So the Democrats control the White House. They control the House of Representatives and they control the United States Senate. They don't really have to worry about Republicans for any sort of reconciliation issue because they can get reconciliation passed without Republican votes. Reconciliation under the rules of the United States Senate bypasses the filibuster. Let me explain this one to you. This is part of what's called the Byrd Rule. When Robert Byrd, the KKK Democrat, was in the US Senate, he decided, he was able to get a rule passed that once a year, now the Senate parliamentary says possibly twice a year if you have a budget resolution, you can pass something to reconcile appropriation items with the budget. The key is it must have a positive impact on the budget and does not change fundamentally public policy.
So for example, the Democrats wanted to throw amnesty into reconciliation. The Senate parliamentary said that would fundamentally change public policy therefore you can't do it. They want to raise some taxes. They want to raise the corporate tax. They want to raise the individual income tax. They want to cut some spending. They want to spend a lot. They're claiming they have pay-fors, that is, their projections claim that things will be paid for, even though they won't. Joe Manchin from West Virginia has said, “wait a second, we've already spent several trillion on COVID. We've got a $1.5 trillion bipartisan infrastructure bill. And now they want to spend 3.5 trillion on a grab bag of goodies. No way, no more than 1.5 trillion.”
One of the ways that they were going to pay for their spending to get it through reconciliation was a prescription drug benefit alteration. They were going to essentially raise some costs on people. Some Democrats in the House have balked at that. Moderates have said, “no way, I'm not voting for this.” You can only lose three Democrats in the House. So now Kyrsten Sinema, the Senator from Arizona has gone to Joe Biden and said, “Joe, I'm going to vote for your reconciliation package, but only if you first pass it by September 27th, the bipartisan infrastructure bill. “Joe Biden says, “well, that's not on me, that's on Nancy Pelosi.” So Sinema has echoed it. Now, House moderates have said, “if you don't pass the bipartisan infrastructure bill by September 27th, the big package dies.”
Now, Alexandria Ocasio-Cortez has come out and said, “if you do pass the bipartisan infrastructure bill, we're killing it.” So you've got the circular firing squad now among the Democrats. The moderate say, “pass the bipartisan infrastructure bill or else we won't vote for the other when it comes up” and the progressives saying, “we will not pass the one without the other.” And all the while Joe Manchin is saying, “I'm sorry, I'm not going to vote for a $3.5 trillion plan.” It's dead. It cannot pass the Senate without Joe Manchin's vote.
So what do you do? Well, they've decided they're going to try to raise the debt ceiling. See, here's part of the problem. They have to raise the debt ceiling because based on the projected spending in the Democrats plan, it's going to escalate. It's going to go through the roof. This is a real problem for the Democrats here. The Democrats, cannot pass their massive spending bill without having raised the debt ceiling because they can't spend the money. They'll hit the debt ceiling. Congress says we only will allow a certain amount of debt of the federal government. I think it's like 29, 30 trillion. Yes. Trillion with a TR, trillion dollars. And when the Democrats pass the rest, they're going to blow through it. So they got to raise the ceiling with Manchin's saying, “I'm only going to allow 1.5 trillion in the package.”
Meanwhile, Republicans are saying, “we're not going to raise the debt ceiling. You're going to have to do it through the reconciliation process.” Why? The Republican logic here is that if you wish to raise the debt ceiling, you have to do it yourself because you're raising it to capture your spending. And it's not going well for the Democrats.
I want to read for you from Punchbowl News. A lot of the good writers at the Politico Playbook left and they started Punchbowl News. I want to read for you part of this, because it really sets the stage for what's happening on Capitol Hill.
Here’s the only assessment one can make right now about Democrats on Capitol Hill and at the White House: This is a party that, at the moment, is a bit adrift and doesn’t seem to know how to turn its bold ideas into legislation that can actually pass. That is a big problem when you’ve got the razor-thin margins that Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer have. Forget blowing up the filibuster. There are few issues that a simple majority of House and Senate Democrats agree on right now.
But even more worrisome for our political system and financial markets is that caught up in the Democrats’ struggle to turn their lofty goals into law is government funding and the debt limit. We are careening into a legislative crisis. The government will shut down in nine days and estimates indicate we will reach the nation’s borrowing limit in one month.
We’re going to take this topic by topic this morning. This is fresh reporting from late Monday evening in the Capitol. And the sheer uncertainty is evident from top to bottom.
