBI to recommend that local agencies keep track of bias “incidents,” such as racially motivated verbal abuse, that do not rise to the level of a crime.

“While these actions are unlikely to rise to the level of a hate crime, the impetus for these actions are the same—fear and xenophobia. In order to meaningfully address the root causes of this bias and hostility, we need a clear and full picture of the scope of the problem. Data on hate crimes alone is insufficient,” Hirono and Meng wrote. 
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House OKs Debt and Funding Plan, Inviting Clash With Republicans

The U.S. House voted Tuesday night to fund the government into early December, suspend the federal debt limit, and provide disaster and refugee aid, setting up a high-stakes showdown with Republicans who oppose the package despite the prospects of a looming fiscal crisis.

The Democratic-led House passed the measure by a vote of 220-211, strictly along party lines. The bill now goes to the Senate, where it is likely to falter because of overwhelming GOP opposition.

The federal government faces a shutdown if funding stops on Sept. 30, the end of the fiscal year, midnight next Thursday. Additionally, at some point in October the U.S. risks defaulting on its accumulated debt load if its borrowing limits are not waived or adjusted. 

“Our country will suffer greatly if we do not act now to stave off this unnecessary and preventable crisis,” House Majority Leader Steny Hoyer said shortly before the vote.

The package approved Tuesday would provide stopgap money to keep the government funded to Dec. 3 and extend borrowing authority through the end of 2022. It includes $28.6 billion in disaster relief for the aftermath of Hurricane Ida and other extreme weather events, and $6.3 billion to support Afghanistan evacuees in the fallout from the end of the 20-year war.

While suspending the debt ceiling allows the government to meet financial obligations already incurred, Republicans argued it would also facilitate a spending binge in the months ahead.

“I will not support signing a blank check as this majority is advancing the most reckless expansion of government in generations,” said Representative Dan Meuser, a Republican.

Backed by the White House, Democratic congressional leaders pushed ahead at a time of great uncertainty in Congress. Democrats are also trying to gather support for President Joe Biden’s broad “build back better” agenda, which would have a price tag of up to $3.5 trillion over 10 years.

Senate Republican leader Mitch McConnell said he was not about to help pay off past debts when Biden was about to pile on more. He said since Democrats control the White House and Congress, it’s their problem to find the votes.

“The debt ceiling will be raised as it always should be, but it will be raised by the Democrats,” McConnell said.

In the 50-50 Senate, Democrats will be hard-pressed to find 10 Republicans to reach the 60-vote threshold needed to overcome a filibuster.

“This is playing with fire,” Senate Majority Leader Chuck Schumer said.

The Treasury Department has been using “extraordinary measures” to fund the government since the last debt limit suspension expired July 31, and projects that at some point next month will run out cash reserves. Then, it will have to rely on incoming receipts to pay its obligations, now at $28.4 trillion.

That could force the Treasury to delay or miss payments, a devastating situation.

Mark Zandi, the chief economist at Moody’s Analytics, warned if lawmakers allow a federal debt default “this economic scenario is cataclysmic.” 

In a report being circulated by Democrats, Zandi warned that a potential downturn from government funding cutbacks would cost 6 million jobs and stock market losses would wipe out $15 trillion of household wealth. 

Once a routine matter, raising the debt ceiling has become a political weapon of choice for Republicans in Washington ever since the 2011 arrival of tea party lawmakers who refused to allow the increase. At the time, they argued against more spending and the standoff triggered a fiscal crisis.

Echoing that strategy, McConnell is refusing to provide Republican votes, even though he also relied on Democratic votes help raise the debt ceiling when his party had the majority. He explained his current thinking to senators during a private lunch Tuesday.

Still, some Republican senators might have a tough time voting no.

Republican John Kennedy of Louisiana, whose state was battered by the hurricane and who is up for election next year, said he will likely vote for the increase. “My people desperately need the help,” he said. 

White House press secretary Jen Psaki told reporters that “in our view, this should not be a controversial vote.” Psaki said Congress has raised the debt ceiling numerous times on a bipartisan basis, including three times under President Donald Trump.

Representative Rosa DeLauro, the Democratic chairwoman of the House Appropriations Committee, was forced to introduce another version of the bill Tuesday after some within the Democratic caucus objected to the inclusion of $1 billion for Israel’s Iron Dome defense system, which uses missiles to intercept short-range rockets fired into the country.

The Israel defense issue splits Democrats, but DeLauro assured colleagues that money for the weapons system would be included in the annual defense spending bill for the next fiscal year, which begins Oct. 1. Hoyer went a step further and said he would bring a bill to the floor this week to replenish the Iron Dome system.

Republicans were highly critical of the change and vowed to stand as allies with Israel. 

