House Speaker Nancy Pelosi, a California Democrat, and Senate Majority Leader Chuck Schumer, a New York Democrat, demonstrate the Covid-19 hate crime law after it is signed during an enrollment ceremony in the U.S. Capitol in Washington, DC, May 19/02/2021.
Samuel Corum | Bloomberg | Getty Images
WASHINGTON – House Democrats have just patched a party break to take a decisive step forward with a huge economic agenda.
But the road ahead could become more difficult as party leaders attempt to thread a legislative pin to exceed more than $ 4 trillion in new spending.
In the coming weeks, Democrats plan to adopt a bipartisan infrastructure plan worth $ 1 trillion and up to $ 3.5 trillion in investment in social programs. Passing both will take heavy work as leaders meet competing demands from spending centrists and progressives who seek to rethink the role of government in American budgets.
The House of Representatives is leaving Washington until September 20 after taking important steps to push through sweeping economic plans. The chamber approved a $ 3.5 trillion budget resolution Tuesday and put forward the infrastructure bill when House Speaker Nancy Pelosi, D-California, promised the center Democrats the bipartisan plan by September 27 to record.
The Senate has already passed the Infrastructure Bill so a final House vote would send it to Biden’s desk for signature.
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After both houses have passed the budget measure, the Democrats can enforce their spending plan through reconciliation without the Republicans. The party leaders want the committees to draft their parts of the bill by September 15 before the budget committees wrap it up into a massive measure that can move through Congress. The committees could start marking laws in early September.
The challenge for party leaders is to propose a bill that will satisfy centrists who want to cut the $ 3.5 trillion price and progressives who see this as the minimum Congress should spend. With one litter in the Senate – and four in the House of Representatives – sinking the legislation, Democrats must meet a variety of views to get their agenda through.
“We’re writing a bill with the Senate because there’s no point in making a bill that won’t pass the Senate in the interests of getting things done,” Pelosi told reporters on Wednesday.
Given the size of the law, rapid adoption could prove difficult. To appease the progressives in Congress who have prioritized the passage of the budget bill, the Democrats could pass both proposals at about the same time.
Pelosi has set a target date of September 27 for the approval of the infrastructure plan, but the commitment is not binding. Still, she noted on Wednesday that Congress must pass the bill before the land transport spending permit expires on September 30th.
“We have long kept an eye on the infrastructure bill being on the president’s desk by October 1, the date the bill comes into effect,” she wrote in a separate letter to the Democrats on Wednesday.
Democrats say the bills taken together will boost the economy and save households. Proponents of the Democratic spending plan, including Pelosi and Chairman of the Senate Budgets Committee, Bernie Sanders, I-Vt., Have called it the biggest addition to the U.S. social safety net in decades.
“This is a truly historic opportunity to pass the most transformative and momentous legislation for families in a century and will stand alongside the New Deal and the Great Society as pillars of economic security,” Pelosi wrote to his colleagues on Wednesday.
The plan would expand Medicare, paid vacation and childcare, expand improved household tax credits, and encourage the adoption of green energy while increasing taxes for businesses and the rich. The Democrats hope to sell a wave of new support to families as they push to keep control of Congress in next year’s midterm elections.
However, these elections have helped generate determined opposition across the aisle. The GOP has cited the trillions of new spending and the proposed repeal of some of its 2017 tax cuts to overturn the Democratic draft budget.
Republicans and some Democrats have stated in recent weeks that an additional $ 4.5 trillion in fiscal stimulus could not only stimulate economic growth, but also have the detrimental effect of fueling inflation.
The inflation debate
The GOP, hoping to retake both the House and Senate in 2022, has made rising prices a core part of its assault on Biden’s economic agenda.
“Inflation is rising,” Senator Tom Cotton, R-Ark., Wrote on Monday. “Does anyone in their right mind think we should spend another $ 3.5 trillion?
These claims are not mere guesswork. The Department of Labor announced earlier this month that its consumer price index was up 5.4% year over year in July, the same level as in June and the largest increase since August 2008.
The inflation debate has made some strange bedfellows too, with some prominent Democrats joining their GOP peers warning of spending spinning out of control.
Former Treasury Secretary Larry Summers and Conservative Democratic Senator Joe Manchin of West Virginia have both reported rising inflation risks in recent months.
Summers, who served as Treasury Secretary under former President Bill Clinton, wrote in May that “the risk of inflation is real”. Manchin, meanwhile, urged Federal Reserve Chairman Jerome Powell earlier this month to curb the central bank’s emergency efforts.
Hot inflation, if only temporary, is not necessarily a problem as an economy works to correct a mismatch between supply and demand. That is what Fed Chief Powell thinks in general.
Powell, himself a Republican appointed by then-President Donald Trump, believes inflationary pressures will soon ease as the U.S. economy works on the backlog of business closings from 2020 onwards.
But when Powell is wrong, inflation can quickly become a headache.
Rising gasoline, property and food prices can undermine Americans’ purchasing power if workers are unable to negotiate wage increases at the same pace. In fact, every dollar can buy fewer apples, lightbulbs, haircuts, and gallons of gasoline.
The White House, hoping to deliver on Democratic promises before the 2022 midterm elections, has tended to embrace Powell’s view of “temporary” inflation.
The government and some progressives have suggested that improving the country’s infrastructure would help alleviate the supply chain bottlenecks that economists blame for some of the inflation worries.
Jared Bernstein and Ernie Tedeschi, two economists in Biden’s economic advisor, wrote Monday that the plan to improve the country’s physical infrastructure was “an antidote to inflationary pressures.”
Infrastructure repairs “should have little or no effect on inflationary pressures in the short term and should alleviate them in the long term,” the two wrote in a White House blog post. “As economic capacity increases, cost pressures become less binding on companies producing new goods and services, and price pressures gradually ease.”
The Democrats in Congress have also downplayed the risk of long-term inflation by promoting the household benefits of their plans. They aim to build on the $ 1.9 trillion coronavirus aid package passed at the beginning of Biden’s tenure, which saw a wave of new relief for families this year.
In order to keep her members on board with their infrastructure and budget strategy this week, Pelosi stressed the need to implement Biden’s agenda for the working class.
“At the end of the day, the president’s vision and the needs of American working-class families had to prevail,” the spokesman said on Wednesday.
– CNBC’s Jacob Pramuk contributed to this report from Pennsylvania and CNBC’s Thomas Franck of Washington.
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