Sens. Manchin and Sinema could cost families in their home states thousands in childcare by tanking Biden’s $3.5 trillion plan

joe bien baby
President Joe Biden greets Ret. U.S. Marine Cpl. William Kiernan, his wife Leah, and their daughter Madison Friday, Jan. 29, 2021, during a visit to Walter Reed National Military Medical Center in Bethesda, Maryland. Cpl. Kiernan was injured in 2010 while deployed to Afghanistan where he suffered a right below-knee amputation from an improvised explosive device attack.

  • A new analysis shows that American families would save thousands on childcare under Biden’s spending plan.
  • In West Virginia, families could save $7,870 every year. In Arizona, they could save $9,430 annually.
  • But the senators from those states are calling for cuts to the size and scope of the reconciliation bill.
  • See more stories on Insider’s business page.

Democrats’ proposed reconciliation bill would pour trillions into “human infrastructure” – social spending meant to expand Medicare, eliminate the cost of community college, and enact paid leave.

One key measure: $450 billion toward affordable childcare and universal pre-K, a proposal that 127 economists have thrown their support behind. Under Democrats’ plan, most families would not spend over 7% of their income on childcare.

However, key moderates like Sen. Joe Manchin of West Virginia and Sen. Kyrsten Sinema of Arizona have said that the current $3.5 trillion price tag is too hefty. Paring it down means that measures like free community college or affordable childcare could be shaved down or cut out completely.

A new analysis from the House Committee on Education and Labor shows just how much families stand to save on childcare. In every single state, a typical family of four that has an infant in full-time care would save at least $6,000 a year.

Politico reported that Manchin laid out his infrastructure proposals in a July document; he wanted a $1.5 trillion topline for the package, and said any new spending – like that for childcare – should go through means testing, where a certain eligibility threshold is set. That might exclude some parents from reaping the benefits of better-subsidized childcare, including those in Manchin’s and Sinema’s home states.

In West Virginia, the typical family would save $7,870 every year. In Arizona, they’d save $9,430 – just shy of $10,000 in savings annually. A typical family in Kentucky, Senate minority leader Mitch McConnell’s home state, would save $6,020 every year.

Residents of Massachusetts would get the biggest break of all states, saving $18,750 every year. The report also highlights $21,670 in savings for residents of District of Columbia, which is likely an outlier due to city cost of living.

A similar analysis from the left-leaning Center for American Progress broke down how much families who make 135% of their state’s median income would pay in childcare costs; these could be families potentially excluded by Manchin’s means testing, if childcare subsidies only apply to lower-income families.

In West Virginia, families pay an estimated $198 a week in childcare under current policy, Insider’s Madison Hoff reports. Under Biden’s proposal, that cost would be more than halved, with West Virginia families saving $103 a week. It’s a similar story in Arizona, where families currently are estimated to spend $236 a week in childcare. They’d save $126 a week under the new proposed spending.

Once again, the residents of Massachusetts would rack up the most savings, with their costs slashed from $436 a week to $182 a week.

Right now, Democrats are locked into a intra-party negotiation over just how big their party-line package should be. Progressives previously called for even more in spending, working with Senate Democrats to craft the $3.5 trillion package over the summer. Now, as moderates push back and Biden steps in, it might be whittled down to somewhere around $2 trillion.

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AOC rips a possible $1 trillion infrastructure bill: ‘That’s the annual budget for NYC alone, but spread thin for everyone in the US.’

AOC
Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez hold a news conference to introduce legislation to transform public housing as part of their Green New Deal proposal outside the U.S. Capitol November 14, 2019 in Washington, DC.

  • Progressives are continuing to push for a larger social spending infrastructure package.
  • On Twitter, Rep. Alexandria Ocasio-Cortez said a $1 trillion package is likely not enough to be impactful.
  • Intra-Democrat squabbles over the size and scope of an infrastructure package already torpedoed one vote.
  • See more stories on Insider’s business page.

Rep. Alexandria Ocasio-Cortez is once again making it clear that progressives want to go big with social infrastructure spending, even amidst pushback from the moderate wing of the party.

On Twitter, she wrote that a $1 trillion bill would come to just about $100 billion every year.

“That’s the annual budget for NYC alone, but spread thin for everyone in the US. Do you think that’s enough to be impactful? To be widely felt in people’s lives? It’s not. Sufficiency is the bare minimum,” Ocasio-Cortez wrote, implying that $1 trillion falls below her acceptable minimum.

Indeed, New York City’s most recent budget was just shy of $100 billion, according to The City.

Infrastructure talks are currently at an impasse as Democrats hash out how much they’re willing to spend on party-line social spending, in addition to the $1 trillion bipartisan package. That has already been passed by the Senate, meaning it just needs to pass the House. Facing unified Republican opposition to the other measure, Democrats are debating a party-line bill of $3.5 trillion, which may be cut two-thirds in size.

For months, progressives in the House, including Ocasio-Cortez, have stressed that they’ll only vote on a bipartisan infrastructure package if it moves in tandem with the larger social package, which contains major progressive priorities like affordable childcare, climate spending, and a Medicare expansion.

When House Speaker Nancy Pelosi tried to bring forward an unlinked vote on the bipartisan package, progressives pushed back. Ocasio-Cortez said she wouldn’t vote for it unless she got “new information.” Sen. Bernie Sanders urged House progressives to vote it down “until Congress passes a strong reconciliation bill.”

Ultimately, the vote on the bipartisan package was delayed. President Joe Biden stepped in, endorsing progressives’ desire to move the two bills simultaneously – while also suggesting a smaller price tag of $2 trillion. On Monday, Biden took aim at key moderates Sens. Joe Manchin and Kyrsten Sinema, who have both attracted ire for pushing back against the size of the party-line social spending package.

