Today’s Edition: Democrats have a path forward. They should take it.

October 5, 2021

          Do not lie awake at night worrying about whether Democrats will raise the debt ceiling to avoid the “catastrophe” predicted by Treasury Secretary Yellen. Democrats will do the right thing—which is what Mitch McConnell is counting on. Let me skip to the end of this complicated mess before quickly reviewing the bidding. Last week, the Senate Parliamentarian confirmed that Democrats could increase the debt ceiling by majority vote on a reconciliation bill. Importantly, the use of the reconciliation process to increase the debt ceiling would not preclude Democrats from using the reconciliation process to also pass the “Build Back Better” bill. As explained by Ed Kilgore in NY Magazine,

          Schumer sought guidance from [Senate Parliamentarian] MacDonough, who confirmed the exact procedure Congress needs to follow. Because the Congressional Budget Act authorizes separate budget resolutions and reconciliation bills involving spending, revenues, and debt, says MacDonough, Democrats can pass a second FY 2022 budget resolution authorizing an increase in the debt limit. . . . This legislation would be separate from the pending $3.5 trillion reconciliation bill still under contentious construction by Democrats.

          Democrats thus have a path to avoid Armageddon. Democrats should take it.

          But Democrats don’t want to use reconciliation because the debt included under the ceiling is due in equal measure to Republican and Democratic spending. At bottom, Democrats want to avoid campaign commercials that attack Democrats for unilaterally raising the debt limit. That is not a good reason for defaulting on the nation’s debts.

          Nonetheless, Democrats in Congress and President Biden are continuing their efforts to force Republicans to participate in a vote to raise the debt ceiling. See NYTimes, “Biden Calls Republicans 'Reckless' Over the Debt Limit Increase.” Senate Majority Leader Chuck Schumer has set up a vote for Wednesday evening on a bill subject to filibuster. The bill will not pass, and we will be two days closer to default than we ever should be.

          Some Democrats, notably Senator Manchin, have begun to suggest that Democrats should relent and just use the reconciliation process. See Talking Points Memo, “Manchin Breaks From Dem Leaders’ Resistance To Raising Debt Ceiling Through Reconciliation.” Manchin said that Democrats “shouldn’t rule out anything” to raise the debt ceiling. On this point, I agree with Senator Manchin.

          Saying that Democrats should do the right thing should not be seen as an effort on my part to let Republicans off the hook. The GOP’s threat to use a catastrophic financial default as a partisan bargaining chit is despicable, reckless, and heartless. The GOP is gambling with the financial security of all Americans as they gleefully watch Democrats (and the American people) twist in the wind. What kind of person does that?

          In the end, Democrats need to do a better job with messaging. The DNC should be running ads now saying, “Democrats acted to protect your checkbook by ensuring that America pays its bills on time—just like you do!” (Or something catchier!) Democrats should lean into their role as the only adult in the room in D.C. This pointless fighting over whether Democrats will vote to increase the debt through reconciliation or a different process sounds like “Blah, blah, blah” and “He hit me first!”  

          Catastrophe will be averted. Democrats just need to avoid shooting themselves in the foot in the process. We can do that.

Negotiations over the reconciliation bill to fund the Build Back Better agenda.

          With the benefit of a new deadline and some time to breathe, the parties to the reconciliation negotiation are beginning to negotiate. Or, at least, Progressives are. During a lengthy teleconference with the President, members of the Progressive Caucus did not challenge Biden’s assertions that Progressives would need to make “some tough calls” in order to pass the legislation. See Talking Points Memo, “House Progressives Reportedly Didn’t Push Back At Biden’s Plan For Lower Topline During Meeting.”

          As Progressives listen politely to Biden’s acknowledgment that compromise will be necessary, Senator Sinema’s odd lack of engagement is attracting notice—none of it good. The most recent polling shows that Sinema is underwater with Arizona Democrats. Her favorability rating with Democrats has dropped 21% this year. She is also sinking in popularity among Independents. The only place where she has increased her popularity is among Republicans—who will never vote for her in a general election. That’s a bad dynamic for someone who won a narrow victory in 2018. See Morning Consult, “Democratic Voters Drive Decline in Sinema’s Popularity in Arizona.”

