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PRESENTED BY

BY JOHN BRESNAHAN, ANNA PALMER AND JAKE SHERMAN
WITH MAX COHEN AND CHRISTIAN HALL

THE TOP

Good Monday morning. Welcome back, Congress. 

There are three massive topics we’re going to review this morning:

→ The continuing struggle to pass President Joe Biden’s legislative agenda as Democratic moderates and progressives clash. There’s a possibility that Democrats fail to pass either the $1 trillion bipartisan Senate infrastructure bill or the $3.5 trillion reconciliation package. This would be a catastrophe for Biden and the entire party heading into 2022. We don’t think that’ll happen, but the “two-track process” ain’t running well on either track right now.

→ The government shutdown and debt limit fight, in which Democrats are hamstrung by Republicans’ refusal to help lift the nation’s borrowing cap. 

→ The Senate parliamentarian’s ruling — released Sunday night — that Democrats can’t include a pathway to citizenship for millions of Dreamers, TPS holders, farm workers and other undocumented immigrants in reconcilation was a serious blow to pro-immigration advocates. Democrats are now considering other potential solutions, but these don’t resolve the pathway to citizenship problem.

There are lots of dynamics we’ll review here as legislating hits a fever pitch this month. But on all three topics, you’re going to hear some Democrats talk about how now is the time to blow up the legislative filibuster. It won’t happen, but the anger on the left is going to reach a boiling point quite quickly during the most important month for legislating in some time.

JOIN PUNCHBOWL NEWS IN-PERSON TOMORROW

Join us: Rep. Joyce Beatty (D-Ohio), chair of the Congressional Black Caucus, will join us tomorrow, Sept. 21 at 9 a.m. for an in-person conversation at The Roost on Capitol Hill. In addition to news of the day, the conversation will focus on the uneven recovery for Black business owners coming out of the Covid-19 pandemic. The event is part of our “Road to Recovery” series sponsored by Goldman Sachs 10,000 Small Businesses Voices.

Ohio-based business owners Letha Pugh and Haleema Shafeek will join afterward for a fireside chat. Space is limited. You can also watch virtually. RSVP here.

SHUTDOWN CITY

On government funding, the debt limit and the struggle to pass both

The House and Senate are both in session today simultaneously for the first time since the end of July. Lawmakers have just 10 days to fund the government ahead of a potential shutdown; federal agencies run out of money on Sept. 30. Congress has to raise the nation’s debt limit by next month as well. 

Democratic leaders and the White House face two key decisions right away: What to do on the debt limit, and whether to allow a House floor vote on the $1 trillion bipartisan Senate infrastructure bill next week? Let’s dig into both.

→ At noon today, the House Rules Committee will meet to consider a short-term funding bill that keeps federal agencies open until Dec. 3. This gives congressional leaders and the White House another two months to come to a deal on FY 2022 funding. But that’s dependent on finding bipartisan agreement on a lot of other issues, which doesn’t seem likely right now.

Speaker Nancy Pelosi and House Democratic leaders are expected to attach a debt-limit increase that will extend past the 2022 elections to the funding resolution.  

However — and this is a huge however — Pelosi has not formally confirmed that she will twin government funding and a debt-limit increase of Sunday night. So we await her announcement. Pelosi may ultimately decide on another option, possibly even calling for a separate, stand-alone up-or-down vote on the debt limit. It’s unclear right now.

Pelosi did make clear that she isn’t ready to concede that the debt-limit increase will be a partisan vote, despite the fact that Senate Minority Leader Mitch McConnell and his GOP colleagues have vowed to block any stopgap funding bill that extends the Treasury Department’s borrowing authority.

Pelosi in a Sunday “Dear Colleague” letter: “In 2019, when supporting suspending the debt ceiling, Leader McConnell stated that doing so ‘ensures our federal government will not approach any sort of short-term debt crisis in the coming weeks or months. It secures our nation’s full-faith and credit and ensures that Congress will not throw this kind of unnecessary wrench into the gear of our job growth and thriving economy.’” 

