by Greg Valliere, AGF Management Ltd.
Industry and Expert Views
August 12, 2021
Greg Valliere's daily Capitol Insights
THE WASHINGTON SPIN MACHINES were in overdrive yesterday, as moderate Democrats battled with progressives over infrastructure legislation that already appears to be in trouble. There are four warring camps:
1. Nancy Pelosi can count votes, and she realizes that House progressives will not accept the $1 trillion infrastructure bill that passed in the Senate earlier this week. They are insisting on a $3.5 trillion companion bill; without it, Congress
could gridlock.
2. House moderates are pleading with Pelosi — why not take a victory: the $1 trillion bill for highways, bridges, dams, water, broadband etc., could pass immediately and the moderates will gladly take it. But at least 50 progressives in the House would not gladly take it, and neither will she.
3. Here comes Joe Manchin, the moderate Democrat who undoubtedly is eager to appear on this weekend’s talk shows. He and Sen. Kyrsten Sinema will not support a $3.5 trillion price tag; the issue becomes what number is acceptable — $2 trillion? $1.5 trillion? That’s a non-starter, of course, among House liberals.
4. And just to complicate the narrative, Mitch McConnell has warmly congratulated Joe Biden for winning approval of the $1 trillion bill; an astonishing 19 Republicans voted for the measure. That gives them cover this fall, of course, when they unanimously oppose the $3.5 trillion package and refuse to raise the debt ceiling.
LISTEN TO THE VOTERS: With this kind of uncertainty, members of Congress will do what they always do in August — they will listen to their constituents.
OUR SENSE IS THAT THE PUBLIC supports the $1 trillion bill but has deep reservations about spending another $3.5 trillion, which would increase uneasiness over inflation. That’s a big concern, along with crime and illegal immigration. (Republicans think voters will rebel over tax hikes, but polls show the public has no problem with raising taxes on the wealthy and big corporations.)
THE GREAT WILD CARD DURING THIS AUGUST BREAK will be the Delta variant and a growing perception that Govs. Ron DeSantis and Greg Abbott are too inflexible on wearing masks, which many school districts support. On this issue as well, Republicans have to listen to voters — not just the loudest ones, but parents who don’t want their children to become political pawns.
IT MAY TAKE A FEW WEEKS for public opinion to gel on these issues, plenty of time for Pelosi, Manchin and others to recalibrate. The one constant is the unflappable and pragmatic Biden, who — like Ronald Reagan — is content to take half a loaf. Biden can get his infrastructure spending this fall, but only if it’s scaled back.
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This post was first published at the AGF Perspectives Blog.