Manchin, for instance, said just months ago that he would be willing to spend up to $4 trillion on an infrastructure package. Now, his topline is $1.5 trillion.

Even $3.5 trillion is lower than some progressives Democrats wanted. Sanders drafted a $6 trillion proposal; Ocasio-Cortez has said she wants $10 trillion. Regardless, it seems that progressives will keep fighting for as much spending as they can.

“We’re taking on the entire ruling class of this country,” Sanders said on ABC’s This Week about the $3.5 trillion package. “Right now the drug companies … the health insurance companies, the fossil fuel industry are spending hundreds and hundreds of millions of dollars to prevent us from doing what the American people want. And this really is a test of whether or not American democracy can work.”

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Insider’s Capitol Hill reporter breaks down the Democrats’ infrastructure fight, the fate of Biden’s $3.5 trillion spending, and why the House had 2 Thursdays

biden/pelosi
U.S. President Joe Biden talks to reporters as Speaker of the House Nancy Pelosi watches after the president met with Democratic lawmakers at the U.S. Capitol to promote his bipartisan infrastructure bill on Capitol Hill in Washington, U.S., October 1, 2021.

  • Democrats in Congress are facing hurdles as they try to raise the debt limit and push forward Biden’s social spending package.
  • Senior editor Sarah Gray called up one of Insider’s Capitol Hill reporters, Joseph Zeballos-Roig, to get some clarity on where things stand.
  • Below is a lightly edited conversation to get you up to speed as we gear up for a new week.
  • See more stories on Insider’s business page.

Sarah Gray: It’s Friday, October 1, today, and this has been a crazy crazy week for you – and Congress.

Joseph Zeballos-Roig: It’s extremely hard to nail down where everybody is right now. So that’s been the challenge.

We started this week with worries that the government might shut down. And then there’s also the reconciliation bill and there’s the bipartisan infrastructure bill and the looming debt ceiling crisis. From Monday to Friday afternoon, how did we get here?

Congress had a very big to-do list, and Democrats, in particular, going into the week. The one thing they manage to clear from the to-do list was the short-term government funding bill. So that’s going to keep the government funding until December 3rd, but this is basically just punting to what’s going to be a big end-of-year spending battle.

In terms of infrastructure, I think that there is a little bit more clarity to what some moderates want, The infrastructure bill, a vote was yanked, but I think it also serves to start negotiations and talks on another, on the bigger part of Joe Biden’s domestic agenda, which is the reconciliation package. I think overall Democrats are slowly but surely making progress on what they want to do, but it’s definitely going to be playing out very messy and public for quite a while.

To the best of your knowledge, do you have a sense of where Democrats are right now with their priorities?

Yeah, so I think the easiest way to explain this is to go over the warring factions: moderates are insisting on a smaller bill, um, with fewer tax hikes. Progressives want a much larger bill to fund, you know, sweeping priorities like initiatives to fight climate change, and affordable childcare, and the expanded child tax credit, expanded Medicaid and Medicare. These are the priorities that a lot of Democrats favor, but they have a really wide bridge to gap between both sides.

Progressives aren’t holding the line on $3.5 trillion. They’re starting to signal that they could go lower, but they’re not going to go as low as Sen. Joe Manchin’s $1.5 trillion. It seems like we’re entering the new phase of negotiations, in which you’re going to try and hammer down a compromise amount. But it’s going to require a lot of Democrats to make some tough sacrifices on a lot of their priorities.

(Editor’s note: This conversation took place before a meeting between President Joe Biden and Democrats, where the president floated a $2 trillion spending package.)

It’s going to be a lot of horse-trading and the next couple of weeks and perhaps months, honestly when it comes to progressives you know, they’ve been very clear that they want this to be a big bill to fight climate change because a lot of the country has undergone climate emergencies or last couple of months – wildfires, deadly hurricanes. And when it comes to the human infrastructure aspect they’re going to have to make a lot of cuts to appease the centrists who just clearly just want a smaller bill at this point.

It felt like progressives were kind of holding the line Thursday night by delaying the vote on the bipartisan infrastructure bill. It is interesting to hear that they might be at a place where they’re ready to make some concessions.

I think a progressive are willing to making concessions, but moderates have not indicated as much willingness up to now. That’s been the problem that progressives complain about: on the Senate side, Senators Joe Manchin and Kyrsten Sinema have been pretty enigmatic about what they want in the bill. Manchin just laid out yesterday ahead of what was supposed to be a scheduled vote on the bipartisan infrastructure goal that he wants $1.5 trillion. But I think there’s still a lot of Democratic complaints, at least that I’ve heard on the Democratic side that Sinema has not been anywhere near as clear.

When do you think we will see any movement or any votes on this? It felt like things were really moving during the summer. And then we had this artificial deadline to vote on the bipartisan infrastructure bill, and now it’s possibly going to take months of negotiation, and next year is a midterm election year…

That’s definitely been a huge focus of Democrats. They want to wrap up the reconciliation bill as soon as possible so that they can provide tangible improvements in people’s lives. For example, Sanders is really pushing a Medicare expansion so that it would provide dental, vision, and hearing coverage for seniors. Some of those initiatives could take years to set up, but for example, he wants to provide these types of voucher cards that seniors could start using up to a thousand dollars so that they can start feeling these improvements in their lives ahead of midterms.

So that’s definitely been a focus, but a problem they’re already running into is a Manchin is insisting that be a long-drawn-out process. He’s repeatedly called for a strategic pause so that Democrats can get their economic priorities in order. Um, and you know, Manchin is a key vote in the 50-50 Senate, they can’t afford to lose anybody. A reconciliation bill for Biden’s domestic agenda is basically dead in the water until he decides that he can support it, which could very well be November, December.

