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Congress faces 3 major economic deadlines before the year ends: Debt limit, infrastructure and government funding

The flurry of activity in Congress will not wane soon.

Lawmakers have spent their early fall jumping among high-stakes agenda items. The breakneck pace will continue in the coming months, and Washington’s ability to meet several upcoming deadlines could hold implications for the country for years to come.

The first target comes Oct. 18, the estimated date when the U.S. will no longer be able to pay its bills unless Congress raises or suspends the debt ceiling, according to Treasury Secretary Janet Yellen. Democratic leaders also want to pass both a bipartisan infrastructure bill and a larger plan to invest in the social safety net before major transportation funding programs expire at the end of October.

Adding to the to-do list, Congress will have to act by Dec. 3 to prevent a government shutdown.

Here’s what’s ahead as lawmakers try to beat the looming deadlines.

Debt ceiling showdown

If Congress fails to address the debt ceiling, it could roil financial markets, raise the cost of borrowing and increase the threat of a first-ever U.S. default. That worst-case scenario could cost the country jobs and damage the global economy.

While Yellen gave congressional leaders an estimated Oct. 18 deadline, she noted the Treasury could run out of ways to pay its bills either before or after the date. How lawmakers will resolve the crisis is unclear.

Democrats have made several attempts to suspend the debt ceiling in recent weeks. Senate Republicans have stymied every effort to do so and will likely block an attempt this week by Majority Leader Chuck Schumer, D-N.Y., to approve a House-passed bill to suspend the borrowing limit.

Republicans have argued Democrats should raise or suspend the ceiling on their own as they prepare to approve a massive bill to invest in the social safety net and climate policy. Democrats, including President Joe Biden, have argued the GOP has taken a dangerous stance for political gain as the U.S. risks economic turmoil.

Failure to raise the debt ceiling would not only shut the door on future spending but also prevent the U.S. from paying for its current obligations. Democrats have pointed to the fact that Republicans joined them in approving trillions of dollars in emergency coronavirus aid since the last borrowing limit suspension in 2019.

Congress has raised or suspended the debt ceiling 78 times since 1960, according to the Treasury. While addressing the borrowing limit is typically uneventful, Republicans have used the deadlines as political leverage more often in the last decade. With the 2022 midterms coming up, Republicans see saddling Democrats with the task as part of their strategy to take back the House and Senate.

Democrats may have to raise the ceiling on their own through budget reconciliation, a process that allows them to approve legislation without a Republican vote in the Senate. The party may be able to do so in a bill separate from its current budget plan, which would invest in the social safety net and green energy.

Democrats hope Republicans will yield ground as the Oct. 18 deadline approaches, but GOP leaders have given no indication they will change their stance.

Biden’s economic plans

Democrats have set an Oct. 31 target to pass both planks of Biden’s economic agenda. The date acknowledges one hard deadline: Funding for some surface transportation programs would lapse at the end of the month if Congress does not approve the infrastructure bill, which would refresh the money for five years.

Democratic leaders have acknowledged they will need to approve the bipartisan plan and their broader budget proposal together in order to pass both. It means the Oct. 31 deadline for the House to greenlight the Senate-passed infrastructure bill is also the target for both chambers to approve the larger piece of Biden’s agenda.

Biden and congressional leaders more explicitly tied the two plans together after House progressives said they would not vote for the infrastructure legislation until the social spending bill gets through the Senate. The party would need to agree to a deal and write final legislation in the coming days to beat the deadline.

Democrats walk a fine line in trying to craft a plan that the most conservative and liberal members of their party alike will support. They will likely have to trim the $3.5 trillion price tag first proposed for the bill.

Progressives already considered that figure a compromise. Sen. Joe Manchin, D-W.V., has said he will not back an investment of more than $1.5 trillion.

Democrats will need all 50 members of their Senate caucus on board to pass a bill. They appear to be short at least two votes: Manchin and Sen. Kyrsten Sinema, D-Ariz.

Biden, who planned to sell his economic plans in Michigan on Tuesday, has held separate talks with House centrists and progressives this week.

The success of the negotiations will shape whether Congress can pass both a refresh of transportation, broadband and utilities, and what could be the biggest expansion of federal benefits in decades.

The infrastructure plan includes more than $500 billion in new spending on roads, bridges, airports, public transit, broadband, water pipes and the power grid, among other measures. Biden and congressional leaders view it as complementary to their larger proposal.

The budget legislation as first proposed would make child care more affordable, expand paid leave and lower the Medicare eligibility age while adding dental, vision and hearing coverage to the government program. It would establish universal pre-K, make two years of community college free and extend a more generous child tax credit created as part of the coronavirus aid package Democrats passed this year.

It would offset spending by increasing taxes on corporations and the wealthiest Americans, among other revenue measures.

Failure to pass the social spending legislation will cause Democrats to run up against other deadlines to renew their priorities. For instance, the popular child tax credit expansion will only be available in the 2021 tax year.

Shutdown looms … again

Congress narrowly beat an end of September deadline to prevent a government shutdown. Lawmakers did not give themselves much time before they have to act again.

A bill signed by Biden last week funds the government through Dec. 3. Congress will have about two months to agree on and pass a longer-term appropriations bill.

Finishing a funding plan in time is no certainty. As Democrats move to raise or suspend the debt ceiling and pass both pieces of Biden’s economic plan, the coming weeks will be packed with activity.

As the debt limit process shows, the approach of the 2022 midterms also raises the incentives for political fights in Congress over usually mundane issues.
Source: CNBC

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