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Crunch time for Congress with Biden's agenda, and debt limit, on the line

[September 20, 2021] By Susan Cornwell

WASHINGTON (Reuters) - The U.S. Congress returns to session on Monday facing a massive agenda and a tight time crunch, with President Joe Biden's Democrats hoping to pass sweeping domestic programs, fund the government, approve an infrastructure bill and raise the debt ceiling in a matter of weeks.

They face several deadlines, including a scheduled Sept. 27 vote on a $1 trillion Senate-approved infrastructure bill and the Oct. 1 date when the federal government will run out of money to fund many of its operations if Congress doesn't act. Later in October the country could breach its borrowing cap, risking default on U.S. payment obligations.

The Democrats, who control Congress by the narrowest of margins, also want to maneuver a $3.5 trillion spending package - including proposals for childcare, education, housing and green energy - past a Republican roadblock. Progressives boast the plan is the largest expansion of social policy in decades but senior Democrats on Sunday acknowledged the bill may need to be trimmed to pass.

"It may be $3.5 (trillion), it may be really close to that or maybe closer to something else," Representative James Clyburn, the third-ranking House Democrat, told CNN on Sunday.

Democrats also want to pass bills on voting on abortion rights, which face long odds, given strong Republican opposition and a Senate filibuster rule requiring a 60 of 100 senators to agree to advance most legislation.

"Have they bitten off more than they can chew on? Well, yes, I think they have," said William Hoagland, senior vice president at the Bipartisan Policy Center think-tank.

INFRASTRUCTURE IMPASSE?

House of Representatives Speaker Nancy Pelosi has promised to take up the bipartisan $1 trillion infrastructure bill just a week after her chamber returns from summer break.

But progressives say they won't vote for the infrastructure plan without first passing the $3.5 trillion social spending program, using a maneuver called "reconciliation," which avoids the Senate requirement for a supermajority.

One possible compromise would be to vote on the infrastructure bill on Sept. 27 but for Pelosi not to forward it to Biden to sign until the larger package passes.

"She can hold on to that bill for a while. So there's some flexibility in terms of how we mesh the two mandates," Democratic House Budget Committee Chairman John Yarmuth told "Fox News Sunday."

Democrats are still squabbling over key planks of the reconciliation package, including proposals to lower the cost of prescription drugs and change tax laws, as well as the total price tag. The plan is to be financed by tax hikes on wealthy Americans and corporations.

Moderate Senate Democrats including Joe Manchin and Kyrsten Sinema say $3.5 trillion is too much; Manchin suggests spending less than half that. Given their thin majorities, Democrats can spare just three House defectors and none in the Senate.

No Republicans intend to vote for the plan, and may ask the parliamentarian to rule on whether parts conform to the reconciliation process to qualify to be exempted from the filibuster rule.

Democrats suffered a setback on Sunday when the parliamentarian ruled they cannot attach immigration reforms to the $3.5 trillion plan. Senate Majority Leader Chuck Schumer said they would pursue alternatives.

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The exterior of the US Capitol is seen as Senators work to advance the bipartisan infrastructure bill in Washington, U.S., August 8, 2021. REUTERS/Sarah Silbiger/File Photo

The legislation could be manipulated to allow moderate Democrats to declare victory while assuaging progressives, such as by shortening some programs' duration, or beefing up tax collection to cover costs, said Norman Ornstein, senior fellow emeritus at the conservative-leaning American Enterprise Institute think-tank.

"Can you do that before Sept. 27? I doubt it, but it's possible," said Ornstein.

DEBT CEILING

While the Sept. 27 deadline is self-imposed, two more rigid ones come next.

The first is Oct. 1, when funding for government operations runs out, which would force the stoppage of many federal functions as has happened three times in the past decade.

In addition, U.S. Treasury Secretary Janet Yellen has warned that sometime in October the Treasury will exhaust its cash reserves and borrowing capacity under the $28.4 trillion federal debt limit, and be unable to pay all of its bills or service its debt without congressional action to raise the limit.

A U.S. default would roil financial markets, lead to cuts in services and benefits and hit the nation's credit rating. It could also plunge the economy back into recession.

Such a scenario would be disastrous politically for Democrats, but Senate Republican Leader Mitch McConnell and other top Republicans have warned they will not vote to boost the national debt limit, despite having done so repeatedly when Republican Donald Trump was president.

McConnell called the Democratic spending inflationary.

"They've been printing and wasting money like there's no tomorrow," McConnell said on the Senate floor.

Senator Mark Warner, a Democrat, said on Thursday that he believes Republicans and Democrats will resolve their political differences and avoid what called a self-inflicted, “Washington-baked crisis” over U.S. creditworthiness that the pandemic-stricken U.S. economy could ill afford.

“That doesn’t mean we may not get up to the precipice on that," Warner told reporters. "I’ve just got to believe that this will get resolved."

(Reporting by Susan Cornwell; Additional reporting by David Morgan; Editing by Scott Malone and Sonya Hepinstall)

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