So where are the Republicans in all of this?

It’s two parts when it comes to Republicans on the bipartisan infrastructure bill, which was focused on popular voter stuff like improving roads and bridges enhancing or broadband connections. There was Republican support for this in the Senate: 19 Senate Republicans voted to back the bipartisan infrastructure bill, including Senate Minority Leader Mitch McConnell. But in the House, it’s a different story where Trump still has a lot of sway among House Republicans. On the larger reconciliation package, Republicans are united in opposition.

They have assailed it as a huge government expansion that will intrude on people’s lives; it will be financed with all these job-killing tax hikes. These are the arguments they are using to oppose the package.

A lot of these investments are popular with voters, childcare, community college, raising taxes on the rich. It’s not the same story among Republicans, so they’re just lining up in opposition, and quite frankly, trying to block many of these popular initiatives from becoming a law, because it would derail Democratic odds of holding onto Congress and furthering Biden’s domestic agenda.

The Republican talking point on the debt ceiling has been trying to connect the $3.5 trillion reconciliation bill with why they won’t raise the debt ceiling, but the debt ceiling has to do with borrowing for bills that the government already owes. So it’d be a lot of the debt and a lot of the spending from the past administrations, including Trump’s right?

That’s correct. The debt ceiling needs to be raised this year regardless of spending plans. Republicans are insisting Democrats you’d do it alone and reconciliation it’s technically possible, but experts that I’ve talked to say it could take at least two weeks if everything goes right, probably three and we’re already in October 1st, so there’s very little time to do it and then there’s a very narrow margin of error for Democrats. Republicans are just not going for a debt limit hike, even though they approve it three times under the Trump administration and both parties accrued nearly $8 trillion in debt.

So raising the debt ceiling also doesn’t authorize new spending. And it needed to be done this year, regardless of Democratic spending plans.

Woody Harrelson was on the Hill this week. There was also the congressional baseball game, which felt totally out of place given all of the negotiations. Pelosi was down there on her cell phone…

Pelosi back in August faced a rebellion from a small group of House moderates, who demanded a vote on the bipartisan infrastructure bill before advancing the larger social spending plan. So she struck a deal with them for a late September vote. And, you know, obviously, that hasn’t happened. The vote was pulled in the face of strong progressive resistance. So in a bid to try and keep her promise to these moderates, she essentially warped time last night.

The House didn’t gavel out, so basically it’s second Thursday in the House right now. The legislative calendar is still frozen on September 30. It underscores the procedural length of she’ll go in order to pacify the potent faction of her moderate wing. And I think it pretty much summarizes how wild this week was.

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Joe Manchin said in January he’d be okay with $4 trillion in infrastructure, but now he wants a lot less. Here’s a full timeline of his price tags.

Joe Manchin
Senator Joe Manchin, a West Virginia Democrat, talks on the phone during a Senate Appropriations Subcommittee hearing on June 9, 2021 at the U.S. Capitol in Washington, D.C. The committee is hearing testimony about the Fiscal Year 2022 budget request for the Department of Health and Human Services.

  • Sen. Joe Manchin is once again pivotal to Democrats’ legislative plans. And he’s been far from consistent.
  • A recently published memo showed Manchin only backs a $1.5 trillion reconciliation package. He supported a $4 trillion plan in January.
  • Here’s a timeline of Manchin’s spending limits – and how they’ve both aided and obstructed Biden’s agenda.
  • See more stories on Insider’s business page.

If you can’t keep track of Democrats’ massive spending push, you aren’t alone. Even the party’s most impactful senator has changed course multiple times in the past year.

West Virginia Sen. Joe Manchin is a pivotal figure in the passage of any Democratic legislation right now. The party holds on to a razor-thin margin, and losing the moderate Democrat’s support would doom much of President Joe Biden’s legislative agenda.

The party entered the last week of September with several policy battles to win. Among the most important is Biden’s $3.5 trillion spending plan, which would be the country’s biggest expansion of social programs since the New Deal of the 1930s. It comes in addition to a $1 trillion bill for roads and bridges that passed the Senate in a bipartisan vote.

As negotiations have dragged on, Manchin has emerged as a clear opponent of the larger plan, and thanks to him and fellow moderate Sen. Kyrsten Sinema, of Arizona, the $3.5 trillion proposal is all but dead. Manchin is now pushing a package that’s less than half the proposed size. In January, he sang a different tune.

In 9 months, Manchin shrunk his price tag by over $1 trillion

In July, Manchin presented his infrastructure proposals to Senate Majority Leader Chuck Schumer, Politico revealed and Insider confirmed. His $1.5 trillion topline is far lower than the reconciliation package around which Democrats have coalesced.

Manchin reaffirmed his commitment to $1.5 trillion on Thursday, telling reporters that “I believe in my heart” that’s the most that the country can afford right now.

In January, Manchin said he’d back up to $4 trillion in infrastructure spending, as then-president-elect Joe Biden laid out his plans for office.

“The most important thing? Do infrastructure. Spend $2, $3, $4 trillion over a 10-year period on infrastructure,” Manchin told Inside West Virginia Politics in January.

He reaffirmed his support for a larger package in April, as Senate Republicans readied their own much smaller infrastructure package.

“We’re going to do whatever it takes. If it takes $4 trillion, I’d do $4 trillion, but we have to pay for it,” Manchin told reporters at the time, saying that he would go big if the situation warranted it.

The document obtained by Politico is dated July 28, meaning that it came about two weeks after Senate Democrats announced their $3.5 trillion reconciliation deal. Ahead of that deal, Manchin said any Democratic-only plan would need to be fully paid for, and not require borrowing money.

