Wake Up To Politics - October 25, 2021

Good morning! It’s Monday, October 25, 2021. Election Day 2024 is 1,109 days away. Election Day 2022 is 381 days away.

Speed read: Where the Democratic spending talks stand

The biggest political story of the moment continues to be the Democratic push to pass President Biden’s top two legislative priorities — a sweeping economic spending package and a bipartisan infrastructure bill.

Lawmakers are hoping to make significant progress this week on both pieces of legislation. Here’s a quick briefing to get you caught up:

What happened this weekend: Negotiations continued over the size and scope of the spending package. President Biden hosted Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) for breakfast at his Delaware home on Sunday in an attempt to come to a final agreement on a few lingering disagreements.

“We have 90% of the bill agreed to and written. We just have some of the last decisions to be made,” House Speaker Nancy Pelosi (D-CA) said Sunday on CNN’s “State of the Union.”

The new deadline: Democratic leaders have set — and missed — a number of deadlines for themselves throughout the legislative process for these two bills. The latest one? According to CNN, Pelosi is hoping to hold a House vote on Wednesday or Thursday on the bipartisan infrastructure package.

Before that can happen, though, moderate and progressive Democrats will need to agree to a framework for the larger spending package. The White House is hoping a framework will be reached, and the bipartisan bill passed, before Biden leaves for a global climate summit in Europe on Thursday, so the president can show the world he’s making progress on his climate goals. Democrats also want to pass the infrastructure bill before the Virginia and New Jersey gubernatorial elections on November 2.

How big will the spending package be: According to Punchbowl News, Manchin is pushing for $1.5 trillion. Biden, Schumer, and other top Democrats are pushing for $2 trillion. A likely compromise, then? A price tag right in the middle: $1.75 trillion.

What’s still in it: According to Politico, here are some of the key provisions that are still expected to be part of the package (although many have been slimmed down to fit the new price tag)...

• An extension of the expanded Child Tax Credit (but for one year instead of four)
• Medicaid expansion in states that didn’t expand coverage under Obamacare (but for three years instead of permanently)
• Funding for public housing repairs and housing vouchers for low-income families (but totaling $175 billion instead of $300 billion)
• Funding to support home care services for elderly Americans and those with disabilities (but totaling around $200 billion instead of $400 billion)
• Two years of universal pre-K
• Clean energy tax credits

What’s out: Here are some of the provisions that have been slashed entirely from the bill...

• Two years of tuition-free community college for all Americans (likely to be replaced by a small boost to Pell grants to help students attend all types of college)
• The Clean Electricity Performance Program, which would have incentivized utilities to use clean energy instead of coal and natural gas

What’s on the bubble: The two policies Democrats are still going back and forth on are expanding Medicare to cover dental, hearing, and vision, and a proposal to guarantee paid family and medical leave for all U.S. workers.

There are shrunken-down measures proposed for both — $800 Medicare vouchers to help cover dental costs or four weeks of paid leave instead of 12 — but it is possible that Democrats could cut one of the two costly policies entirely in order to get the package under $2 trillion.

How will it be paid for: Democrats had originally hoped to pay for the spending package by raising tax rates on wealthy Americans and corporations, but Sen. Kyrsten Sinema (D-AZ) has stood in the way of any rate hikes. According to the Washington Post, here are the financing measures expected to be included instead:

• Tougher tax enforcement by the IRS (expected to net $700 billion)
• A new global minimum tax to ensure companies around the world pay a minimum tax rate of 15% (expected to net $500 billion)
• An annual tax on the unrealized capital gains of America’s billionaires (expected to net $500 billion)
• A “stock buyback tax,” which would tax the amount corporations spend to buy their own stock (expected to net $275 billion)
• A requirement that all domestic companies pay a minimum 15% tax rate (expected to net $150 billion)

What else you should know

— “Jan. 6 protest organizers say they participated in ‘dozens’ of planning meetings with members of Congress and White House staff” Rolling Stone

— “The Facebook Papers may be the biggest crisis in the company's history” CNN

— “‘We don’t have time to be tired’: Obama tries to jolt Virginia Dems at McAuliffe rally” Politico

— White House delays release of JFK assassination files ‘to protect against identifiable harm’” CBS News

Policy Roundup: Economics

A weekly briefing from Wake Up To Politics economic contributor Davis Giangiulio.

