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    Senate Republicans Stall Crucial Vote on Fed Nominees

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    President Biden’s plans to reshape the Federal Reserve suffered a setback on Tuesday as Republicans delayed a key vote on his five nominees for its Board of Governors.Republicans did not show up for a committee decision that would have advanced the nominees to the full Senate for a confirmation vote. Because a majority of the Senate Banking Committee’s members need to be physically present for such votes to count, their blockade effectively halted the process.The unusual maneuver, spearheaded by Senator Patrick J. Toomey of Pennsylvania, was driven by Republican opposition to Mr. Biden’s pick for the nation’s top bank cop, Sarah Bloom Raskin.The president has renominated Jerome H. Powell as Fed chair and has tapped Lael Brainard, a current Fed governor, as vice chair. He has also nominated the economists Lisa D. Cook and Philip N. Jefferson as Fed governors. But Ms. Raskin — a longtime Washington policymaker and lawyer whom Mr. Biden has picked as vice chair for bank supervision — has garnered the most pushback.To prevent her nomination from advancing to the full Senate, Republicans held up the vote on all five nominees.Democrats and the White House criticized Republicans for engineering a boycott and scrambled for a solution that could get the nominees to a confirmation vote. Senator Sherrod Brown, Democrat of Ohio and chair of the Banking Committee, on Tuesday shot down the idea that he would separate Ms. Raskin from the other nominees to allow the rest to advance. Ms. Raskin could face tough odds of passing, especially on her own.By nominating five of the Fed’s seven governors and all of its highest-ranking leaders, Mr. Biden had a chance to shake up the institution. While some of his picks — like Mr. Powell — represented continuity, together they would have made up the most racially and gender-diverse Fed leadership team ever.Sarah Binder, a professor of political science at George Washington University who co-wrote a book on the politics of the Fed, said Democrats would need to come up with a strategy to overcome the Republican block or the nominees could get stuck in limbo.“It is really a delay — it might yet scupper Raskin,” she said. She noted that Democrats could break the nominations up or try to garner enough support among the full Senate to override the rules and get the nominees past the committee, though that might be a challenge.“It’s pretty uncharted, and they’re going to have to find a way,” Dr. Binder said.Molly Reynolds, a senior fellow in governance studies at the Brookings Institution, said that outside of trying to change Senate rules — which she called the “nuclear option” — Democrats’ clearest avenue was probably to negotiate with Republicans.“They just need a Republican to show up,” she noted, explaining that the senator would not even need to vote yes for the committee to secure a majority and move the candidates along.Tuesday’s maneuver was the latest step in Mr. Toomey’s opposition campaign against Ms. Raskin, who would serve as arguably the nation’s most important bank regulator if confirmed.Mr. Toomey has criticized Ms. Raskin for past comments on climate-related regulation, worrying that she would be too activist in bank oversight. More recently, he has pressed for more information about her interactions with the Fed while she was on the board of a financial technology company that was pushing for a potentially lucrative central bank account.“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” Mr. Toomey said in the statement.White House officials criticized his move as inappropriate when the Fed is wrestling with rapidly rising prices and preparing to raise interest rates next month.