What to Know in Washington: Senate Set to Avert Default, for Now

The Senate is nearing a deal on a short-term increase in the debt ceiling that would pull the U.S. from the brink of default but threatens to exacerbate year-end clashes over trillions in government spending.

After weeks of stalled talks, Democrats appeared to be on the verge of accepting a proposal from Senate Republican leader Mitch McConnell (R-Ky.) to raise the debt limit by a specific amount that would be sufficient to tide the Treasury over until December, when Congress would have to vote again to avoid a default.

“We’re making good progress,” Senate Majority Leader Chuck Schumer (D-N.Y.) said on the chamber floor, adding “we hope to have agreement tomorrow morning.” McConnell said earlier that the two parties were “trading paper” on the specifics of the agreement. Schumer said the Senate would come back into session at 10 a.m. today.

While the urgent threat of a default sometime in mid-October would recede, the deal would merely delay the fight to December, when Democrats likely will try to move a massive tax and spending package and a separate infrastructure bill. Congress also must act to fund the government and avert a shutdown after Dec. 3. That could be politically perilous for Democrats still sharply divided over President Joe Biden’s $4 trillion economic plan—particularly for moderates in swing states who worry about the overall cost.

The short-term debt extension allows McConnell to achieve key political objectives such as providing fodder for campaign attack ads and highlighting issues of deficits and spending as Biden’s economic agenda is hammered out by Congress, according to Bill Hoagland, a former Republican Senate Budget Committee staff director. But some Democrats still declared victory at the seeming break in the debt ceiling impasse. Read more from Laura Litvan, Erik Wasson, and Mike Dorning.

Photo by Kevin Dietsch/Getty Images

McConnell at the Capitol yesterday.

Happening on the Hill

Today’s Agenda:

• The Senate could vote on an agreement to raise or suspend the debt limit.
• Click here for a complete list of today’s hearings and markups.

Democratic Plans Stall in Senate: Key elements of the Democratic agenda are in danger of being buried in the Senate as lawmakers wrangle over the social spending package and with Congress scheduled to be in session for only some 30 more days this year. A broad swath of party priorities leaders say will prove popular are included in that massive piece of legislation they’re rushing to finalize and in the bipartisan Senate-passed infrastructure bill. But Schumer and Speaker Nancy Pelosi (D-Calif.) are likely to put off work on immigration, policing, gun control, and other issues of great interest to the Democratic base. Nancy Ognanovich has more on Democrats’ stalled agenda.

Biden Climate Push at Risk With Energy Crunch: Allies of the oil and coal industry have seized on energy crises overseas and rising gasoline prices in the U.S. to counter Biden’s plans to combat climate change and force a rapid shift to renewable power. They are warning that the dilemma now facing Europe—where energy shortages have crimped consumers and forced multiple manufacturers to shut plants—is a specter of what may occur in the U.S. under proposals to swiftly curtail the use of fossil fuels.

“It’s an indication of what’s coming here,” said Sen. Kevin Cramer (R-N.D.), who argues a proposed $1,500-per-ton fee on methane emissions and other climate proposals in the Democrats’ social-spending bill would boost U.S. energy prices. “Why we would want to duplicate that is beyond me.” Read more from Jennifer A. Dlouhy and Ari Natter.

Medicaid Incentive Could End Under Senate Plan: Democrats are mulling whether to rescind billions of dollars meant to prod states to expand their Medicaid programs, in part to pay for a federal Medicaid-like coverage plan in those states. The debate on whether to rescind the funds divides some Senate and House Democrats.

House aides say the incentive money, which Congress provided in March, should remain available instead of being used to offset part of Democrats’ sweeping social spending and tax package. The new legislation’s federal fallback program for non-expansion states isn’t meant to replace state-run Medicaid programs, they say. Senate supporters of adding new Medicaid coverage in these GOP-led states say their state legislatures and governors have shown no amount of cash will persuade them to open up eligibility for their public health insurance programs. Read more from Alex Ruoff.

Senate Could Act on Defense Bill Before December: A must-pass bill setting policy and budget levels for the Pentagon could see Senate floor activity as early as this month and won’t be delayed until the last minute, according to the head of the Senate Armed Services Committee. Schumer is committed to bringing the defense authorization bill to the floor when there’s a window, said Sen. Jack Reed (D-R.I.) in an interview. But other priorities might take precedence. Roxana Tiron has more.