After Manchin presented his proposals to Schumer, all 50 Senate Democrats voted to advance the $3.5 trillion blueprint and send it to the House. That unanimous support is now on the ropes.

Now, it’s progressives versus moderates

For months, progressives have warned they’ll torpedo any attempt to bring the $1.2 trillion bipartisan infrastructure package without the $3.5 trillion party-line reconciliation moving in tandem. House Speaker Nancy Pelosi has attempted to do just that, a risky gamble as there is no guarantee the reconciliation bill would pass afterward.

After the progressive wing of the party pushed back, a Thursday vote on the bipartisan package was pulled as Democrats regrouped and confusion reigns about what comes next.

“We started off with the $10 trillion number. They wanted to bring that down to six, so we obliged, negotiating in good faith. Then several months ago, we had an agreement with Senator Manchin … saying we will move forward on this $3.5 trillion,” Rep. Alexandria Ocasio-Cortez told NBC’s Garrett Haake. “Since then, some folks in our party have reneged on that agreement, and that’s where I think we have an issue of trust.”

What is clear, though, is Manchin’s opinion will continue to dictate where the package goes next. And a statement on Wednesday at least signaled where his head is at: “Spending trillions more on new and expanded government programs, when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity.”

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Biden floats $2 trillion price tag social spending package, pushing for cuts to salvage his economic plans

Joe Biden
President Joe Biden.

  • Biden told progressives to come down on the price tag for the party’s reconciliation bill.
  • Rep. Henry Cuellar told reporters the president expects a price between $1.9 and $2 trillion.
  • Biden also endorsed progressive calls to push for infrastructure and social spending bills together.
  • See more stories on Insider’s business page.

President Joe Biden suggested a $2 trillion price tag for a social spending plan containing the bulk of his economic agenda, trying to broker a compromise between the party’s warring factions and get his agenda over the finish line with wafer-thin Democratic majorities.

Biden told progressive Democrats on Friday they need to lower their expectations when it comes to the price tag on the party’s much-debated spending bill. But he also endorsed their demands for a two-track strategy to approve an infrastructure bill and social spending plans in tandem.

The president prodded his fellow Democrats to support a total cost of between $1.9 trillion and $2.3 trillion on the spending package that once was slated to cost $3.5 trillion, according to Politico.

Rep. Henry Cuellar of Texas told reporters Biden said the final number for reconciliation will likely be $2 trillion. Cuellar also said the president “basically linked” the fate of the packages together.

Following a separate meeting of the Congressional Progressive Caucus, Rep. Jamie Raskin of Maryland hinted at what a final deal could entail, telling reporters he remains “excited” about providing universal daycare, extending the child tax credit, and cutting tuition at community colleges.

“Maybe not everything can be funded for 10 years, maybe it’s going to be a lesser period of time,” Raskin said. “But at least we’ll be able to develop these programs and make a commitment in the American people.”

Biden’s visit reflects a last-ditch effort to get progressives and moderates on the same page after House Speaker Nancy Pelosi yanked a vote on his bipartisan infrastructure bill on Thursday evening in the face of a progressive rebellion. They’re demanding the passage of a larger social spending plan aimed at combating the climate emergency, securing affordable childcare and tuition-free community college first before clearing the traditional infrastructure package.

But intraparty infighting this week stalled much of Biden’s economic agenda. Biden told lawmakers during Friday’s meeting that the infrastructure bill “ain’t going to happen until we reach an agreement on the next piece of legislation,” Politico reported.

The president reportedly stressed that even a bill that costs less than $3.5 trillion “can make historic investments.”

Pelosi gambled big earlier this week, telling the caucus the infrastructure bill had to be passed even though the spending package was far from winning approval in the Senate. She said Democrats needed to make “difficult choices” given there was still no agreement on a final, smaller price tag for the larger anti-poverty bill.

The California lawmaker’s plan triggered a progressive revolt that has put Biden’s economic agenda in jeopardy. Without reconciliation on the spending bill, progressive Democrats have promised to tank the infrastructure bill.

Party leaders are hoping to cement the deal at $2.1 trillion, but Rep. Joe Manchin, a moderate Democrat holdout, confirmed Thursday he won’t vote for a bill that costs more than $1.5 trillion.

Still, Biden is insisting Democrats will be able to unite around both measures to revamp the nation’s physical infrastructure and strengthen the social safety net. “It doesn’t matter whether it’s in six minutes, six days or six weeks,” Biden told reporters. “We’re gonna get it done.”

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5 ways the debt ceiling brinksmanship in Congress could end, from markets teetering to Biden’s agenda and who gets blamed

Senate Majority Leader Chuck Schumer (D-NY) points at Senate Minority Leader Mitch McConnell as they arrive for a remembrance ceremony marking the 20th anniversary of the 9/11 terror attacks on the steps of the U.S. Capitol, on September 13, 2021 in Washington, DC.
Sen. Majority Leader Chuck Schumer (D-NY) and Sen. Minority Leader Mitch McConnell (R-KY).

  • Even if Congress avoids a shutdown and a default on the nation’s debt, things could still get ugly.
  • The brinksmanship fueled by negative polarization entails several knock-on effects.
  • Markets could teeter, and it comes at a crucial time for President Biden’s agenda.
  • See more stories on Insider’s business page.

As with most things in Congress, seemingly arcane and petty disputes may end up having wide-reaching effects across the American public and global economy.

When it comes to this particularly chaotic week in late September – with lawmakers in a standoff over lifting the debt ceiling, narrowly avoiding a government shutdown, and making any progress on President Joe Biden’s infrastructure package – the stakes couldn’t be higher and the pettiness is off the charts.