The Federal Reserve tightened their trading rules for officials last week, after a scandalous month surrounding members’ personal investments. It all began early last month when the Wall Street Journal reported Dallas Fed President Robert Kaplan made “multiple million-dollar-plus stock trades in 2020,” and Bloomberg reported Boston Fed President Eric Rosengren also made big trades while shaping the pandemic’s monetary response.

Fed Chair Jay Powell, who said he didn’t know of the trades, opened an inquiry into the Fed’s rules on trading after pressure from some members of Congress. While both Kaplan and Rosengren stepped down at the end of September, there was a push for not just the makeup of the Fed to change after the scandal, but also its rules.

On Thursday, the Fed announced just that. Fed officials will no longer be able to hold individual stocks, securities, bonds, or investments in agency securities. “These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve," said Powell in the statement. The scandal comes at a critical moment for Powell, who is trying to secure a second term as chairman, despite growing progressive opposition.

A new study by the Federal Reserve Bank of San Francisco (FRBSF) suggests the American Rescue Plan (ARP) is adding to inflation. The report expects the Democratic stimulus package passed in March will add about 0.3 percent to core inflation this year, and about 0.2 percent in 2022. The report also says the package will add 0.6 percent to the vacancy-to-unemployment ratio, which is a labor shortage indicator as it measures the number of open jobs per unemployed person.

The report may seem like vindication for those who opposed the plan like Larry Summers, who warned it could lead to inflation. And it may add fuel to the fire of opposition to President Joe Biden’s new spending plan, which critics say will only increase inflation. However, the FRBSF study says they view the inflation being caused as “transitory” and depends on “the level of economic slack,” how close the economy is to producing its capacity.

The deficit declined in fiscal year 2021, down from its 2020 peak. The federal deficit measured $2.8 trillion, down from last year’s record $3.1 trillion. 2021’s figure is the second-largest ever. The figure was lower than estimates earlier in the year suggested, primarily because of greater tax revenue than expected. The deficit in September alone was the smallest since January 2020, before the pandemic altered government spending, but that number may go up again if Congress passes new large spending measures soon.

Daybook

All times Eastern.
WHITE HOUSE
President Joe Biden will wake up in Wilmington, Delaware, where he spent the weekend. At 8:30 a.m., he will receive his daily intelligence briefing. At 9:40 a.m., he will depart Delaware for New Jersey, where he will arrive at 10:20 a.m.

At 11:20 a.m., Biden will visit East End Elementary School in Plainfield, New Jersey, to promote his “Build Back Better” agenda. At 1:45 p.m., he will deliver remarks on his “Build Back Better” agenda and the bipartisan infrastructure deal at the NJ TRANSIT Meadowlands Maintenance Complex in Kearny, New Jersey.

At 2:55 p.m., the president will depart New Jersey, arriving at 4:05 p.m. at the White House. Finally, at 5:30 p.m, he will welcome a delegation from the Orthodox Christian Church to the White House and meet with the worlwide leader of the church, His All-Holiness Ecumenical Patriarch Bartholomew I.

First Lady Jill Biden is in Charleston, South Carolina. At 2:45 p.m., she will visit the Hollings Cancer Center at the Medical University of South Carolina for an event marking Brest Cancer Awareness Month. At 4:30 p.m., she will visit Joint Base Charleston and host an event with military families as part of her “Joining Forces” initiatives.

White House Principal Deputy Press Secretary Karine Jean-Pierre will hold a press gaggle aboard Air Force One during the flight to New Jersey.

CONGRESS The Senate will convene at 3 p.m. The chamber will vote at 5:30 p.m. to confirm two Biden nominees: Douglas Parker, to be Assistant Secretary of Labor for Occupational Safety and Health, and Myrna Perez, to be a U.S. Circuit Judge for the Second Circuit.

The House will convene at 12 p.m. The chamber is scheduled to consider four bills under “suspension of the rules”:

• H.R. 4111, the Sovereign Debt Contract Capacity Act
• H.R. 2989, the Financial Transparency Act of 2021
• H.R. 2265, the Financial Exploitation Prevention Act of 2021
• H.R. 5142, to posthumously award a Congressional Gold Medal to the 13 U.S. service members who were killed during the Afghanistan evacuations in August

COURTS

The Supreme Court will not meet today.