As the reconciliation process kicked off earlier this month, my firm started a new legislative update to track the progress. My contribution each week is styled as “Liam Donovan’s Bottom Line.”
You can find the previous two editions here and here.
This week’s bottom line: CBDR
Constant bearing, decreasing range. That’s the theme for Congressional Democrats heading into next week, careening toward critical deadlines—self-imposed and otherwise—with no sign of course-correction or meaningful progress. First up, Democrats must maneuver their way through (or around) a previous commitment made by Speaker Pelosi to pass the bipartisan infrastructure bill by Monday, September 27. This had been a concession (a “clarification” in her terms) to House moderates required to win their votes for the budget resolution and unlock the reconciliation process. But providing a date certain for the infrastructure vote immediately prompted progressives to dig in further on their demand that reconciliation pass first, creating an untenable timeline for achieving both, despite leadership assurances to the contrary. With rhetoric heating up this week as the deadline approached, President Biden summoned the various factions from both chambers to the White House to stop the public ultimatums and coordinate a path forward. While the meeting seemingly succeeded in turning down the temperature, it did not yield any substantive breakthroughs, nor a clear timeline for reaching internal agreement.
What ensued can best be described as a choreographed effort by Democratic leaders to project some semblance of progress and momentum, however contrived or illusory. First, the joint announcement of an agreement on a “framework” for revenue options to finance whatever topline amount can be agreed upon. This was ultimately revealed to be a tentative agreement between the tax committee Chairmen that simply affirmed the universe of pay-fors under consideration, with very little definitely ruled out. Next, they announced a markup of the reconciliation bill in the House Budget committee for Saturday, a formal step in the process that essentially combines the 13 “legislative recommendations” into a single package without making the requisite substantive changes that will be needed before it comes to the floor. Finally, Speaker Pelosi announced in a Dear Colleague letter to the caucus her intention to “move forward to pass [both] bills next week.” While this stops short of a commitment to hold a floor vote on the reconciliation bill next week, that is the strong implication. It remains unclear what, if anything, the House could do to muster 218 votes at this point, and specific commitments from the Senate seem highly unlikely in that timeframe, putting this push into direct conflict with previous promises Pelosi has made, that the House would only vote on something that “will pass the Senate,” and that she would not force members to vote on “a bill with a higher topline than would be passed by the Senate.” Whether this gambit succeeds remains to be seen, but it underscores Leadership’s desire to pass the bipartisan infrastructure bill on Monday—or at least avoid a defeat that would further erode intra-caucus trust and goodwill. They key is putting on a public show that is convincing enough to allow progressives to save face despite falling short of their demands. If the whip count comes up short, Speaker Pelosi is likely to table to vote rather than risk a failure that could further poison the well. Either way, short of public commitments from Senators Manchin and Sinema, we remain far away from the endgame, which will involve significant haggling over the ultimate scope and scale of the bill. Indeed, passage of the bipartisan bill could actually prolong the process, as the holdouts could feel even less pressure to come to the bargaining table without their top priority in peril.
All of this is playing out with the backdrop of an emerging crisis over a possible government shutdown and a potential default. The House this week passed a short term continuing resolution (CR) to fund the government through early December and suspend the debt ceiling until the end of 2022 that is doomed to fail in the Senate, but that delays the decision on how to proceed until Monday night, three days before the deadline. It is likely that a clean CR will be passed in short order, but a brief lapse is not out of the question. Either way, the debt limit brinkmanship will continue, with a presumed late October X-date for a default still not specified. With Republicans remaining united in their insistence that Democrats avail themselves of their ability to do this themselves through the reconciliation process, the most likely resolution is for the budget resolution to be amended, which would allow the majority to pass an increase on a party-line basis, whether as part of the broader reconciliation package (unlikely given time constraints) or as a stand-alone bill. This would throw a wrench into already-fraught political balancing act, and likely cost them an additional two weeks in a rapidly disappearing calendar. Other options range from unlikely to fanciful, including an ongoing game of chicken that could end in default, a change to the filibuster that would allow for the vote without GOP help, or constitutionally novel ideas like minting a platinum coin. And while a default would not be desirable for either side, who would be blamed is less relevant than the fact such an unprecedented economic shock would be untenable for the White House, to say nothing of its legislative agenda. At best, Democrats can hope to emerge from this process united against a common foe, a welcome respite after months of intramural scuffles.
You can read this week’s full update here, and for more on where things stand on the reconciliation package, infrastructure, and showdowns over government funding and the debt limit, check out this weeks’ episode of The Lobby Shop where I dig into all of the above.