It might seem irrational given the gravity of the situation, but these inter-connected spats are all part of a broader trend in American politics known as negative polarization and asymmetric polarization: As long as the other side is losing, your side is winning. That mentality is now especially strong among Republicans with Democrats holding the White House and both chambers of Congress.

Even if some or all of the following potential catastrophes are averted, the uncertainty and confusion surrounding the negotiations could send global markets teetering in a ripple effect that may already be under way.

Here are five ways this Congressional brinksmanship could play out:

1. Armageddon: Congress fails to raise the debt ceiling and the US defaults on its debts.

Wall street traders panic
Traders work on the floor of the New York Stock Exchange August 9, 2007.

The debt limit or debt ceiling is often a misunderstood term, since it pertains to money the US government has already spent, not future payments.

The Senate and House have passed a continuing resolution to fund the government and stave off shutdown, averting a double whammy worst-case scenario – but the debt ceiling issue has yet to be resolved.

If Congress doesn’t lift it, the government could run out of funding by mid-October, according to Treasury Secretary Janet Yellen.

Democrats in the House passed a bill suspending the debt ceiling, but it was dead on arrival as soon as it reached Senate Republicans. A default – or a near-default – stands to negatively impact markets, and services that millions of Americans reply upon.

Democrats are sick of dealing with the debt ceiling and the need to regularly stave off economic catastrophe, finding themselves the target of GOP efforts to make them pay a political price via a mechanism that isn’t even used by most developed democracies, as Insider’s Ben Winck, Joseph Zeballos-Roig, and Andy Kiersz reported last week.

Even if there is no default, prolonging the process could still cause a financial drag: The nonpartisan Committee for a Responsible Federal Budget finds that even the threat of default can have “serious negative economic implications.”

In 2011, a similar showdown resulted in a last-minute increase to the debt ceiling – but not before roiling financial markets as the country’s credit rating was downgraded. For instance, a Government Accountability Office (GAO) report estimated that the prolonged debt ceiling process in 2011 made Treasury’s borrowing costs go up by $1.3 billion.

There could be a huge hit to employment and stocks if the debt limit doesn’t get lifted by mid-October, Moody’s Analytics predicts. Economists led by Mark Zandi found that 6 million jobs could be shed, with unemployment soaring up to 9%. Stocks crashing could wipe out $15 trillion in household wealth.

Yellen said in a statement to the Committee on Banking, Housing, and Banking that “the full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession” if the country goes into default.

If the debt ceiling isn’t lifted, Americans receiving support from government programs may feel the impact acutely. Treasury Secretary Janet Yellen warned in a Wall Street Journal opinion piece that families could see their monthly child tax credits delayed.

Also potentially impacted: Military troops, senior citizens, children receiving free or subsidized school lunches, and Americans relying on Medicaid. Yellen wrote that almost 50 million senior citizens may not receive their Social Security checks, and that troops may not receive their paychecks.

In a memo sent out to the state and local governments, the White House warned that federally subsidized Medicaid and free school lunches could face reductions in the case of a default.

2. Both crises are avoided and the HIP and BIF live happily ever after.

ilhan omar nancy pelosi
Rep. Ilhan Omar (D-MN) (L) and Speaker of the House Nancy Pelosi (D-CA).

Because Democrats hold the narrowest majority possible in the Senate, with just 50 members plus Vice President Kamala Harris as the deciding vote, passing Biden’s infrastructure plan has been a high wire act from the start.

It’s an especially precarious position because it’s so far from the 60 votes needed for most legislation to clear a filibuster from Republicans.

Given the inevitability of a filibuster on several key Democratic priorities, the bill was split in two: the Bipartisan Infrastructure Framework, or “BIF,” and the more wide-reaching Human Infrastructure Plan, or “HIP.” The ostensible goal was to have enough Republicans vote for the BIF, since it includes more traditional infrastructure components such as roads, bridges, and ports, while the HIP would pass with just the 50 Senate Democrats and VP Harris before going over to the House.

Right now, Democrats are essentially playing a game of infrastructure chicken as Republicans stand by and watch. From the start, progressives have said that the BIF needs to move in tandem with the larger social spending plan, and have warned they’ll shut down any standalone bipartisan bill. It’s a position that both Biden and Pelosi originally echoed.

But moderates like Sen. Joe Manchin have indicated that they’re not on board with the size or timeline of that $3.5 trillion reconciliation package.

Now, Pelosi is pushing for a vote on just BIF, a risky gamble to get one part of the agenda across the finish line. As promised, House progressives like Rep. Alexandria Ocasio-Cortez have said they’ll vote against the bipartisan bill, with prominent Senate progressive Bernie Sanders backing them.

However, there is a chance both the moderate and progressive wings were bluffing after the deal fell apart, and both will escape the prisoner’s dilemma of Game Theory to arrive at a compromise.

3. Most of the public blames Republicans for the debt ceiling brinksmanship – just like before

Kevin McCarthy down
House Minority Leader Kevin McCarthy (R-CA).

Over the past 25 years, standoffs like this one have become increasingly routine in Congress.

When it comes to the threat of a government shutdown – particularly the nation’s longest, under former President Donald Trump, and both shutdowns during the Clinton administration in the mid-1990s – most Americans blame the GOP, without fail.

Yet despite Republicans always being blamed more for shutdowns and bringing the nation closer to defaulting on its debts, they keep doing it.

A Washington Post/ABC poll following the Clinton-era shutdowns, the first of which lasted five days and the second clocked in at 21, found 50% of Americans blaming Republicans to just 27% blaming Clinton. The clashes ultimately ended former House Speaker Newt Gingrich’s reign in Congress, and emboldened Clinton going into his second term.