“It’s totally irresponsible, in our view — it’s never been more important to have confirmed leadership at the Fed,” said Jen Psaki, the White House press secretary. She added that the administration’s focus now was moving the nominees through the committee and called Mr. Toomey’s probing of Ms. Raskin’s background “false allegations.”The dispute centers on the revolving door between government regulators and the arcane world of financial technology.Mr. Toomey and his colleagues have said Ms. Raskin, a former Fed and Treasury official, had contacted the Federal Reserve Bank of Kansas City on behalf of Reserve Trust, a financial technology company. Reserve Trust secured a strategically important account at the Fed while she was on its board: To this day, it advertises that it is the only company of its kind with what’s known as a “master” account.Master accounts give companies access to the U.S. payment system infrastructure, allowing firms to move money without working with a bank, among other advantages.Republicans are blocking the process over concerns about one of the nominees, Sarah Bloom Raskin.Pool photo by Ken CedenoMs. Raskin said in written responses to Mr. Toomey’s questions early this month that she did “not recall any communications I made to help Reserve Trust obtain a master account.” But Mr. Toomey said in a subsequent letter that the president of the Kansas City Fed, Esther George, had told his staff that Ms. Raskin called her about the account in 2017.The Kansas City Fed has insisted that it followed its normal protocol in granting Reserve Trust’s master account and noted that talking with a firm’s board members was “routine.” But Mr. Toomey has continued to push for more information.“Important questions about Ms. Raskin’s use of the ‘revolving door’ remain unanswered largely because of her repeated disingenuousness with the committee,” Mr. Toomey said in his statement Tuesday.Democrats have emphasized that Ms. Raskin recently committed to a new set of ethics standards, agreeing not to work for financial services companies for four years after she leaves government — a pledge Ms. Cook and Mr. Jefferson also made, at the urging of Senator Elizabeth Warren, Democrat of Massachusetts.Ms. Brainard agreed to a weaker version of that commitment that would bar her from working at bank holding companies and depository institutions outside of mission-driven exceptions like banks that target underserved communities, a spokesperson for Ms. Warren’s office said Tuesday.Mr. Powell declined to make a similar commitment, the spokesperson said. The Fed chair did signal that he would adhere to the administration’s ethics rules, which ban paid work related to government service for two years upon leaving office.On Tuesday, a dozen Republican chairs in the room where the committee met remained empty while Democrats occupied their seats across the room. Democrats took a vote to show support, though it was not binding, and Mr. Brown pledged to reschedule.“Few things we do as senators will do more to help address our country’s economic concerns more than to confirm this slate of nominees, the most diverse and most qualified slate of Fed nominees ever put forward,” Mr. Brown said, chiding Republicans for skipping the session.“They’re taking away probably the most important tool we have — and that’s the Federal Reserve — to combat inflation,” he later added.The Fed has four current governors, in addition to its 12 regional presidents, five of whom vote on monetary policy at any given time. Mr. Powell has already been serving as chair on an interim basis, since his leadership term officially expired this month. Even if the nominees advance, Ms. Raskin may struggle to pass the full Senate. Winning confirmation would require her to maintain full support from all 50 lawmakers who caucus with Democrats and for all those lawmakers to be present unless she can win Republican votes. Senator Ben Ray Luján, Democrat of New Mexico, has been absent as he recovers from a stroke.“The Republicans are playing hardball because they can,” said Ian Katz, the managing director at Capital Alpha Partners. “At the least, it delays her confirmation. It could have the ultimate effect of killing it.” More

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    Debate Looms Over I.M.F.: Should It Do More Than Put Out Fires?