More Pelosi: “The debt limit is a shared responsibility, and I urge Congress to come together, in that spirit, on a bipartisan basis as it has in the past to protect the full faith and credit of the United States.”

None of this matters to McConnell, though. He has made his position on the debt limit known, and it will be up to Democrats to respond.

Even as the drama over the debt limit unfolds, staffers on the House and Senate Appropriations panels were scrambling this weekend to complete work on the CR, including anomalies — continuing programs — that the White House wants to see funded. 

There’s a couple other outstanding issues here too. The White House has sought more than $6 billion to cover the costs of resettling tens of thousands of Afghan refugees. Democrats were working through that request this weekend.

Disaster aid was still being worked out too. The White House is seeking $20 billion to cover the federal response to hurricanes and wildfires. Again, this was being worked out on Sunday.

There have been some calls to add as much as $1 billion for Israel’s Iron Dome defense system to the CR. But House and Senate Democrats weren’t in agreement on this. There are Democrats in the House who would likely balk at this too, so with a three-vote margin, it’s problematic.

THE BIDEN AGENDA

House Budget won’t act this week on reconciliation as Dems battle

We have some news here: The House Budget Committee will not mark up the Democrats’ reconciliation package this week. This means that the $3.5 trillion reconciliation package won’t be ready for the House floor by next week. We never thought it was going to be, but this just makes it official.

So this gets us to another decision point. Will Speaker Nancy Pelosi now allow a floor vote on the $1 trillion bipartisan Senate infrastructure bill next week even though the reconciliation package isn’t finished? This is a huge moment for both efforts, as Democrats have been saying for months that one can’t pass without the other. 

Back in August, when the House passed the budget resolution clearing the way for reconciliation, it also adopted a rule governing floor debate for the bipartisan infrastructure bill. Pelosi bought off Democratic moderates who wanted an immediate infrastructure vote by promising to take up the Senate-passed bill by Sept. 27. There was some hope among Democrats at the time that the infrastructure package would be done — or nearly done — by then. That’s not happening. It may be weeks before the reconciliation package is finished and ready for floor action. Possibly months.

As of right now, a huge gulf exists between House and Senate Democrats on Medicare and Medicaid, Obamacare funding and tax hikes. A number of House and Senate Democrats are balking at the Medicare prescription drug negotiations measure being pushed by party leaders, which leaves a $700 billion hold in the reconciliation package while also endangering Medicare expansion, which progressives want.

Now Pelosi must now choose whether to move forward on the infrastructure vote without reconciliation. As of now, the vote is still going forward on Sept. 27 (more likely the following day), although it could slip until later in the week. But this is Pelosi’s call to make, and it’s a big one.

One side note here before we go any further — Federal surface transportation program authorization expires on Sept. 30, the same day federal agencies run out of money. House Transportation and Infrastructure Committee Chair Peter DeFazio (D-Ore.) has been calling around to see if there’s any way to do a “clean” extension. So far, no go. The path forward on this front is to pass the bipartisan infrastructure bill. 

Progressives have repeatedly warned that they won’t support infrastructure without reconciliation. This was a senior Democratic aide on Friday: “There is serious concern among Leadership that there aren’t the votes to pass the infrastructure bill unless reconciliation moves at the same time, which can’t happen unless the Senate moves more expeditiously on pre-conferencing, finishing the Byrd bath process, and concluding talks with [Sens. Joe] Manchin and [Kyrsten] Sinema.”

Yet the other side of that equation is also true — moderates may not vote for reconciliation without infrastructure. The Medicare prescription drug fight among House Energy and Commerce Committee Democrats last week showed that moderates aren’t afraid to buck the leadership right now.

And here’s a Manchin-related scoop from our friend Hans Nichols at Axios that plays into this whole debate. According to this story, Manchin is “privately saying he thinks Congress should take a ‘strategic pause’ until 2022” before voting on reconciliation. 

