Congress braces for spending fights amid threat of government shutdown

Lawmakers are bracing for budget battles later this month when they return to Washington, where they’ll be racing against the clock to pass trillions of dollars in spending while the threat of a government shutdown looms.

Before October, the House is aiming to pass two major pieces of legislation: a roughly $1 trillion bipartisan infrastructure bill and a forthcoming $3.5 trillion spending package backed by Democrats that would advance key parts of President Biden’s economic agenda. They’ll also need to pass government funding legislation to avoid a shutdown on Oct. 1. 

House leadership has set a Sept. 27 deadline to vote on the bipartisan infrastructure bill as committee chairs rush to finish drafting their portions of the larger spending package by Sept. 15 to hold a floor vote shortly thereafter. Progressives have threatened to block the bipartisan bill if it comes to the floor before the Democratic-only measure that focuses on issues such as health care, climate change and education. 

The party also faces a tough challenge sticking together on the reconciliation package in the Senate, where it can’t afford any defections. This past week, Sen. Joe Manchin (W.Va.) urged fellow Democrats to hit “pause” on the spending bill and warned in a strongly worded op-ed that he wouldn’t back the proposed level of spending “without greater clarity about why Congress chooses to ignore the serious effects inflation and debt have on existing government programs.” 

The intraparty squabbling has set the stage for what could be a bruising couple of weeks ahead for the Democratic Party.

There is also the Sept. 30 deadline to avoid a government shutdown.

Neither the House nor Senate has passed the 12 annual appropriations bills necessary to fund the government starting Oct. 1, when the new fiscal year begins. That increases the odds that Congress will pass a continuing resolution, allowing the government to keep funds flowing at current spending levels as lawmakers carry on with negotiations over a longer-term spending bill. 

Zach Moller, a former Senate Democratic budget aide who is now director of the economic program at the centrist think tank Third Way, said lawmakers are staring down what will be “probably one of the craziest three-week stretches” they’ve seen in a while.

While the House has passed a majority of the annual appropriations bills, the Senate hasn’t brought any to the floor for a vote.

Last month, the Senate Appropriations Committee advanced its first three spending bills for fiscal 2022. But that was met with swift opposition from Senate Minority Leader Mitch McConnell (R-Ky.), who warned that Republicans won’t back the bills without a larger deal on government spending. 

At the same time, both parties are locked in an increasingly high-stakes game of chicken over the nation’s borrowing limit.

Senate Republicans have said they will not vote to raise or suspend the debt limit if Democrats pursue their $3.5 trillion spending package, panning the partisan plan as “reckless” and potentially damaging to the nation’s economy during the ongoing pandemic.

Meanwhile, Democrats have instead touted the spending package as a “game-changing” investment in infrastructure and say the legislation would create thousands of jobs.

The debate is now playing out amid the backdrop of an August jobs report released by the Labor Department on Friday showing lackluster job gains amid a surge in coronavirus cases.

Treasury Secretary Janet Yellen recently said Congress will need to take action on the debt ceiling in the next few weeks to avert a default.

In a move that surprised many budget watchers, Democrats left out language from their budget resolution to increase the debt ceiling, essentially laying the groundwork for the nasty fight that lies ahead.

With its hands full with the reconciliation package this month, Moller predicted the House would not take immediate action to address the debt ceiling, but he added that the Senate might.

“We’ll see if the continuing resolution includes another suspension of the debt limit or not or how that is negotiated,” he said. “But that’s going to be a very high-level negotiation between Biden and Pelosi and [Senate Majority Leader Charles] Schumer [D-N.Y.] and McConnell.”

The GOP’s strategy to leverage votes on the debt ceiling in exchange for spending reforms comes years after the party made similar demands during a standoff over the national borrowing limit in 2011.

Congress didn’t reach a solution to the issue until the eleventh hour, and the nation later saw its creditworthiness downgraded by S&P for the first time, roiling financial markets.