Debt limit an issue ... again — Dems load up giant money cannon — Oil slides

From: POLITICO's Morning Money - Tuesday Aug 10,2021 12:03 pm

Aug 10, 2021

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Quick Fix

Debt ceiling in play … again — Give your MM columnist a moment of personal privilege. We have lived through and covered multiple debt limit fights, one of which ended in the first credit rating downgrade in American history under President Barack Obama in 2011. We covered that on a bus down to the Jersey Shore.

There is no reason on earth why we should face another one now, given the bipartisan infrastructure deal and then the Dems’ up-to-$3.5 trillion budget bill. But there are no debt limit hikes to be seen right now in either.

We will say this clearly: The U.S. is not going to default on its debt. Not with (albeit nominal) one party control in Washington. But D.C. does seem bent on once again annoying (and scaring) everyone by monkeying around with it until the last possible moment this fall.

Via our Burgess Everett, Heather Caygle, and Sarah Ferris : “With the threat of default on the nation's $28 trillion debt awaiting this fall, Democrats are going ahead with plans to exclude raising the federal borrowing limit from their party-line $3.5 trillion budget bill. Instead, they are counting on the Senate minority leader to provide them the GOP votes they need to overcome a filibuster and avert economic disaster.

“But McConnell is not budging. In fact, the Kentucky Republican is as dug-in as can be, according to advisers and colleagues. McConnell said in the Capitol Monday that nothing will change his mind: Democrats ‘have every opportunity to raise the debt ceiling that covers the reckless spending bill. And they will.’”

Real talk — Are Dems really that freaked out by raising the debt limit along partisan lines? If so... why? If you are going to spend an absolutely enormous amount of money over the next decade to reshape big parts of the American economy, tucking in a debt limit hike seems like a total afterthought.

The political calculus on the reconciliation package is Democrats are ready to GO BIG on long-delayed party priorities, no matter the cost. So, can there really be that much fear of midterm attack ads from the right on the … debt limit? I mean maybe.

But it’s super weird. Other thoughts on the debt limit issues? Email me on bwhite@politico.com.

GOOD TUESDAY MORNING — Just a special note to MM’s readers in the White House and senior leadership on the Hill: Don’t mess up my life with a debt limit fight that we all know will end in a deal. Just skip it. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben.

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COMPROMISE ON CRYPTO BUT FUTURE UNCLEAR — Our Brian Faler: “A bipartisan group of lawmakers said … they’ve reached a compromise on cryptocurrency tax reporting provisions in an infrastructure bill in the Senate, though it remained unclear whether they’ll get a chance to put it to a vote.

“Their revised amendment, written in consultation with the Treasury Department, attempts to end a dayslong standoff over who counts as a ‘broker’ and is therefore subject to the new requirements, which are meant to make sure the industry is complying with tax laws. However, one of the key players in the dispute, Senate Finance Chair Ron Wyden (D-Ore.), who had been pushing for changes, said he did not support the compromise plan.”

DEMS ROLL DEBT LIMIT DICE — Our Jennifer Scholtes and Caitlin Emma: “Senate Democrats released a $3.5 trillion budget … that doesn't tackle the imminent need to raise the debt ceiling, setting the stage for a dramatic standoff with Republicans this fall. The exclusion of debt limit language amounts to a political gamble by … Biden's party, with the Treasury Department expected to run dry on its borrowing limit in the coming weeks. …

“The budget also marks Democrats’ first step toward bypassing the filibuster in order to pass their party's massive social spending plan, which envisions higher taxes on corporations and the wealthy in order to fund initiatives like expanded Medicare, free community college and green cards for some immigrants.”

Markets

OIL PRICES SLIDE – WJS's David Hodari and Amrith Ramkumar: “A slide in oil accelerated on … as prices fell to around their lowest level in 2½ months, with traders worried that new restrictions to slow the spread of the Delta variant of the coronavirus could weaken the global economy and crunch fuel demand.

“U.S. crude fell by as much as 4.6% and ended the day down 2.6% at $66.48 a barrel, near its lowest price since late May and 12% below a recent multiyear high. While prices are still well above the $50 level where they started the year, their monthslong climb has morphed into a reversal as Delta variant cases soar and governments respond.”

ASIA OPENS WEAK ON DELTA WORRIES – Via Reuters: “Asian stocks started off on a weak footing on Tuesday after a largely soft performance on Wall Street and as persistent concerns over the spread of the Delta variant of the coronavirus dented sentiment and triggered falls in metals and oil prices. …

“With the Delta variant spreading, money managers who were over-invested in the re-opening trade continue to unwind that trade because it's not working right now,’ said Dennis Dick, a trader at Bright Trading LLC.”

Fly Around

DEMS LOAD UP GIANT MONEY CANNON — NYT’s Emil Cochrane: “Democrats formally began their push … for the most significant expansion of the nation’s social safety net since the Great Society of the 1960s …

“The budget resolution, which Senate Democrats hope to pass by the end of this week, would allow the caucus to piece together social policy legislation this fall, paid for by raising taxes on the wealthy, large inheritances and corporations …

“Democrats plan to take up the measure as soon as the Senate approves a separate $1 trillion bipartisan infrastructure bill , which is scheduled for a vote at 11 a.m. Tuesday. Together, the measures could secure virtually all of President Biden’s $4 trillion economic agenda”

CANADA RE-OPENS TO VAXXED AMERICANS — Our Sue Allan in Ottawa: “Canada opened to fully vaccinated Americans ... increasing pressure on the Biden administration to respond in kind to its northern neighbor.

“Even as Prime Minister Justin Trudeau shared plans to welcome double-vaxxed Americans, the Biden administration rolled over U.S. restrictions on nonessential travel until at least Aug. 21 … Nine border state governors have sent a letter to Homeland Security Secretary Alejandro Mayorkas and Secretary of State Antony Blinken to demand movement on the guidelines.”

CUOMO IMPEACHMENT MOVES FAST — Our Bill Mahoney in Albany: “New York state Assembly members may enter the final stages of their impeachment inquiry into Gov. Andrew Cuomo before September and plan to release their findings publicly at that time, a key lawmaker said …

“Cuomo is facing widespread calls to resign, but has so far refused, even as his most senior aide did so on Sunday . The Judiciary Committee has for months been conducting its own probe into the sexual misconduct allegations and is also looking at issues including Cuomo's alleged use of public resources to help author a book and the governor's handling of Covid-19 outbreaks tied to nursing homes.”

JOB OPENINGS SURGE — Via Reuters: “U.S. job openings jumped to a fresh record high in June and hiring also increased, an indication that the supply constraints that have held back the labor market remain elevated even as the pace of the economic recovery gathers momentum.

“Job openings, a measure of labor demand, shot up by 590,000 to 10.1 million on the last day of June, the Labor Department said in its monthly Job Openings and Labor Turnover … Employers have struggled to quickly rehire workers to keep up with the speed from which the economy has emerged from the depths of the COVID-19 pandemic, which upended many businesses as restrictions and fears of the virus kept people home.”

YELLEN PLEADS ON DEBT LIMIT — Our Nick Niedzwiadek: “Treasury Secretary Janet Yellen ... implored Congress to address the creeping debt limit, the latest in a series of warnings in recent weeks, Yellen warned that inaction risked ‘irreparable harm to the U.S. economy and the livelihoods of all Americans ...

“Yellen has previously warned that the tipping point could be hit as soon as mid-September, and the Congressional Budget Office has said the Treasury could run out of money in October or November.”

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