Whether a similar dynamic plays out with Biden depends on how bad things get and how much more polarized the public is now compared to the ’90s, but the polling history is not on the GOP’s side.

4. Both a shutdown and default are avoided, but Biden’s infrastructure bill continues to suffer.

US President Joe Biden convenes a virtual Covid-19 Summit on the sidelines of the UN General Assembly, on September 22, 2021, in the South Court Auditorium of the White House in Washington, DC.
President Joe Biden.

With Biden’s infrastructure plan already on the ropes as intra-Democratic divisions have boiled over regarding how the bill was split in two, a protracted fight over the debt ceiling does nothing to help move the roughly $3.5 trillion package along.

Similar to the way narrowly avoiding a default would still have negative impacts on the economy, a languishing infrastructure bill would factor into how Wall Street analysts assess the state of the economy and which sectors are worth investing in.

With the midterms just over a year away, Biden and Democrats would like to campaign on the infrastructure bill as a major legislative accomplishment beyond the administration’s pandemic response and the March stimulus bill known as the American Rescue Plan.

5. All of this bogs down Biden’s agenda through the fall, and Democrats get blamed by voters who associate government spending directly with inflation.

joe biden
President Joe Biden.

The notion of “overheating the economy” has already become a theme in the Biden presidency, and has been explicitly mentioned by notable holdouts such as Democratic Sen. Joe Manchin of West Virginia as a reason to be wary of the infrastructure bill’s $3.5 trillion price tag.

On top of the $5 trillion in stimulus spending during the pandemic between the Trump and Biden administrations, those ranging from partisan critics to apolitical observers tend to tie government spending directly with inflation.

Although it’s much more complicated than that, and pandemic-related supply chain issues have led to many of the most dramatic price hikes, Democrats risk losing the messaging battle on what could become one of the key issues in the 2022 midterms.

Swing voters – or at least anyone showing up to a midterm election who isn’t planning on backing their party all the way down the ticket – are far more likely to have the rising price of goods sitting top of mind than squabbles over the debt ceiling that took place over a year ago.

Former President Jimmy Carter faced a similar issue, and despite breaking with the historical trend of an incumbent president’s party losing seats in Congress in the first election since taking office, Carter ended up failing in his reelection bid as Ronald Reagan ran on reigning in government spending and tamping down on inflation.

While this outcome is less empirical and more closely related to campaign messaging, it may be the one with the longest staying power.

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Joe Manchin confirms he wants a reconciliation bill worth only $1.5 trillion, saying he believes the US can’t turn into ‘entitlement-based society’

Joe Manchin
Sen. Joe Manchin of West Virginia.

  • Sen. Joe Manchin told Chuck Schumer in July he wanted a $1.5 trillion social-spending topline, a document shows.
  • Other proposals include means testing for new spending and a 25% corporate tax rate.
  • Even though Schumer signed the document, his spokesperson told Politico he never agreed to it.
  • See more stories on Insider’s business page.

As Democrats are working to get their $3.5 trillion social-spending bill signed into law, West Virginia Sen. Joe Manchin has been clear he thinks his party’s proposal is too expensive. A document just came to light confirming that he felt that way in July – and he still feels that way now.

On Thursday, Politico first published a document, which a Senate Democratic aide later confirmed to Insider, that revealed Manchin had outlined his proposals for what Democrats’ reconciliation bill should look like to Senate Majority Leader Chuck Schumer in July.

In the document, Manchin proposed $1.5 trillion in spending as a topline for the bill, and proposed raising the corporate tax rate to 25%, the capital gains tax rate to 28%, and he wanted means testing – or threshold formulas – for any new spending.

Speaking to reporters on Thursday, Manchin said, “I believe in my heart” that $1.5 trillion is the most US can afford to spend right now and that it shouldn’t change into “an entitlement-based society.”

The July document said that Manchin “does not guarantee that he will vote for the final reconciliation legislation if it exceeds the conditions outlined in this agreement.”

And while both Manchin and Schumer signed the document, Schumer wrote that he will “try to change Joe on some of these,” referring to what Manchin had proposed. A spokesperson for Schumer told Politico that Schumer “never agreed to any of the conditions Sen. Manchin laid out; he merely acknowledged where Sen. Manchin was on the subject at the time.”

Earlier this month, Manchin suggested Democrats should “hit the pause button” on their reconciliation bill, writing in a Wall Street Journal opinion piece that “I can’t explain why my Democratic colleagues are rushing to spend $3.5 trillion,” citing inflation concerns.

Given progressive lawmakers’ firm stance they will not cut down their $3.5 trillion proposal, Manchin’s outline is unlikely to gain support from most of his Democratic colleagues. Leader of the Congressional Progressive Caucus Pramila Jayapal has made clear that progressives want to see their reconciliation bill passed before infrastructure to ensure the measures they are proposing, like universal pre-K and free community college, are not skimped on.

And progressives have also struck down Manchin’s request that all new spending should have thresholds, especially with the child tax credit. Manchin previously suggested that people should be required to work to access the child benefit, which Democrats like Sen. Bernie Sanders pushed back on, telling reporters that his “personal view is that would be counterproductive to the children who need help the most.”

The House is scheduled to vote on the bipartisan infrastructure bill on Thursday, but given progressive opposition, it’s unlikely to pass. As for the reconciliation bill, Manchin has made clear he will not support it as is, and he still believes in a “strategic pause” to ensure the best economic decision is made.

“While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot – and will not – support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces,” Manchin wrote in a Wednesday statement. “There is a better way and I believe we can find it if we are willing to continue to negotiate in good faith.”

