by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
June 25, 2021
THREE CHEERS TO JOE BIDEN for his persistence in winning a bipartisan infrastructure deal, but now the hard part begins — getting conservative Republicans and liberal Democrats on board. It won’t be easy.
SQUARE PEGS, ROUND HOLES: Neither side likes the dynamics because winning enactment for this deal requires huge compromises on what will follow. Good luck getting Mitch McConnell and Alexandria Ocasio Cortez on the same page.
THE DIFFICULTY IN WINNING A FINAL DEAL was clear yesterday at the White House. Biden said he would not support this new deal if it isn’t accompanied by a massive spending package for social issues. That second measure is a non-starter for most Republicans.
COULD BIDEN THREAD THE NEEDLE and win both of his bills (plus tax hikes)? It’s theoretically possible but Biden declared that he would abandon yesterday’s compromise if Congress doesn’t simultaneously send him a sweeping package of Democratic spending priorities, opposed by virtually all Republicans, to shore up the nation’s social safety net.
BIDEN INSISTS ON PASSING BOTH BILLS — it’s a tandem, he says — a stance that McConnell blasted as a cave-in to the Democrats’ left. McConnell’s pronouncements will be crucial in the next few days; he seems disinclined to give the president a big victory ahead of the 2022 elections.
IN THE FINAL ANALYSIS, the only issue that matters is whether Biden has the votes. As of now, we think he has the 60 votes to win passage of the first bill, but the second measure may not have enough votes, which apparently could torpedo the entire process because Sens. by Sens. Joe Manchin and Krysten Sinema are opposed to using the reconciliation process to enact huge new spending.
CONGRESS LEFT TOWN LAST NIGHT is a generally upbeat mood — the tone is more civil than in the past four years, and maybe a bipartisan bill can move before the August break. During this Fourth of July recess, staffers will prepare legislative language and suggest further compromises. Good luck to them, but count us as skeptical.
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