Process matters in policy making, even more so in Washington fiscal policy debates guided by an oft-amended 47-year-old law. Adhering to the 1974 Budget and Impoundment Act, the two most important committees for now have completed their work which facilitates floor votes likely beginning this week and lasting into December. That work represents the most relevant fiscal component of Bidenomics.
The House Ways and Means Committee ten days ago finished work on legislation that could provide a bit more than $2 trillion to finance elements of President Biden’s economic plan. Saturday, the House Budget Committee bundled that package and all other committee-passed reconciliation proposals into a single bill. House Democrat leaders intend to vote on that bill as well as the Senate passed infrastructure bill this week, if plans hold.
More urgently, Congress this week will vote to continue funding government past the end of fiscal year 2021 which ends after midnight on Thursday, September 30. With plenty to do over the coming three months, process and deadlines will simplify this week at least for those of us not responsible for cajoling or casting votes. If there is a shutdown on Friday, a continuation into the first full week of October would be a meaningful event sure to drive headlines.
A White House that long since has lost control of headlines will want nothing adding to this trend risking more damage to the President’s standing. Further erosion of Biden’s job rating would complicate maintaining Democrats’ relative unity. At minimum, it raises the political price some Democrats would demand to remain loyal. Further slippage absolutely would further embolden Republican obstruction and not just related to fiscal policy.
Public opinion surveys can be an echo chamber and a megaphone, sometimes simultaneously. Biden’s net disapproval rating began less than two months ago. While he retains net positive ratings on the economy and the pandemic, his political capital depletion came at the worst time for his domestic policy agenda. For decades we have favored Pew Research Center polling because of its multi-decade database, transparent methodology, accuracy, and breadth of topics. Pew’s latest report (“Biden Loses Ground with the Public on Issues, Personal Traits and Job Approval”) lays out Biden’s challenges in startling detail.
President Biden’s ability to shape policy relies on a no-margin-for-error strategy. Congressional Democrats’ political well-being and policy aspirations lie in the balance. It’s difficult to contemplate House Democrats remaining the majority party after 2022 midterms if the president’s economic agenda collapses in the year prior. Public opinion factors into public policy, at times as a catalyst and other times as an impediment. Support for Bidenomics is at a crucial juncture, less because of policy and more because of politics.
For the majority party, Biden’s fiscal policy package is nearly everything (and in some cases more than) most supporters thought possible. External events present both parties with political and substantive challenges and opportunities in 4Q21. Public opinion in the coming quarter likely will react more to US fiscal developments than any subject other than the pandemic. It might be a close call. Uncertainties and risks acknowledged, we continue to see a successful week for Biden, if a serious shutdown is avoided and House leaders reach an agreement with all Democrats to keep reconciliation and infrastructure packages alive with a reasonably sure schedule for passage. If the president is unhappy at the end of this, we also expect that to reflect in markets’ growing focus on fiscal policy, especially the October debt ceiling dance