          The lack of a public persona for Sinema has led to the unfortunate situation in which the writers at Saturday Night Live are creating the public face of Kyrsten Sinema. In a skit broadcast over the weekend, Sinema was portrayed as a vapid, self-centered, attention-seeking contrarian. Was the portrayal sexist and unfair? Undoubtedly. But none of the political figures portrayed in the skit came out looking good. The portrayal of Sinema by Cecily Strong may be career defining. Recall that Tina Fey ruined the career of Sarah Palin with a single line in a mock vice-presidential debate—“Are we not doing the talent portion?”—delivered while holding a flute (at 9:20). See Newsweek, “Kyrsten Sinema Suffers a Sarah Palin-Style Skewering on 'Saturday Night Live'.”

The Pandora Project.

          WaPo published its second installment of the Pandora Project—an investigation into the use of off-shore accounts, shell-companies, and trust funds to evade tax authorities and criminal prosecution. In one disturbing segment of today’s report, the Post described how the South Dakota legislature gave free rein to the “trust fund industry” to rewrite state laws to impose secrecy similar to that of Swiss banks. See Washington Post, “U.S. tax havens lure wealthy foreigners and tainted money.” Legislators from South Dakota have admitted that they don’t even understand the laws that they are passing. What they do know, and care about, is that small, secretive firms have flocked to Sioux Falls, South Dakota, to set up shop. Those firms, in turn, lure international money with the promise of the “South Dakota Advantage.”

          Per the Post,

          [A] burgeoning American trust industry is increasingly sheltering the assets of international millionaires and billionaires by promising levels of protection and secrecy that rival or surpass those offered in overseas tax havens. That shield, which is near-absolute, has insulated the industry from meaningful oversight and allowed it to forge new footholds in U.S. states.

          Of course, there is nothing inherently improper or illegal about trusts. They are a standard part of estate planning for tens of millions of American families. But when the object of a trust is to shield financial transactions from tax authorities and criminal liability, the U.S. has every right to regulate and investigate those trust companies and banks. The fact that South Dakota’s legislature has allowed the state to become a captive of the foreign trust industry is shameful. Let’s hope that someone in the D.O.J. subscribes to the Washington Post.

Concluding Thoughts.

          For the last week, I have received a stream of emails telling me that the most important legislative priority is passing the Freedom to Vote Act. I agree. But until we carve out an exception to the filibuster for voting rights legislation, nothing will happen on voting rights. So, to everyone who urges me to talk about voting rights above all else, I urge you to talk about eliminating the filibuster above all else. If the filibuster no longer existed, we would not be having a drawn-out fight over the reconciliation process, we would not be playing chicken with the national debt, we would not be worried about the Court’s plan to overturn Roe v. Wade, and we would not be talking about passing a “Joe Manchin-lite” version of the John Lewis Voting Rights Act.

          The above emails are frequently accompanied by predictions that if we don’t pass the Freedom to Vote Act soon, Democrats will lose in 2022. We must stop using fatalistic language in a misguided effort to motivate (and frighten) Democrats. If we tell Democrats frequently enough that 2022 is a lost cause, they will believe us. If we say that the only way to win in 2022 is if we pass the Freedom to Vote At but fail to do so, we are predicting defeat in 2022. That is a corrosive message.

          I have been unrelenting in my efforts to persuade Democrats that we must end the filibuster to pass voting rights reform. But I have been equally adamant that we can prevail in 2022 regardless of the obstacles that Republicans create. We should be honest in discussing the challenges we face (which are great), but that honesty includes acknowledging that that we can win in 2022. Yes, Democrats have problems, but the leader of our party is not a failed coup-plotter whose platform is revenge and whose major accomplishment is contributing to the deaths of hundreds of thousands of Americans by failing to take the coronavirus pandemic seriously.

          Democrats are focused on the reconciliation bill because they can pass it this year. Unless Sinema and Manchin change their minds on the filibuster, we cannot pass voting reform this year. That is a tragedy and an outrage. But given that conundrum, it is reasonable to focus on what we can accomplish in the short term.

          In the meantime, please continue to call your Senators and Representatives and urge them to pass voting rights reform and end the filibuster. Although we may not achieve success on either of those items this year, we are conditioning our elected representatives for the fight to come—a fight that we will eventually win.

          Talk to you tomorrow!