Meanwhile, behind the scenes, Democrats were negotiating among themselves over Biden’s big “build back better” package as the price tag likely slips to win over skeptical centrist lawmakers who view it as too much. 

Publicly, the White House has remained confident the legislation will pass soon, despite sharp differences among progressives and moderates in the party over the eventual size of the package and a companion $1 trillion bipartisan infrastructure bill.

There has been a flurry of outreach from the White House to Democrats on Capitol Hill, and Biden himself was given a call sheet of lawmakers to cajole, even though his week was dominated by foreign policy, including his speech to the United Nations General Assembly. 

The president has been talking to a wide number of lawmakers beyond his recent meetings with Democratic Senators Joe Manchin and Kyrsten Sinema, two key centrist votes, according to a White House official familiar with the calls and granted anonymity to discuss them.

Biden’s big initiative touches almost all aspects of Americans’ lives. It would impose tax hikes on corporations and wealthy Americans earning beyond $400,000 a year and plow that money back into federal programs for young and old. It would increase and expand government health, education and family support programs for households, children and seniors, and boost environmental infrastructure programs to fight climate change.

With Republicans opposed to Biden’s vision, Democrats have no votes to spare in the Senate, and just a few votes’ margin in the House.

House Speaker Nancy Pelosi has promised a Sept. 27 vote on a companion bill, a $1 trillion bipartisan infrastructure bill of public works projects that enjoys widespread support from both parties in the Senate, though House Republicans mostly oppose it.

Even though that bipartisan bill should be an easy legislative lift, it too faces a political obstacle course. Dozens of lawmakers in the Congressional Progressive Caucus are expected to vote against it if it comes ahead of the broader Biden package. And centrists won’t vote for the broader package unless they are assured the bipartisan bill will also be included.
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Senate Parliamentarian Deals Blow to Dems’ Immigration Push

Democrats can’t use their $3.5 trillion package bolstering social and climate programs to give millions of immigrants a chance to become citizens, the Senate’s parliamentarian said late Sunday, a crushing blow to what was the party’s clearest pathway in years to attaining that long-sought goal. 

The decision by Elizabeth MacDonough, the Senate’s nonpartisan interpreter of its rules, is a setback for President Joe Biden, congressional Democrats and their allies in the pro-immigration and progressive communities. It badly damages Democrats’ hopes of enacting — over Republican opposition — changes letting several categories of immigrants gain permanent residence and possibly citizenship.  

MacDonough’s decision was described by a person informed about the ruling who would describe it only on condition of anonymity. 

The parliamentarian decided that the immigration language could not be included in an immense bill that’s been shielded from GOP filibusters. Left vulnerable to filibusters, which require 60 Senate votes to defuse, the immigration provisions have virtually no chance in the 50-50 Senate. 

MacDonough rejected Democratic language that would have opened a doorway to citizenship for young immigrants brought illegally to the country as children, often called “Dreamers”; immigrants with Temporary Protected Status who’ve fled countries stricken by natural disasters or extreme violence; essential workers; and farm workers. 

Estimates vary because many people can be in more than one category, but the liberal Center for American Progress has estimated that 6 million people could be helped by the Democratic effort. Biden had proposed a broader drive that would have affected 11 million immigrants. 

Democrats and their pro-immigration allies have said they will offer alternative approaches to MacDonough that would open a doorway to permanent status to at least some immigrants.  

The overall legislation would boost spending for social safety net, environment and other programs and largely finance the initiatives with tax increases on the rich and corporations. Moderate Democrats want to water down some of the provisions, including shrinking its price tag, but progressives oppose trimming it. 

Party leaders are still working on finding a compromise on the sweeping legislation that would satisfy virtually every Democrat in Congress. They can’t lose any Democratic votes in the 50-50 Senate and can lose no more than three in the House. 

Under the special process Democrats are using to shield the overall bill from a filibuster, language in such legislation is considered “extraneous” and is supposed to be removed if its budget impact is “merely incidental” to the provision’s overall policies.  

MacDonough said the budget impact of Democrats’ immigration proposal was outweighed by the policy impact it would have. Democrats have said that according to an unreleased estimate by the nonpartisan Congressional Budget Office, the immigration provisions would have increased federal deficits by more than $130 billion over the coming decade, largely because of federal benefits the immigrants would qualify for.  

Democrats and a handful of GOP allies have made halting progress during the past two decades toward legislation that would help millions of immigrants gain permanent legal status in the U.S. Ultimately, they’ve been thwarted each time by broad Republican opposition. 

The House has approved separate bills this year achieving much of that, but the measures have gone nowhere in the Senate because of Republican filibusters. Bipartisan talks have yielded no middle ground. 
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