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What Democrats and Republicans have in common this Thanksgiving
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC, shares his perspective on US politics.
What are three things that lawmakers have to be grateful for this Thanksgiving?
Well, the first is that they get to go home. Lawmakers reached a short-term deal to fund the government until January 19th, which means that they won't be around Washington, DC, beating each other up over levels of funding. That can all wait until 2024. They can go home and enjoy the holidays with their families and not pass much other legislation this year.
The second is that so far, the Inflation Reduction Act seems to be working to spur manufacturing in the United States. There are 22 new battery plants currently under construction. There's record investment in electronics manufacturing, and a number of European companies have announced their intention to expand green energy projects in the United States and not because of these subsidies. Now, of course, the real question about the success of the program is going to come when the subsidies stop, and you can judge how well the US has done in spurring this manufacturing in the US. But for now, Democrats are happy because it looks like the IRA is working. Republicans like the jobs, even though they didn't vote for the bill.
The third thing that both parties have to be grateful for is that there are no competitive primaries, which means that there's no choosing sides. There's no traipsing through the snowy fields of Iowa to campaign for one guy or another. Donald Trump is almost certain to win the Republican nomination, and Joe Biden faces no real challengers. So, both parties can marshal all their resources for the general election in 2024. And neither party is likely to go through a particularly divisive primary in the first half of the year.
US government shutdown: No end in sight
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC shares his perspective on US politics:
How long will a US government shutdown last?
I'm here in Miami, Florida, which feels very far away from the drama happening in Washington, DC this week, where the House and Senate are unlikely to agree on a new government funding bill in time to stop a government shutdown from happening on Saturday night.
This raises a couple of key important questions. One, what are they fighting for? Well, there's a group of conservatives in the House who want to see deep deep spending cuts on appropriated spending. That means defense spending and all non-mandatory spending, like interest payments and Social Security and they're piqued that the government has grown quite a bit since pre-pandemic and they want to see about a 10% cut back to 2022 levels. And they're unlikely to get it because most other members of Congress are in favor of the debt limit deal that was agreed to earlier this year, which would have increased defense spending by about 3% and kept all non-defense discretionary spending flat.
Two, how are they going to get out of this thing? Well, no one's quite no one quite knows. There's some talk about a deal to exchange Ukraine money in order for border funds, some funds to secure the southern border and stop the flow of migrants coming over the border. But it's really unclear at this point whether or not that kind of deal can work out or if it can be worked out quickly given the deep divides between the House and the Senate.
And then three is how long is this thing going to last? And while it could be resolved early next week, some of the pain of the federal government shutdown starts to hit in for constituents, lawmakers. This could also potentially go deep into October. And as it goes deeper into October, the vast majority of members of Congress who want to see the debt limit deal be honored with the 3% increase in defense and 0% increase across the board that I talked about earlier. They may start to feel more pressure to agree to some additional cuts, which means that you could see those cuts be enacted into law as the price of the government reopen. Probably this will be resolved in the next week or so with another deal to extend current levels of funding until November, mid-November. And then we're going to be right back in the soup, having to deal with this all over again later this year.
So lots of drama still to come. Outlook is very uncertain and this could go on for weeks if not much longer than that.
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Will the US debt ceiling debate cause a government shutdown?
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:
Is a US government shutdown coming?
Hard to say. Republicans and Democrats generally are in agreement about the need to fund the government. And they generally agree at what level the government should be funded. And they generally agree about the need for supplemental money for Afghanistan and some natural disasters, coming out of hurricanes this season and wildfires. What they're not in agreement about is the federal debt limit, which is the cap on US borrowing that the US hit in early August and needs to be extended by some time in October. Otherwise, the US will have a first-ever default. This would be a very bad outcome with cataclysmic results for the entire world economy.
But Republicans are saying, "Hey, you guys want to spend a bunch of money on $3.5 trillion. We are not going to help you. So you need to find the votes for this on your own." And the Democrats are saying, "This debt belongs to all of us and therefore we all need to vote to increase the debt ceiling." The government shutdown and the debt limits so far are linked. And as long as they remain linked, there will be a government shutdown. The issue has to be resolved by the end of the month. Otherwise, government functions shut down until they get a resolution.
Why is President Biden's economic plan hanging in the balance?
Well, the plan is hanging in the balance because the Democratic Party itself is divided over how much money should be spent by the federal government over the next 10 years. The progressives support spending up to $6 trillion. The conservative members of the party are being a little bit cagier about what they'd be for. Basically, the party's in agreement that they should do some form of expanded social spending, direct subsidies for childcare, for education, for healthcare, and a whole bunch of new physical infrastructure spending. But how much and how to pay for it are really dividing the party. And there's no clear solution right now. Probably they get there by the end of the year. Biden himself has not been super effective in mitigating the differences between the two wings of the party. And you've got a small number of moderate members, including most prominently Kyrsten Sinema from Arizona, and Joe Manchin from West Virginia, who are holding out on the spending parts of the agenda. But there's also a bunch of members in the House who are for tax increases. So this will take some time to work out. Ultimately, they probably rally around $2 or $2.5 trillion in spending, but maybe not until Thanksgiving or Christmas.