On The Money — Democratic divides deepen as progressives hold the line

Happy Tuesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: digital-stage.thehill.com/newsletter-signup.

Today’s Big Deal: Liberals are not happy about a pending vote on the bipartisan infrastructure bill and what they call a broken deal. We’ll also look at new clarity about how soon the U.S. could default on its debt and blow to Jerome Powell’s renomination bid.

But first, keep an eye on your mail.

For The Hill, we’re Sylvan Lane and Aris Folley. Write to us at slane@digital-stage.thehill.com or @SylvanLane and Aris Folley at afolley@digital-stage.thehill.com or @ArisFolley. You can reach our colleague on the Finance team Naomi Jagoda at njagoda@digital-stage.thehill.com or @NJagoda and 

Let’s get to it.

Left warns Pelosi they’ll take down Biden infrastructure bill

Liberals on Tuesday fired a shot across the bow at Democratic leaders by warning that a bipartisan infrastructure bill cannot pass the House as long as Senate centrists remain noncommittal on the larger social benefits package at the heart of President Biden’s agenda.

• The threat is the latest challenge facing Speaker Nancy Pelosi (D-Calif.) and other party leaders, who have scheduled a Thursday vote on the Senate-passed $1.2 trillion public works proposal. 
• The timeline reflects Pelosi’s promise to moderate House Democrats, who have sought to divorce the bipartisan infrastructure bill from the larger and more divisive “family” benefits package.
• But in a sign that the infrastructure bill would be doomed Thursday, progressives are sticking with their long-held insistence that Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) first commit to supporting the larger package before the liberals vote in favor of the more popular bipartisan measure.

And they say they have the numbers to sink it.

“If she were to call the bill, it will fail,” Rep. Jan Schakowsky (D-Ill.), a close ally of Pelosi, said while leaving a closed-door House Democratic Caucus meeting. “Not because the [Congressional] Progressive Caucus, people like me, aren’t willing to vote for it. But … we had an agreement that we were going to get these two pieces [together].”

The Hill’s Mike Lillis and Scott Wong have the latest here.

Don’t count out Pelosi: Pelosi, a master vote counter, has built a reputation for never bringing bills to the floor without knowing for certain they will pass — a stipulation she has repeatedly said also applies to the infrastructure bill. 

For that reason, “it was not entirely clear” if leaders intend to push through with their plan to bring it to the floor on Thursday, Schakowsky said.

“I’ve never seen her bring a bill to the floor that’s going to fail,” she said. “It will fail if she does.”

A historic challenge: Mike and Scott have more here on how Pelosi is approaching the heaviest legislative lift of her career, which is likely winding to a close, with some of the highest stakes she’s ever faced.

LEADING THE DAY

Democrats scramble for strategy to avoid default

Senate Democrats are scrambling to find a strategy to avoid a national default next month when the Treasury Department says it will exhaust its borrowing authority, which could put stock markets into a tailspin.

Democratic senators say they’re discussing a variety of options to extend the debt limit after their first two attempts to do so this week failed in the face of Republican opposition.

• GOP senators on Monday evening blocked a measure to fund the government and suspend the debt ceiling, and then stopped another debt ceiling hike from advancing Tuesday by unanimous consent. 

• While Democrats say they still have a bunch of cards to play, they don’t have many details to offer and just about all the options on the table require a degree of support from Senate Republicans.

• Meanwhile, Republicans say they won’t provide any help to raise the debt limit and insist that Democrats use the budget reconciliation process to do it by themselves. A budget reconciliation bill can’t be filibustered.

“There are lots of options, lots of opportunities. But at the end of the day let’s remember that Mitch McConnell is responsible for filibustering this,” said Sen. Sheldon Whitehouse (D-R.I.).

Yet with Democrats holding the White House and control of Congress, it may be hard to make that argument stick. The Hill’s Alex Bolton explains here.

Yellen, Democrats chastise GOP as debt default countdown starts: The standoff over the debt ceiling came to a head Tuesday during a Senate Banking Committee hearing with Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell.

• Yellen urged Republicans to take responsibility for their role in adding trillions to the national debt and raise the federal borrowing limit to prevent an economic disaster.
• She also informed lawmakers that the U.S. is on track to default on Oct.18, pinning a specific “X-date” for the first time since the debt ceiling was reimposed Aug. 1.

“It would be disastrous for the American economy, global financial market and millions of families and workers whose financial security would be jeopardized by a delay in payments,” Yellen said at the hearing.

“Even coming very close to the deadline without raising the debt ceiling can undermine the confidence of financial markets in the creditworthiness of the United States.”

Despite raising the debt ceiling three times under Trump, Republicans have insisted that Democrats must raise the federal debt limit on their own. But Republicans accused Democrats of only seeking GOP votes to spread the blame for the future debt caused by their economic plans, even though raising the debt ceiling is necessary to cover past expenses.

“I understand why, politically, you folks want to have Republican fingerprints on the spending fiscal knife. I get that,” said Sen. John Kennedy (R-La.). “But is your politics so important that you’re going to gamble here on the sovereign debt of the United States when you have a very, very simple solution that you refuse to take?”

I’ll take you there.

 

‘DANGEROUS MAN’

Warren says she’ll oppose another term for Powell 

Sen. Elizabeth Warren (D-Mass.) said today that she will oppose Federal Reserve Chair Jerome Powell’s renomination if President Biden reappoints him, saying he’s a “dangerous man” to have at the helm of the central bank.

Warren told Powell, a Republican, during a Senate Banking Committee hearing that she has “grave concerns” about his support for loosening financial rules.

“Renominating you is gambling the next five years of a Republican majority on the Fed board and a Republican chair who has regularly voted to deregulate Wall Street won’t drive this economy off a financial cliff again,” Warren said, evoking the 2007-08 financial crisis.

“With so many qualified candidates for this job,” she continued, “this risk is not worth taking.”

Read more.

 

HOLD ON, WE’RE GOING HOME

Home prices jump by record amount

Home prices in the U.S. rose at a record pace in July, as buyers bid up prices in a limited-supply market.

The S&P CoreLogic Case-Shiller 20-city home price index increased 19.9 percent in July compared to the same month in 2020, marking the biggest increase since record-keeping began in 2000. The gains follow a 19.1 percent year-over-year jump in June.

Prices hit all-time highs in July in 19 of 20 cities analyzed. The one outlier city was Chicago, where prices tracked sit at just 0.3 percent below their 2006 peak.

The increased prices are making it more difficult for younger potential buyers to purchase homes. As a result, first-time homebuyers decreased to 29 percent last month, which was the lowest rate tracked since January 2019, according to the National Association of Realtors.

Read more.

Good to Know 

The frantic sprint on Capitol Hill to prevent a government shutdown, avoid a debt default and pass trillions of dollars in infrastructure spending could make for a tumultuous week on Wall Street.

Here’s what else have our eye on:

• Ford Motor Company has announced plans to bolster its electric vehicle footprint in the U.S. by investing billions in three new battery plants and a pickup truck factory — generating 11,000 jobs across Tennessee and Kentucky.
• The U.S. Postal Service is anticipating slower operations, telling USA Today that the agency is going to be implementing new operating standards that may backup mail deliveries and pickups.

 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.

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