Welcome to Fall. The season where, predictably, the weather gets cooler, the leaves change color, and Congress puts on its annual fiscal crisis. This year, we all get to watch a quadruple-header: Will Congress pass a $1 trillion—or perhaps $552 billion-- infrastructure bill? Will Congress approve a massive social spending bill including major tax increases on corporations and high-income households? Will Congress keep the government open after Sept 30? And will it extend the federal government’s ability to borrow money?
Spoiler alert: The answers are yes, yes, yes, and yes. The infrastructure bill will pass because, let’s face it, every politician loves nothing more to cut a ribbon on a local public works project. And, after years of failing to get a big bill, the pent-up demand is enormous.
The big social spending and tax hike measure will pass because Democrats cannot afford for it to fail. It will shrink but it is too big to fail.
The federal government won’t shut down, at least not for long, in the midst of a pandemic. And the nation’s borrowing authority will be increased because it must be.
Kabuki
But that doesn’t mean we won’t have lots of drama and breathless commentary first. Keep in mind, all of the players in this annual Kabuki have their roles to play. As with real Kabuki, it all is highly stylized and elaborate. Sadly, the actors in our drama have strong incentives to keep it running for as long as they can.
Journalists and analysts have endless commentary to produce. Think of where they (we) would be if Congress had worked all this out back in July.
Lobbyists have so many more hours to bill. All those client briefings. All those Hill meetings to try to get some provision in. Or out.
Lawmakers themselves have two reasons to play this out. The first is the additional opportunity to seek attention and raise money. Dragging out the process gives them multiple chances to remind their base voters, on the left or right, that they are doing all they can for the cause.
More importantly, we are in a period of maximum leverage for rank-and-file Democrats. With the party majorities in the House and Senate so narrow, every vote matters. Thus, back-bench members who ordinarily are ignored by their leadership have their moment to press for their priorities.
“Loud and messy”
Case in point: A group of moderate Blue State Democrats leveraged their votes to press House Speaker Nancy Pelosi (D-CA) for a commitment to address their top priority—repeal of the $10,000 cap on the state and local tax (SALT) deduction. They won’t get the cap repealed, but may get it eased.
But their moment is fleeting. Once Democrats agree to overall spending and revenue targets, the all-important details will be filled in by Pelosi, Senate Majority Leader Chuck Schumer (D-NY), and President Biden. All those back-benchers will, literally and metaphorically, be out of the room.
Today, that room is not only large but it is open to the public. Thus, the Democrats’ internal debate is both is loud and messy. But it makes sense.
But wait, you ask, didn’t Congress already agree to a $3.5 trillion budget resolution? Well, that was theater too. It approved the measure as a means to move the debate forward on Biden’s domestic agenda. But the real spending and revenue targets almost certainly will shrink.
At this stage, of course, Republicans largely have abandoned their opportunity to take part in this drama. That is, other than Senate GOP leader Mitch McConnell (R-KY) standing at stage right and regularly intoning “no” except for a whispered “yes” on infrastructure. But their time will come.
What will happen
This is what is likely to happen: Democrats will make Republicans vote against a bill that keeps the federal government running, increases its borrowing authority, and provides emergency relief for states hard hit by hurricanes and wildfires. This message vote will give Democrats fodder for campaign ads in 2022.
Then, Republicans will force Democrats to vote on their own to increase federal borrowing authority, most likely by going through the cumbersome process of amending the already-passed budget resolution. This will give the GOP fodder for its 2022 campaign ads.
Sometime after that, probably between Thanksgiving and New Year’s, Democrats will pass a stripped-down but still substantial version of Biden’s Build Back Better domestic agenda, including some large tax increases on businesses and high-income households.
Between now and then, we all will have the opportunity to watch lawmakers play their well-rehearsed parts in what has become a tediously predictable play. But those dark predictions of fiscal doom? Ignore them. They are just part of the show.
