October 17, 2021

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Live updates: Biden, lawmakers work to trim budget bill as GOP, Democrats remain at odds over debt ceiling – USA TODAY

6 min read

WASHINGTON – Negotiations continued Tuesday in Congress over lowering the price tag on a budget bill packed with progressive policies as the threat of the first U.S. default on its debt hangs over Capitol Hill.

After a whirlwind week that concluded Friday without a deal on Biden’s budget bill that would satisfy both progressives and moderate Democrats, the various factions were back at the table this week to hammer out details on a revised plan.

Democratic leaders said last week that President Joe Biden’s $3.5 trillion budget plan with liberal priorities like subsidized childcare and community college, would need to be scaled back to meet moderates who say the price tag is too high. 

Biden met with progressive Democrats on Monday and planned to meet with moderates on Tuesday.

Democratic divisions on the budget bill are holding up a $1.2 trillion bipartisan infrastructure bill. House progressives say they’ll vote down the measure if the larger package isn’t hashed out first. 

At the same time, Congress faces the threat of a debt ceiling crisis. Republicans have refused to vote with Democrats to raise the limit on the amount of money the government can borrow to pay its bills. Democrats have proven reluctant to use a maneuver called reconciliation, which would require a majority vote in the Democrat-led Senate, to raise the debt limit without Republican votes.

More:The US has never defaulted before. In the debt ceiling crisis, what happens if it does?

If Congress doesn’t raise the limit, the government could default on its debts, potentially setting off a cascade of economic turmoil.

No call yet between Biden and McConnell

A day after Senate Minority Leader Mitch McConnell warned President Joe Biden to pursue a different course on raising the debt limit, the two have not spoken.

On Monday morning, Biden told reporters he had just read McConnell’s letter and “I plan on talking to Mitch about it.”

“I hope we can have some intelligent and honest conversation about what he’s proposing,” Biden said.

In the letter, McConnell said Democrats were “sleepwalking” to economic catastrophe and urged them to raise the debt ceiling with Republicans. 

Tuesday afternoon, White House deputy press secretary Karine Jean-Pierre said that while Biden “is always open to having conversation,” there has been no call.

There has, however, been contact with McConnell from “the highest levels of the administration,” including a recent phone conversation with Treasury Secretary Janet Yellen, she said.

“And in those conversations, we’ve made clear how catastrophic the consequences would be if Republicans continue to vote to default, and block Democrats from solving this ourselves,” she said.

– Maureen Groppe

Moderate leader lashes out at ‘faction of the far left’

Rep. Josh Gottheimer, the New Jersey centrist who co-chairs the Problem Solvers Caucus, urged fellow Democrats Tuesday not to imperil a hard-fought infrastructure bill amid a continuing schism in the caucus over a larger social safety net spending bill.

“We must not let a faction of the far left kill an historic infrastructure bill that will help create 2 million labor jobs a year, build the Gateway Tunnel (connecting New Jersey with New York City), fix our crumbling roads and bridges, upgrade our broadband, get lead out of our children’s drinking water, and repair NJ Transit,” he said in a prepared statement. “This historic bill passed the Senate in early August. We need to get shovels in the ground and Americans to work as soon as possible.”

Gottheimer’s comments underscored the growing tension between moderates within the Democratic caucus and progressives, led by Rep. Pramila Jayapal, D-Wash.

Moderates were frustrated last week when House Speaker Nancy Pelosi pulled the five-year, $1.2 trillion infrastructure bill from consideration because progressives threatened to torpedo the measure by withholding their support until the larger 10-year, $3.5 trillion Build Back Better bill had been agreed to.

The negotiations on the larger bill continue with President Joe Biden telling progressives they needed to get close to around $2 trillion.

– Ledyard King

Schumer: Nation lurching ‘dangerously close’ to default

Senate Majority Leader Chuck Schumer once again warned of the financial calamity that would ensue if the nation’s debt ceiling is not raised or suspended by Oct. 18, the date at which the Biden administration says the government would reach its limit and begin defaulting on its debts.

The Senate is scheduled to vote on a procedural rule Wednesday that would allow a measure suspending the debt limit until December 2022 to reach the floor for a vote. But if anyone objects to that rule, it would require 60 votes to overcome the filibuster – a tall order considering there are only Democrats in the Senate and no Republicans have indicated they would join them.

“It’s not too late but it’s getting dangerously close,” Schumer, D-N.Y., said on the Senate floor Tuesday, imploring passage of the bill by the end of the week. “We can resolve the debt ceiling this week and reassure the world that the full faith and credit of the United State will never be in question. Democrats are going to do the responsible thing and vote yet to prevent a default.”

The national debt, now approaching $29 trillion, keeps rising due to past tax and spending decisions made by both parties. Republican leaders have said they won’t participate in helping Democrats raise the ceiling this time because Democrats hold both chamber of Congress and the White House and because they say Democrats have not included them enough in spending decisions since Biden took office in January.

If the U.S. defaults on its debt for the first time, the results could lead to a global recession, Treasury officials and experts say. A tanked market would hurt 401(k)s and other investments. For example, a debt ceiling standoff in 2013 cost the economy 1% in GDP.

– Ledyard King and Mabinty Quarshie

Yellen: Debt default would be ‘catastrophic’ and may lead to recession

Treasury Secretary Janet Yellen told CNBC Tuesday morning that failing to raise or suspend the debt ceiling by Oct. 18 would be “catastrophic.”

“I fully expect it would cause a recession as well,” she added.

The U.S. is 13 days away from the Oct. 18 deadline, when the department expects it will run out of “extraordinary measures” to keep the country from defaulting.

The delay is caused by partisan disagreements on Capitol Hill, where Democrats are insisting Republicans vote with them to raise the limit. But Republicans say they won’t help and want Democrats to use a process called reconciliation, which would allow Democrats to raise the debt ceiling without Republican support.

– Savannah Behrmann and Mabinty Quarshie

Biden, Democrats moving closer on Build Back Better price tag

Congressional Democrats and President Joe Biden are working towards a deal on their spending bill in an effort to bring every congressional Democrat on board, with the White House offering between $1.9 trillion and $2.2 trillion in an effort to win over moderates balking at its size and scope, according to two sources familiar with the negotiations.

Biden asked House Progressives to lower their spending bill by more than $1 trillion during a virtual call Monday afternoon on his 10-year, $3.5 trillion Build Back Better Act, while progressives countered with $2.5 trillion, according to one of the sources.

Biden has been trying to unite a divided caucus behind a far-reaching proposal that would address social welfare priorities that are a priority for progressives, such as climate initiatives, and subsidized caregiving, childcare, pre-kindergarten and community college. But centrists, notably Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have resisted such a massive spending program.

President Joe Biden walks from the Oval Office to Marine One on the South Lawn of the White House in Washington, Tuesday, Oct. 5, 2021, as he prepares to leave for a trip to Michigan to talk about infrastructure. (AP Photo/Susan Walsh) ORG XMIT: DCSW109

Last week, Manchin revealed that he would be willing to go as far as $1.5 trillion but was adamant about not going along with most of what progressives want.

“I cannot – and will not – support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces,” he said.

On Tuesday, a spokesperson for Manchin said he had no new comments in reaction to the president’s new funding target.

– Ledyard King and Savannah Behrmann

Government shutdown looms after Senate Republicans block a federal spending bill over the debt ceiling. A shutdown would begin Oct. 1.

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