→ The House will vote today on a short-term government funding bill coupled with language to hike the debt limit until 2022. Republicans are going to block this in the Senate. If you still think GOP senators are going to cave, we can’t help you. Republicans from Sen. Mitt Romney (R-Utah) to Sen. Shelley Moore Capito (R-W.Va.) made it very clear on Monday they were in lockstep with Senate Minority Leader Mitch McConnell in blocking a debt limit hike.
So what’s Plan B? Glad you asked -- because we did too. It is an obvious question and no one has an answer.
We asked Pelosi Monday evening what will happen if Senate Republicans block the combo CR-debt limit bill Democrats have proposed.
“Well, let’s hope they won’t,” Pelosi responded to us. When we noted that Republicans have repeatedly said they’re going to reject it, including again on Monday, she said, “Well, let’s hope they don’t.” They will.
Now, all of this may sound like gobbly gook to you, but let me explain this to you, in just raw political terms. The Democrats can't figure out among themselves what they want in the overall package. They can't figure out how to restrain the spending to satisfy Joe Manchin and they can't figure out how to raise the debt limit without Republican votes, because they don't want to own it completely. They're afraid it's going to be a political issue.
Mitch McConnell knows all of this. There's a lot of discussion about Republicans ousting Mitch McConnell. Donald Trump thinks the era of Mitch McConnell must come to an end. You know, I used to, but he's not going anywhere, at least not right now, not with Donald Trump pushing him out.
Here is the thing you’ve got to understand. McConnell knows how this game is played and right now, you want him in this position because he's got a united Republican front saying they're not going to raise the debt limit. If the Democrats can't do it in the reconciliation package, McConnell can force the concessions. He's not going to do an all-or-nothing approach. McConnell is not going to say “yes, we will gladly raise the debt ceiling with no strings attached.” He's not going to do that.
And remember, if the Democrats don't pass the debt ceiling increase in reconciliation, they're not going to be able to pass it without Republican help. Republicans aren't going to give them what they want. The Republicans are standing firm. It's one of the few times that Republicans are willing to fight. The reason the Republicans are willing to fight is they know the Democrats are really divided right now.
I've been telling you guys for a while and it always falls on deaf ears, but I've been telling y'all for a while that the Democrats are on the verge of a major crack up. The media has always been obsessed with the Republican’s in-fighting. So John Eastman, Donald Trump's lawyer wrote a memo showing how he could hang onto power and essentially reject the electoral college. You do not have to know much about the American Constitution to understand that he was full of crap, but he represented Donald Trump. He had to come up with something. He was a lawyer. He was doing his best to try to thread a needle that does not work. The dog does not hunt, as some might say.
Mike Lee, the foremost expert on the Constitution in the United States Senate laughed Eastman's memo out of the Senate, said, “there's no way." This is impossible.” Mike Pence's lawyers, the Senate parliamentarian, former Vice President, Dan Quayle all said, there's no way this happens. It was rejected. The media wants you to focus on Eastman's memo and the supposed coup that Donald Trump was trying to mount because they never ever, ever, ever, ever want to focus on Democratic divisions. The Democrats are actually the ones on the verge of a crack up at this moment. The Democrats are divided between the progressives and the moderates. The Democrats cannot get the Democrat’s agenda passed. They cannot get their President's agenda passed through Congress.
They cannot do it with themselves even though the filibuster is not an obstacle. They can't do it because they are divided increasingly between the progressives and the moderates. And the progressives feel like they are on the rise. The progressives feel like it is their party now. And the progressives intend to make the moderates bend the knee. The moderates know they cannot bend the knee to the progressives in the Democratic Party, because if they do, they're toast. In fact, the moderates actually have truth on their side that if the Democratic Party goes further to the left, they're going to lose more and more people. They're starting to lose Hispanic voters. They're starting to lose young black men. They're starting to even lose college-educated people again. There's been a 12-point swing in the polling average of college-educated people moving back to the GOP in response to the Democrat’s growing progressivism.
So for the progressives to hold up the entire budgetary process in order to get even more spending and more government expansion, that's not going to work for the public. You can't expect the Republicans to help them when their spending goal is to fundamentally transform American society. On top of that, you can't expect the moderate House Democrats to sleep well at night thinking they're helping you fundamentally transform America when most Americans do not want America fundamentally transformed. The math does not add up. The fighting is about to get really ugly on the Democratic side without any Republicans participating.