Now a “strategic pause until 2022” means reconciliation is dead. If reconciliation is dead, infrastructure is dead because one isn’t going to pass without the other. There are moderates who could live with that outcome. Progressives? Probably not. As we said up top, this would be a political disaster of the first order for Biden and the Democratic Party. Whatever chance Democrats have of holding the House would likely be gone. And their hold on the Senate would be imperiled as well. But Manchin getting this line of thinking out there serves to show that his needs need to be met or else the whole plan falls apart. 

Biden, Pelosi and Senate Majority Leader Chuck Schumer can’t let this happen. Which is why there’s a good argument for doing infrastructure now. It may be all Democrats get. So why not take it?

Progressives, however, will be loath to hear this and won’t go along. We’re not sure there’s enough GOP votes for an infrastructure package to overcome progressive opposition. Our reporting would indicate there would be 20-plus Republican votes for the infrastructure bill. And that’s only if it can be politically separated enough from reconciliation to give these GOP lawmakers cover to vote for it. That may or may not be enough. 

Pelosi could seek to delay the vote for several weeks while party leaders and the White House try to work through the reconciliation process. But what’s the deadline there? If you’re a Democratic moderate, the longer the delay, the worse it gets.

IMMIGRATION

Parliamentarian rules immigration provisions can’t go in reconciliation

As we reported last night for Premium members, Senate Parliamentarian Elizabeth MacDonough has ruled that that the Democrats’ $3.5 trillion package can’t include a path to citizenship for up to eight millions Dreamers, TPS holders, farm workers and other undocumented immigrants.

This ruling is a big loss for Democrats. Reconciliation allows the majority to pass legislation on a party-line vote. Immigration reform will continue to need 60 votes to overcome a Republican filibuster. That means it can’t pass the Senate.

You can find the text of the ruling here.

Senate Majority Leader Chuck Schumer and Majority Whip Dick Durbin — who has worked on this issue for years — immediately said they’d offer additional proposals to the parliamentarian for review.

“Senate Democrats have prepared alternate proposals and will be holding additional meetings with the Senate parliamentarian in the coming days,” Schumer said in a statement.

“We are deeply disappointed in the Parliamentarian’s decision, but the fight for immigration reform will continue. Senate Democrats have prepared an alternative proposal for the Parliamentarian’s consideration in the coming days.” Durbin and Sen. Alex Padilla (D-Calif.) added in their own statement.

Republicans quickly hailed the ruling as the correct reading of Senate rules and precedents. “Senate rules never contemplated a majority circumventing the filibuster by pretending that sweeping and transformational new policies were mere budgetary changes,” Senate Minority Leader Mitch McConnell said.  Sen. Lindsey Graham (S.C.), ranking Republican on the Budget Committee, asserted “The Parliamentarian’s guidance reinforces long held traditions of the Senate that major policy changes should be done collaboratively and not through the reconciliation process. This decision reinforces the fact that the Senate is truly different than the House.”

Pro-immigration advocates, for their part, were furious at MacDonough’s ruling, which came several months after she declared that a minimum-wage increase couldn’t be part of the Democrats’ American Rescue Plan.

Some advocates called for Democrats to overrule MacDonough, or even fire her. We don’t see either of these things happening. Democrats probably couldn’t muster the votes to overrule her, and leadership has made clear that firing MacDonough — a highly respected expert on Senate rules — isn’t going to change anything.

Beyond offering other proposals for MacDonough’s consideration, as we mentioned earlier, Democrats may also try to figure out what they can pass via the Senate Finance Committee or another panel to benefit this group of immigrants, but we’re not sure this would fly politically or substantively. None of this would include a pathway to citizenship, which is the critical matter.

There’s two main sections you should pay attention to in MacDonough’s ruling. 