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    As the International Monetary Fund gets set for its annual meeting, economists ask if it’s time to update its mandate as the world’s financial crisis responder.Lopsided access to vaccinations, extreme economic inequality, rising food prices and staggering debt are on the agenda when the International Monetary Fund and the World Bank gather for their annual meetings in Washington next week.A pressing issue not in the official program is the controversy that has been swirling for weeks around the chief of the I.M.F., Kristalina Georgieva, threatening her leadership.An investigation last month accused Ms. Georgieva of rigging data to paint China as more business friendly in a 2018 report when she was chief executive at the World Bank. Ms. Georgieva has denied any wrongdoing.The scandal has focused on the bank’s credibility — billion-dollar decisions can be made on the basis of its information — as well as Ms. Georgieva’s culpability.But lurking behind the debate over her future are foundational questions about the shifting role of the I.M.F., which has helped guide the planet’s economic and financial system since the end of World War II.Once narrowly viewed as a financial watchdog and a first responder to countries in financial crises, the I.M.F. has more recently helped manage two of the biggest risks to the worldwide economy: the extreme inequality and climate change.Some stakeholders, though, have chafed at the scope of the fund’s ambitions, and how much it should venture onto the World Bank’s turf of long-term development and social projects. And they object to what’s perceived as a progressive tilt.“There is a modernizing streak here running through major financial institutions which is creating a kind of tension,” said Adam Tooze, a historian at Columbia University and the author of “Shutdown: How Covid Shook the World’s Economy.”Other pressures weigh on the agency as well. Washington is still home to the I.M.F.’s headquarters, and the United States is the only one of the 190 member countries with veto power, because it contributes more money than any other. But its dominance has been increasingly challenged by China — straining relations further tested by trade and other tensions — and emerging nations.The willingness of the Federal Reserve and other central banks to flush trillions of dollars into the global economy to limit downturns also means that other lenders, aside from the I.M.F., have enough surplus cash on hand to lend money to strapped nations. China has also greatly expanded its lending to foreign governments for infrastructure projects under its ambitious Belt and Road Initiative.At the same time, long-held beliefs like the single-minded focus on how much an economy grows, without regard to problems like inequality and environmental damage, are widely considered outdated. And the preferred cocktail for helping debt-ridden nations that was popular in the 1990s and early 2000s — austerity, privatization of government services and deregulation — has lost favor in many circles as punitive and often counterproductive.The debate about the role of the I.M.F. was bubbling before the appointment of Ms. Georgieva, who this month started the third year of her five-year term. But she has embraced an expanded role for the agency. A Bulgarian economist and the first from an emerging economy to head the fund, she stepped up her predecessors’ attention to the widening inequality and made climate change a priority, calling for an end to all fossil fuel subsidies, for a tax on carbon and for significant investment in green technology.She has argued that however efficient and rational the market is, governments must step in to fix built-in flaws that could lead to environmental devastation and grossly inequitable opportunity. Sustainable debt replaced austerity as the catchword.When the coronavirus pandemic brutally intensified the slate of problems — malnourishment, inadequate health care, rising poverty and an interconnected world vulnerable to environmental disaster — Ms. Georgieva urged action.Here was “a once in a lifetime opportunity,” she said, “to support a transformation in the economy,” one that is greener and fairer.The I.M.F. opposed the hard line taken by some Wall Street creditors in 2020 toward Argentina, emphasizing instead the need to protect “society’s most vulnerable” and to forgive debt that exceeds a country’s ability to repay.I.M.F. headquarters in Washington, where Republicans have bristled at Ms. Georgieva’s agenda.Daniel Slim/Agence France-Presse — Getty ImagesThis year, Ms. Georgieva managed to create a special reserve fund of $650 billion to help struggling nations finance health care, buy vaccines and pay down debt during the pandemic.That approach has not always sat well with conservatives in Washington and on Wall Street.Former President Donald J. Trump immediately objected to the new reserve funds — known as special drawing rights — when they were proposed in 2020, and congressional Republicans have continued the criticism. They argue that the funds mostly help American adversaries like China, Russia, Syria and Iran while doing little for poor nations.Ms. Georgieva’s activist climate agenda has also run afoul of Republicans in Congress, who have opposed carbon pricing and pushed to withdraw from multinational efforts like the United Nations Framework Convention on Climate Change and the Paris climate agreement.So has her advocacy for a minimum global corporate tax like the one that more than 130 nations signed on