Senate Strikes Deal To Avert Shutdown, But Remains Deadlocked On Debt-Ceiling, Domestic Agenda

Tyler Durden's Photo
by Tyler Durden
Thursday, Sep 30, 2021 - 11:00 AM

Now that Sen. Joe Manchin has denounced his own party's multi-trillion plan to expand the social safety net as "the definition of fiscal insanity," we can be virtually assured that the entire Democratic domestic agenda has essentially been left dead in the water, since the progressive Left won't agree to back the Dems' "bipartisan" infrastructure plan via reconciliation without first passing the larger spending package through both chambers.

Whatever the outcome, Manchin's statement suggests it will likely take weeks and months - not days - for President Biden and the leadership to negotiate the votes - if indeed they can ever resolve the intractable divide within their own party, which has largely taken the form of aggressive leftists in the House (exemplified by the AOC-led "squad") vs. a pair of moderates (Manchin and Arizona's Kyrsten Sinema) in the Senate.

That's fortunate, in a sense, since it means Chuck Schumer and Nancy Pelosi will have no choice but to focus on the arguably more pressing priorities: keeping the government funded while raising the debt ceiling, ideally before Treasury Secretary Janet Yellen's "drop-dead" date of Oct. 18.

(And, of course, placing some hedging trades during last night's Congressional baseball game).

With the Democrats heading for an iceberg of a vote on the infrastructure package Thursday that the left has already promised to sink, Schumer announced late Wednesday night that, at the very least, the leadership had secured a deal to extend funding for the federal government until Dec. 3, crossing off arguably the easiest thing on their "to do" list.

The deadline for the shutdown is midnight tonight (because the new fiscal year starts tomorrow).

"We have an agreement on the the continuing resolution to prevent a government shutdown, and we should be voting on that tomorrow [Thursday] morning," Schumer said.

The House passed a government funding bill last week on a party-line vote of 220-211.

Now that the spending package has been stripped of Republican-opposed language suspending the debt-ceiling (which analysts fear will only be resolved much, much closer to Yellen's deadline, which is really the start of a countdown before the money actually runs out) the leadership believes it has the votes to pass a "clean" continuing resolution to fund the government in a series of Thursday-morning votes.

Asked about the progressives' plans to sink the infrastructure package, Manchin told reporters "I didn't know I was on their timetable", referring to the progressive leftists, whose rebellion has threatened to irreparably damage the Biden presidency.

Progressives, led by Washington's Pramila Jayapal, say they have enough votes in the House to sink the infrastructure package, which has already passed the Senate, but Pelosi appears undeterred. "The plan is to bring the bill to the floor," she told reporters after returning from a White House meeting with Biden and Schumer yesterday afternoon.

As for the larger spending bill, a few compromise numbers have been thrown around. One reporter said during yesterday's WH press conference that the heard $2.5 trillion might be a workable number. Manchin has meanwhile hinted he could back $1.5 trillion while Sinema has been more circumspect. The debt ceiling has already passed the House, but remains stuck in the Senate, where Minority Leader Mitch McConnell has managed to get his entire caucus to vote against it, while Dems have said they are unwilling to use the same "reconciliation" short-cut to get the debt-ceiling deal done (which would use up valuable political capital).

As Thursday begins, get ready for another day of non-stop headlines on every marginal development on the Dems' negotiations, as talks grind on.