→ The first is highly technical. MacDonough and her staff found that the proposed Democratic revisions to the Immigration and Nationality Act “is a policy change that substantially outweighs the budgetary impact of that change.” There’s more: “Changing the law to clear the way to LPR [legal permanent resident] status is [a] tremendous and enduring policy change that dwarfs its budgetary impact.” 

This finding by MacDonough means the Democrats’ proposals violate the Byrd Rule, a highly complex set of tests that govern what’s allowed in reconciliation packages. Such policy changes can only be “merely incidental” to its revenue impact, and in this case, she clearly found they’re not.

→ The second section we will quote at length here:

Finally, it is important to note that an obvious corollary of a finding that this proposal is appropriate for inclusion in reconciliation would be that it could be repealed by simple majority vote in a subsequent reconciliation measure. Perhaps more critically, permitting this provision in reconciliation would set a precedent that could be used to argue that rescinding any immigration status from anyone — not just those who obtain LPR [legal permanent residence] status by virtue of this provision — would be permissible because the policy of stripping status from any immigrant does not vastly outweigh whatever budgetary impact there might be. That would be a stunning development but a logical outgrowth of permitting this proposed change in reconciliation and is further evidence that the policy changes of this proposal far outweigh the budgetary impact scored to it and it is not appropriate for inclusion in reconciliation.

So what MacDonough is saying here is that what Congress gives by reconciliation also can be taken away by reconciliation. Eight million immigrants could gain LPR status and a pathway to citizenship here by a party line vote. A future GOP-run Congress could also undo that for eight million immigrants by party line vote. That’s a sobering thought, and it’s clear that MacDonough believes this kind of enormous policy change must go through regular order to be implemented.

MOMENTS

11 a.m.: President Joe Biden will leave Rehoboth Beach for the White House, where he’ll arrive at noon. 

12:30 p.m.: Biden will get his intelligence briefing.

1 p.m.: Jen Psaki will brief.

3:55 p.m.: Biden will leave the White House for Andrews where he will fly to New York. He’ll arrive in New York at 5:10 p.m.

4 p.m.: Vice President Kamala Harris will host a reception for the Congressional Black Caucus’ 50th anniversary at the Naval Observatory.

6:30 p.m.: Biden will meet with U.N. Secretary General António Guterres.

CLIP FILE

NYT

→ “Climate, Covid and Biden’s Challenged Credibility Underline U.N.’s Big Week,” by Rick Gladstone

→ “Jill Biden Is Chasing the President’s Most Elusive Campaign Promise: Unity,” by Katie Rogers

→ “This Powerful Democrat Linked to Fossil Fuels Will Craft the U.S. Climate Plan,” by Coral Davenport 

 → “With Abortion Rights Under Threat, Democrats Hope to Go on Offense,” by Trip Gabriel in Virginia Beach

WaPo

→ “As they gather at U.N., world leaders face furious push to act quickly on climate change,” by Brady Dennis and Steven Mufson

→ “A once-in-a-decade chance to overhaul health care gets personal for Democrats and advocates,” by Dan Diamond, Rachel Roubein and Amy Goldstein

→ “Biden seeks a phone call with France’s Macron to calm the waters,” by Tyler Pager in Rehoboth Beach, Del., and Anne Gearan and John Hudson in D.C.

WSJ

→ WSJ Editorial Board: “Purging Anthony Gonzalez”: “As Democrats march to the socialist left on economics and use identity to divide America by race and other categories, the country desperately needs a Republican Party that can attract a broad coalition. A party that purges the likes of Anthony Gonzalez is diminishing its prospects to build a durable majority.”

AP

→ “The AP Interview: UN chief warns China, US to avoid Cold War,” by Edith M. Lederer at the United Nations

→ “Biden pitching partnership after tough stretch with allies,” by Aamer Madhani

Politico

→ “Inside Thompson and Cheney’s Jan. 6 probe alliance — both genuine and strategic,” by Kyle Cheney and Olivia Beavers

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