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A Biden adviser blasts politicians rewarding ‘wealth over work,’ and says Congress has to choose between the middle class and the wealthy

Joe Biden
President Joe Biden delivers a speech on voting rights at the National Constitution Center in Philadelphia on July 13, 2021.

  • Biden economic adviser Heather Boushey wrote in the NYT that the US government has rewarded wealth over work.
  • She says the Biden administration is seeking to change this, an implicit break with decades of policy.
  • Biden’s proposals to increase taxes on the wealthy and corporations are in peril in Congress.
  • See more stories on Insider’s business page.

Heather Boushey, a member of President Joe Biden’s Council of Economic Advisers, sounded off in a New York Times opinion essay on who the government should work for – and who it’s left behind in recent decades.

“Millions of Americans don’t trust the government or its ability to improve their lives, and it’s not hard to see why,” Boushey writes. Instead, she says, politicians from both sides of the aisle have done everything from allowing monopolies to grow to slashing taxes for the wealthiest Americans.

It’s an argument in favor of Democrats’ sweeping reconciliation bill that would unwind some Trump-era tax cuts and funnel money towards social services and lower and middle-income Americans. That bill is currently in jeopardy as progressives and moderates seem unable to agree on shifting from the system Boushey decries to the one she wants.

Boushey writes that it is “now abundantly clear that the problem lies with a government that rewards wealth over work, that serves big corporate interests over working families.” Such a statement from a presidential economic adviser would have been unthinkable in the Obama administration, let alone the Trump one, but the identification of the widening chasm between wealth and work has gone mainstream in recent years, led by groundbreaking work from economists such as Thomas Piketty. Boushey is further confirming Biden’s radical shift on wealth and inequality.

Biden’s White House has been focused on taxes and inequality

Biden’s economic team has repeatedly used the press to hammer home the importance of Democrats’ proposed tax hikes to offset infrastructure as a move to address inequality and close tax gaps.

“The president has put forth a robust tax agenda that rewards work, not wealth, one that will ensure companies pay their fair share and encourage them to keep jobs in America,” Boushey writes.

Last week, White House economists released their own analysis of how much the wealthiest Americans pay in taxes. They found the 400 wealthiest families in America pay about 8.2% in income taxes annually; significantly, they included assets like stocks as part of those incomes.

Under House Democrats’ proposed tax plan, capital gains – the profits from selling assets like stocks – would be taxed at 25% instead of 20%. The wealthiest Americans often derive more of their income from assets, while many Americans rely on wages for income. That means that while lower-earning Americans pay higher income taxes on their wages, wealthy Americans are often taxed at the preferential rate for capital gains. Democrats also want to impose a 3% “surtax” on people earning over $5 million, although that still wouldn’t be an outright wealth tax, since it targets income and not assets.

Democrats also want to hike the corporate rate to 26.5% for companies that earn over $5 million. Both the corporate rate and capital gains increases are lower than Biden’s original proposals.

Boushey writes that Biden’s “vision for the economy” has resulted in the two bills currently going through Congress: a bipartisan infrastructure bill and Democrats’ party-line reconciliation bill. However, both are currently in jeopardy.

Progressives have repeatedly warned that the two bills must move forward together. But moderates have been reluctant to commit to moving the massive reconciliation bill forward, and Pelosi has moved to decouple them. Now, progressives are making noises about torpedoing the bipartisan bill in retaliation.

“Congress has a choice to make,” Boushey writes. “Does it want to grow our economy by investing in the middle class and the public sector, and fundamentally recalibrating the relationship between government and the people it represents, or continue giving billions in tax handouts to the wealthiest Americans and multinational corporations?”

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Bernie Sanders just urged progressives to tank the Biden infrastructure bill if Pelosi brings it up for a vote in two days

Sen. Bernie Sanders, I-Vt., 2020 Democratic Presidential Candidate, gives a victory speech after winning New Hampshire Primary during Primary Night Celebration at SNHU Field House on Tuesday, February 11, 2020 in Manchester, New Hampshire.
Sen. Bernie Sanders.

  • Sen. Bernie Sanders threw a rhetorical grenade into the infrastructure bill saga on Tuesday.
  • The House should “vote against the bipartisan infrastructure bill until Congress passes a strong reconciliation bill,” he tweeted.
  • Bernie’s move came after Nancy Pelosi decoupled the two bills – something she and Biden said months ago wouldn’t happen.
  • See more stories on Insider’s business page.

Sen. Bernie Sanders of Vermont threw a wrench into congressional infrastructure negotiations on Tuesday – after House Speaker Nancy Pelosi threw a wrench into progressives’ voting strategy.

Since late June, when President Joe Biden reached a bipartisan deal in the Senate on a $1 trillion roads-and-bridges bill, he and Pelosi have vowed to bring it to a vote in the House at the same time as a $3.5 trillion party-line reconciliation bill. Pelosi’s move on Tuesday blows up that strategy, and progressives are furious.

“I strongly urge my House colleagues to vote against the bipartisan infrastructure bill until Congress passes a strong reconciliation bill,” the independent senator from Vermont wrote on Twitter.

By calling on House progressives to vote against the basic package until the Human Infrastructure Plan passes the Senate through budget reconciliation, Sanders took the lead among progressive senators in urging Democrats’ left wing in the House to hold firm and play hardball with the speaker. The stakes are huge, because if Democrats only succeed in passing one, they will leave much of Biden’s agenda unpassed, with midterm elections looming in a little over a year.

pelosi aoc
House Speaker Nancy Pelosi/Rep. Alexandria Ocasio-Cortez.

Progressive fury

For months, progressives have said that they would torpedo any movement on the bipartisan package that comes without the reconciliation bill. Now that Democratic leaders seem to be doing just that, progressives are digging in.

