#Capitol Report: Biden’s agenda facing test this week as Pelosi, moderate Democrats in standoff

The Senate voted 69-30 in favor of a $1 trillion bipartisan infrastructure bill on Aug. 10, and it then had a procedural vote a day later for a $3.5 trillion package targeting social spending, climate change and other Democratic priorities that was approved 50-49, along party lines.

House Speaker Nancy Pelosi, the California Democrat, plans a procedural vote on Monday that would set up future passage of both measures, as she works to corral nine moderate Democratic representatives who want the $1 trillion infrastructure bill to get approved before the larger package. Additional voting then is expected to happen Tuesday.

“Any delay to passing the budget resolution threatens the timetable for delivering the historic progress and the transformative vision that Democrats share,” she said in a letter on Saturday to her fellow Democrats. She gave Oct. 1 as a deadline for enacting the infrastructure and social-spending packages.

But her nine colleagues have been sounding defiant, saying in a joint Washington Post op-ed column on Sunday that they’re “firmly opposed to holding the president’s infrastructure legislation hostage to reconciliation, risking its passage and the bipartisan support behind it.”

“We can walk and chew gum, just as the Senate did,” the nine moderates said in the column. “We can pass the infrastructure measure now, and then quickly consider reconciliation and the policies from climate to health care to universal pre-K that we believe are critical.”

Pelosi also faces pressure from progressive House Democrats who say they won’t support the bipartisan infrastructure bill unless the $3.5 trillion package moves ahead as well. She has a narrow House majority and can afford no more than three defections by Democrats on legislation if there’s no Republican support for it.

House Majority Leader Steny Hoyer, the Maryland Democrat, reportedly urged all Democrats on a conference call last week to support the vote setting up future passage of both measures. He also said voting would take place on Monday night, with the House acting as well on a voting-rights bill named after the late Rep. John Lewis.

“I continue to believe that there is a small but non-trivial possibility that in the end, Congress passes none of the above,” said Stephen Stanley, chief economist at Amherst Pierpont, in a recent note. He pointed out lawmakers soon will have to address the federal government’s debt ceiling and “do something about a budget for next year or risk a government shutdown.”

“It is possible that the infrastructure and reconciliation bills get shoved to the back burner for a few days or for as long as two months while Congress addresses these more pressing concerns.  Like a banana sitting in your pantry, the longer these bills sit in limbo, the softer their support will get,” Stanley said.

“With no signs of progress, expectations for a resolution this week hinge
on Pelosi’s track record of corralling Democrats using both carrots and sticks,” said Benjamin Salisbury, director of research at Height Capital Markets, in a note.

“We expect leadership to find a face-saving exit for moderates potentially offering private and/or public commitments on the timing for an infrastructure vote and/or the size of the reconciliation bill. However, at this point the pathway is still uncertain,” Salisbury added.

Biden is facing criticism even from within his own party over his administration’s handling of the U.S. withdrawal from Afghanistan, and that might be a problem for his plans for infrastructure and social spending.

“The fallout from the collapse of Afghanistan is not limited to foreign policy and could impact U.S. domestic politics including the debate in the House about regarding the two infrastructure bills as well as the future of the Federal Reserve,” said Brian Gardner, chief Washington policy strategist at Stifel, in a note.

Related: Powell’s future in question as Warren blasts Fed for being too easy on the biggest banks

Beyond the possible roadblocks in the House, the $3.5 trillion package is facing opposition from moderate Democratic senators, with Sen. Joe Manchin of West Virginia warning last week about Washington “continuing to spend at irresponsible levels.”

Infrastructure stocks, as tracked by the Global X U.S. Infrastructure Development ETF
PAVE,
+0.86%,
have jumped 26% so far this year, topping the broad S&P 500 index’s
SPX,
+0.75%
gain of 18%.

This is an updated version of a report that was first published on Aug. 17, 2021.