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Will Joe Manchin thwart Biden's spending? FDA credibility hit
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:
What does the disappointing jobs number mean for the Democrats' agenda?
Well, payroll employment in August came in well under expectations with under 300,000 jobs created. This is in contrast to the last several months, which really saw a torrid pace of job creation as the US started to recover from the pandemic and restrictions were lifted. With new mask mandates and the Delta variant spreading, Americans are slowing down their pace of activity and slowing down spending, which means you could see more economic volatility in the next couple of months. At the same time, Democrats are attempting to find consensus around a major new spending initiative, which would spend up to $3.5 half trillion over the next 10 years. This initiative isn't really about coronavirus pandemic recovery, or even stimulus, it's about expanding the size and scope of government for increased transfer payments and increased subsidies for education services and healthcare and also, of course, on infrastructure. The slowing jobs growth creates more fiscal space for Democrats to borrow more, and that's a real sticking point because you have moderates like Senator Joe Manchin from West Virginia, who says the US is already at their borrowing limit and shouldn't be borrowing more to spend money. This is going to be the major storyline in Washington for the next several months because it's also probably going to be the last big initiative of the Biden administration before the midterm elections next year.
Two top FDA vaccine regulators are about to leave this fall. How will this influence the vaccine rollout?
Well, the FDA has really struggled over the last year with vaccines and with the coronavirus pandemic. There's been mistakes and missteps along the way between the FDA and the Center for Disease Control, both around messaging, the science around the pandemic, and on things like testing kits, where there's been major screw-ups by the federal government. The two top vaccine regulators at the FDA announced they're going to leave, supposedly, according to some reports, because they felt like they were under political pressure to approve booster shots. The White House has said they plan on doing booster shots. They've already authorized them for people who have underlying conditions that make them more vulnerable. These two regulators leaving is just another bump in the road for the FDA. It's going to take a long time for the American health agencies to recover their credibility
Democrats need to be united to pass $3.5 trillion budget plan
Get insights on the latest news in US politics from Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington:
What are the details of the Democrats' proposed $3.5 trillion budget blueprint?
Well, the Democrats this week in the Senate Budget Committee agreed to move forward with the plan to spend $3.5 trillion spread out over about 10 years on a huge portion of President Biden's Build Back Better Plan. This comes on top of a bipartisan agreement, at least in principle, on another $600 billion in physical infrastructure, which is roads, bridges, tunnels, repair, broadband deployment and a whole bunch of other physical infrastructure spending that Republicans and Democrats agree they want to do but aren't clear on how they want to pay for. But on the $3.5 trillion in spending, this is a lot of new social services, it's extending a number of tax subsidies that are going to low-income families and families with kids as part of the American Rescue Plan, which was the Biden stimulus bill that passed earlier in the year. It also includes money for two years of community college, universal preschool, and expands Medicare to cover things like dental benefits and other things that Medicare currently doesn't pay for.
So, this is a really big, ambitious plan. Democrats are excited about it because they think it's going to reshape, eliminate poverty for millions of Americans and reshape the role of the federal government and a lot of people's lives. However, the road to get there is long and challenging. And this next, in this part of the process is just one baby step forward. The next part of the process will be to pass a budget. And the budget process requires only 50 votes in the Senate and the simple majority in the House. But with Democrats slim margins in both, they can't really afford to lose even a single member. So, Democrats have to be totally unified to get this thing through. They can't expect a lot of support from Republicans. And the tension in the party is between progressives who want to spend a lot of money, Senator Bernie Sanders said he was looking to do over $6 trillion, and more moderate members, which is a sizable but silent group led by the very vocal senator from West Virginia, Joe Manchin, who says, this whole thing has to be paid for, there can be no deficit financing. Which means the Democrats can really only afford to spend the money they can raise. And while Biden has put forward $3.6 trillion in tax increases, a lot of those tax increases are politically untenable. And most analysts see there's a realistic range of about one to two trillion dollars in tax increases that are possible. If you combine that with some budget gimmicks and some fake spending cuts that have been floated in the bipartisan framework, plus, you give yourself a longer time frame for how you count the revenues that will finance some of the short-term spending, you can probably get there. But the Senate and the House are probably months away from resolution of this process. And the challenging part right now is going to be keeping everybody on board until the very end.