Sanders is one of several to throw cold water on a standalone bipartisan infrastructure bill. Other progressives are also upset at Pelosi’s move. Sen. Elizabeth Warren told reporters that “we had a deal,” implying that Pelosi was backtracking on an agreement to hold joint votes.

Rep. Alexandria Ocasio-Cortez said earlier on Tuesday that she would vote no unless she gets “new information.”

And Rep. Pramila Jayapal, the chair of the House Progressive Caucus, said in a statement: “We articulated this position more than three months ago, and today it is still unchanged: progressives will vote for both bills, but a majority of our members will only vote for the infrastructure bill after the President’s visionary Build Back Better Act passes.”

Not every Senate Democrat was upset with Pelosi. “I trust Speaker Pelosi, she’s the best speaker in my lifetime and I don’t give her advice,” Sen. Sherrod Brown of Ohio, chair of the Senate Banking Committee, told Insider.

Others were still in favor of linking the bills together. “We need to make sure and have confidence that both measures” are traveling in tandem, Sen. Chris Van Hollen of Maryland told Insider.

Pramila Jayapal Attorney General William Barr
Rep. Pramila Jayapal.

The Democratic disarray over a decoupled vote

Pelosi is reversing herself from a position she laid out in June linking the passage of the bipartisan infrastructure bill to the Senate approving a larger social spending bill in the fall. Now Pelosi plans to hold a vote on the former with the latter far from materializing into a piece of legislation.

Biden also said the two would move in tandem, although he later walked back his comments that implied he’d veto a solo bipartisan bill.

The debate over the decoupling is the latest entry in the increasingly messy ongoing intra-Democrat debate about how to move forward on infrastructure. Prominent moderates like Sens. Joe Manchin and Kyrsten Sinema want the proposed $3.5 trillion in reconciliation spending to be pared down. Manchin has said he wants a “pause” on that larger package.

Meanwhile, in the background looms a potential government shutdown and a debt default, with ​​Senate Minority Leader Mitch McConnell rejecting Democrats’ request to raise the debt ceiling on their own.

Sanders reiterated that a deal had been struck between House and Senate Democrats on how the basic package would pass the lower chamber as long as senators pushed the more comprehensive version through by using filibuster-proof budget reconciliation.

“Let’s be crystal clear,” Sanders tweeted, using one of his signature phrases. “If the bipartisan infrastructure bill is passed on its own on Thursday, this will be in violation of an agreement that was reached within the Democratic Caucus in Congress.”

“More importantly, it will end all leverage that we have to pass a major reconciliation bill,” he continued. “That means there will be no serious effort to address the long-neglected crises facing the working families of our country, the children, the elderly, the sick and the poor.”

Pelosi responded to Sanders’ comments on Tuesday. “Everybody has to do what they have to do and I respect that,” she told reporters.

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The stakes of passing Biden’s agenda are 4 million jobs a year, study says

joe biden
U.S. President Joe Biden.

  • A new analysis from the Economic Policy Institute looked at just how many jobs Biden and the Democrats’ agenda would support.
  • The agenda would support 4 million jobs a year, with 1.1 million jobs supported in caregiving.
  • This includes 545,598 jobs a year from investments in long-term care.
  • See more stories on Insider’s business page.

The Democrats are currently negotiating a pair of bills that together could add $4.5 trillion in new spending on infrastructure, family care, and other long-sought priorities. And the ambitious program could add 4 million new jobs a year, according to a new analysis.

A new report from the left-leaning Economic Policy Institute (EPI), breaks down just how many jobs would be supported by the Build Back Better agenda.

According to EPI, the $1.2 trillion bipartisan infrastructure bill, which includes $548 billion in new spending per EPI, would support around 772,400 a year. The reconciliation bill, which would include spending on social programs like child care, would support over 3.2 million a year.

EPI examined the different parts of the two bills and used Department of Labor data to see just how many jobs would be supported a year over a 10-year period.

The Build Back Better agenda would support more than 4 million jobs per year “on average, over the course of the 10-year budgeting window, through direct spending and increased indirect demand in related industries,” according to the report.

This chart shows the parts of the agenda that would support the most jobs a year per EPI’s analysis:

Almost all of the top 10 are from spending under the reconciliation bill with the exception of spending for “roads, bridges, major projects.” That falls under the Infrastructure Investment and Jobs Act, where $110 billion of the $548 billion in new funding would be used for this.

EPI finds different types of jobs would be supported as the infrastructure bill and budget reconciliation package include things like investing in clean energy, physical infrastructure, child care, and health care. The agenda would support 763,000 green jobs, 556,000 manufacturing jobs, and 312,000 construction jobs a year. Additionally, it would support 1.1 million caregiving jobs a year over a 10-year period.

A large chunk of the 1.1 million caregiving jobs supported comes from long-term care. Investing in the nation’s childcare and caregiving, including universal pre-k and affordable childcare, is one key component of the spending. According to EPI’s report, universal pre-K would support 197,659 jobs a year and child care would support 341,711 jobs a year.

“Such investments in universal pre-K, child care, and long-term care would not only disproportionately provide jobs for women – and particularly for women of color – but would also enable millions to participate more fully in the workforce at higher productivity and to earn higher compensation,” The report’s author Adam Hersh, a visiting economist at EPI, wrote.

These different investments would not only provide support for many jobs but could help the US as it makes its way back from the pandemic’s devastating impact on employment and the economy overall.

“​​Supporting more than 4.0 million in employment annually, the proposed Infrastructure Investment and Jobs Act, combined with Congress’s anticipated budget reconciliation, would provide a significant boost to America’s job market as it recovers from the pandemic economic shock and would sustain high-pressure labor markets critical to broadly rising wages,” EPI wrote.

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