Rubio Presses SEC for China Investments Disclosures: Sen. Marco Rubio (R-Fla.) wants the Securities and Exchange Commission to put one issue front and center in the regulator’s focus on environmental, social and governance matters: China. Rubio said in a letter to SEC Chairman Gary Gensler yesterday that rules in the offing that would require publicly-traded firms to disclose more about workforce diversity and ESG-related efforts must also apply to Chinese companies trading in the U.S. Read more from Daniel Flatley and Ben Bain.

Powell’s Path Gets Trickier on Trading Furor, Warren: Biden’s selection of a new Federal Reserve chair grew more complicated in the last week as Congress quarrels over spending, taxes and debt, while a scandal over stock trades by some top officials under Jerome Powell’s leadership could damage his prospects. What seemed like an easy potential renomination for Powell—beloved by moderate Democrats and several Republicans—has become a problem for the White House as Sen. Elizabeth Warren (D-Mass.) and progressives call into question the trading activity. Nancy Cook, Jennifer Jacobs, and Saleha Mohsin have more.

Around the Administration

Today’s Agenda:

• Biden travels to Chicago today, where he’ll visit a construction site and deliver remarks at 3:45 p.m. on the administration’s vaccine requirements.

Biden Will Use Illinois Trip to Push Vaccine Mandates: Biden will escalate his campaign to pressure private employers into imposing Covid-19 vaccination mandates during a visit to a Chicago suburb today. The president will visit an Elk Grove Village construction site for Clayco, a construction company that plans to require vaccinations or weekly testing for its employees, a White House official said. He will also highlight the example of Chicago-based United Airlines, which has said 98.5% of its workforce has complied with an inoculation requirement.

Before the trip, the White House released a report that said 3,500 U.S. organizations already have a vaccine mandate, including 40% of hospitals and 25% of businesses, following Biden’s directive that federal workers and contractors be vaccinated and that the Occupational Safety and Health Administration draft regulations for companies with at least 100 employees. Jennifer Jacobs has more.

Texas Abortion Law Put on Hold After Biden’s Legal Challenge: A federal judge temporarily blocked Texas’s new ban on most abortions, arguing the law outsourcing enforcement to bounty-hunting members of the public was “contrived” to work around a constitutional right. The ruling by U.S. District Judge Robert Pitman in Austin is a major early victory for the Biden administration, which sued to overturn the ban. With the injunction in place, the strictest such law in the nation will go on hold during the rest of the case, at least for now.

The law prohibits abortions after about six weeks of pregnancy—before many women know they’re even pregnant—and has no exceptions for rape or incest. While the verdict clears medical professionals to once again offer most abortions, they face risks if Texas ultimately prevails because the law allows suspected violators to be sued retroactively. Pitman wrote that “a person’s right under the Constitution to choose to obtain an abortion prior to fetal viability is well established.” Read more from Erik Larson.

Xi Picks Opportune Time to Cool U.S. Tensions: China’s Xi Jinping has plenty of pressing reasons to arrange a meeting with U.S. Biden and dial back tensions between the two largest economies. The announcement today of a virtual summit before the year’s end between Xi and Biden comes as China grapples with a series of domestic challenges and looming political milestones. Beijing is navigating fears over indebted real estate firm Evergrande, preparing to host a pandemic Olympics, and energy shortage. Read more from Jenny Leonard and Jennifer Jacobs.

ARPA-H Agency Faces Hurdles Without Spending Plans: Biden’s plan to set up an NIH incubator for biomedical discoveries could face setbacks as the government runs on a continuing resolution through early December. But the government is still moving forward with plans to open the Advanced Research Projects Agency for Health in the coming months, according to the White House’s point-person on the project. Biden unveiled the ARPA-H plan this spring as part of a fiscal 2022 budget request. Jeannie Baumann has more.

Biden Team Debates IMF Chief’s Fate: Treasury Department officials are debating whether the U.S., the International Monetary Fund’s largest shareholder, should ask Managing Director Kristalina Georgieva to resign amid an ethics scandal, people familiar with the situation said. The Treasury’s deliberation continues as the Washington-based fund said its executive board met with Georgieva yesterday as part of its ongoing review of an investigation by law firm WilmerHale, commissioned by the World Bank. Read more from Eric Martin and Saleha Mohsin.

Chipmakers Resist Biden Bid for Data on Supply Chain: A Biden administration push to untangle global chip supply snarls is facing resistance from lawmakers and executives in Taiwan and South Korea, complicating attempts to resolve the bottlenecks hurting industries from automobiles to consumer electronics. The Commerce Department last month asked companies in the semiconductor supply chain to fill out questionnaires by Nov. 8 seeking information pertaining to the ongoing chip shortages. Read more from Debby Wu.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com