by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
January 26, 2021
FILIBUSTER RULES AND BUDGET RECONCILIATION are pretty deep in the weeds — but as we explain below, a deal cut yesterday will play a major role in curbing Joe Biden’s agenda.
AN EFFORT TO SCRAP THE FILIBUSTER has failed in the 50-50 Senate, as two Democrats indicated they would not support abolition, thus keeping alive the rule that 60 votes are needed to cut off debate. This means President Biden and his allies will have to move on to Plan B.
WITH THE FILIBUSTER STILL ALIVE, many of Biden’s bills will languish — unless they’re tied to budget issues, which would allow a bill to pass with only 51 votes via a process called reconciliation. That provision can be used only twice this year — and it appears that those two bills will be for covid relief and for infrastructure, supported by tax hikes.
EVERYTHING ELSE — immigration reform, climate legislation, police reform, etc. — probably couldn’t be folded into a budget-related bill via reconciliation, which means that an ambitious progressive agenda will face an uphill battle.
WITHOUT FILIBUSTER REFORM, Democrats will have to use reconciliation to stuff as much as they can into the covid and infrastructure bills, but that also could encounter just enough opposition from a couple of Democrats to water down those two bills; even getting 51 votes could be difficult.
BOTTOM LINE: We’ll get a covid relief bill via reconciliation by spring, but it could be significantly less generous than the initial Biden proposal. Potential casualties: massive aid to states and a minimum wage hike.
* * * * *
THE IMPEACHMENT TRIAL WILL BEGIN on Feb. 9, returning Donald Trump to the spotlight that he craves, gobbling up time that could be used to pass legislation. It will be a futile exercise for the Democrats, who don’t have the votes to convict.
THERE WILL BE NO SHORTAGE of legal action in the next year against Trump, perhaps in the District of Columbia for inciting a riot, perhaps in Georgia for seeking vote fraud, and undoubtedly in the Southern District of New York, where prosecutors will throw the proverbial book at him.
BUT AN IMPEACHMENT TRIAL IS A SERIOUS MISCALCULATION BY THE DEMOCRATS: They’re preparing plenty of video evidence, and will call witnesses who will admit that Trump inspired the Jan. 6 riot. But there aren’t enough Republicans prepared to convict — 17 is the magic number, assuming every Democrat votes against Trump.
THE FORMER PRESIDENT has allies who are making it clear to wavering Republicans: vote against us and you will face a serious primary fight; Liz Cheney is the prime target but every Republican who votes to convict will face a fierce challenge.
WE UNDERSTAND THAT CHUCK SCHUMER and most Democrats want the Republican fissure to widen, but we reiterate: the trial will detract from passing legislation; it will feed Trump’s hunger for martyrdom; and — most importantly — it will fail to win enough votes to convict.
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This post was first published at the AGF Perspectives Blog.
