Week of Truth in Washington – and for Joe Biden: Domestically, things will be extremely explosive for the US President in the coming days. Several points of contention are on the agenda.
After the Afghanistan debacle and the submarine dispute with France, US President Joe Biden will face extremely explosive domestic politics this week. In Congress, a gigantic infrastructure package and an even larger investment package for social reforms are being fought, and there is a threat of a shutdown and insolvency of the country. An overview of the points of contention.
Infrastructure package
The Senate voted in early August for a $ 1.2 trillion infrastructure package, which includes massive investments in roads, bridges, train routes, broadband internet, water pipes and climate change measures. In addition to Biden’s Democrats, some Republicans also voted for the project. It has to pass through the House of Representatives – but there is resistance in the progressive wing of Biden’s Democrats.
Left-wing MPs only want to vote for the infrastructure package if a social package worth 3.5 trillion dollars (almost three trillion euros) progresses at the same time. They fear that the social package in the Senate could peter out once the infrastructure package has been approved and they no longer have any leverage. The chairman of the House of Representatives, the Democrat Nancy Pelosi, postponed a vote on the infrastructure package planned for Monday. This is to gain time for deliberations on the social package.
Historical social reforms
The social package is the heart of Biden’s reform plans and would be the largest expansion of the welfare state in the United States in decades. It provides $ 3.5 trillion for education, health care, families, and climate protection over a ten-year period. In contrast to the infrastructure package, we are also talking about “human infrastructure”.
The measures are to be financed through higher taxes for companies and the rich. The opposition Republicans firmly reject the plans. However, Democratic senators also have reservations, especially the center politicians Joe Manchin and Kyrsten Sinema. Because the Democrats in the Senate only have a wafer-thin majority, they cannot afford a single deviator – otherwise the social program will fail.
Impending budget freeze
In addition to the disputes between Democrats and Republicans and within the Democratic Party, the US is facing a budget freeze and thus a shutdown of federal agencies. The current annual budget ends at the end of the month on Friday night – and a new budget has not yet been decided.
Without a transitional budget, there would be a so-called shutdown. Hundreds of thousands of federal employees would then be sent on unpaid compulsory leave, and numerous public institutions would have to close. The Democrats have already presented a transitional budget – but are linking that to a suspension of the debt ceiling, which is being met with opposition from the Republicans. They therefore refused to approve the Democrats’ plan in the Senate.
Dispute over the debt ceiling
The Treasury Department warns that if the cap is not increased or suspended, the US faces bankruptcy in October. Treasury Secretary Janet Yellen said it could lead to “historic financial crisis” and “economic catastrophe”.
Most recently, the debt cap was suspended under Biden’s predecessor Donald Trump for a period of two years. Since August 1, however, a debt ceiling of 28.4 trillion dollars (around 24 trillion euros) has been in effect again. Since then, the Ministry of Finance has tried to avoid bankruptcy by redeploying, but the options will soon be exhausted.
The opposition Republicans are refusing to allow the debt ceiling to be suspended again. You accuse the Democrats of having an irresponsible budget policy in view of the planned investment packages. However, under Republican presidents other than Trump, the debt ceiling has also been raised or suspended.
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