Friday.In July, Laurence D. Fink, who runs BlackRock, the world’s largest investment management company, and was at odds with the I.M.F.’s stance on Argentina, called the fund and the World Bank outdated and said they needed “to rethink their roles.”The investigation into data rigging at the World Bank focused on what is known as the Doing Business Report, which contains an influential index of business-friendly countries. WilmerHale, the law firm that conducted the inquiry, said various top officials had exerted pressure to raise the rankings of China, Saudi Arabia, the United Arab Emirates or Azerbaijan in the 2018 and 2020 editions.The law firm reported that Ms. Georgieva was “directly involved” with efforts to improve China’s rating for the 2018 edition. She said WilmerHale’s report was inaccurate and rejected its accusations. The I.M.F. executive board is reviewing the findings.The United States, which is the fund’s largest shareholder, has declined to express support for her after the allegations. Ahead of a meeting of the I.M.F. board on Friday, Ms. Georgieva maintained strong support from many of the fund’s shareholders, including France, which had lobbied hard for her to get the job in 2019. Late Friday, the I.M.F. released a statement saying the board would “request more clarifying details with a view to very soon concluding its consideration of the matter.”In Congress, Republicans and Democrats called for the Treasury Department to undertake its own investigations. A letter from three Republicans said the WilmerHale inquiry “raises serious questions about Director Georgieva’s ability to lead the International Monetary Fund.”Several people sprang to her defense, including Shanta Devarajan, an economist who helped oversee the 2018 Doing Business Report and a key witness in the investigation. He wrote on Twitter that the law firm’s conclusions did not reflect his full statements, and that the notion that Ms. Georgieva had “put her thumb on the scale to benefit one nation is beyond credulity.”“It was her job to ensure the final report was accurate and credible — and that’s what she did,” Mr. Devarajan added.In an interview, he said critics had used the investigation to discredit Ms. Georgieva. The problem, he said, is “how people may have chosen to read the findings of the report and use that to criticize Kristalina’s credibility and leadership.”Mr. Devarajan was not the only one to make the case that the controversy was functioning in some ways as a proxy for the contest over the I.M.F.’s direction. Jeffrey Sachs, director of the Center for Sustainable Development at Columbia, wrote in The Financial Times that Ms. Georgieva was receiving “McCarthyite treatment” by “anti-China forces” in Congress.Whatever role one might prefer for the I.M.F. — traditional, expanded or something else entirely — the scandal is both a distraction and a threat.Nicholas Stern, a British economist who formerly served as the chief economist and senior vice president of the World Bank, said this controversy could not come at a worse moment.“The coming few years are of vital importance to the future stability of the world economy and environment,” he wrote in a letter to the I.M.F. board in support of Ms. Georgieva. “This is as decisive a period as we have seen since the Second World War.”Alan Rappeport More

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    Finance Executives Say Risk of Default Is Already Damaging the Economy

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    Shortly after the C.E.O.s met with President Biden, Senator Mitch McConnell said he would allow Democrats to raise the debt ceiling enough to push a potential default to December.Finance executives met with President Biden as an Oct. 18 debt-ceiling deadline inched closer, warning that a U.S. default would threaten the global economy. Senate Republicans have promised to filibuster a long-term suspension of the borrowing limit.Doug Mills/The New York TimesPresident Biden met with finance executives on Wednesday as he continued to try to put maximum pressure on Senate Republicans to raise the debt ceiling before Oct. 18, the date the Treasury Department has said the United States would go into default.Shortly after the meeting, Senator Mitch McConnell, the minority leader, seemed to relent from his opposition to allowing Democrats to lift the ceiling in the short term through regular channels. He said he would “allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”The White House dismissed Mr. McConnell’s statement as an informal offer and said the president would rather Republicans allow a vote on a spending bill to go forward.The executives all warned that the economy would be threatened should the country default on its debts for the first time in history.“It’s already beginning to cause some damage in the economy,” Jane Fraser, the chief executive of Citigroup, told the president. “It will hurt consumers. It will hurt small businesses.”“It’s not an exaggeration to say that even small distortions in the Treasury market can cost taxpayers tens of billions of dollars over many years,” she added, referring to the market for bonds issued by the Treasury Department.Mr. Biden, seeking to convey the consequences to everyday Americans, asked the executives to explain what would happen if the United States went into default for only a day or two.“Certainly, as we know, there are hundreds of millions of investors that are involved in the markets today that have put their hard-earned savings into the markets,” said Adena Friedman, the chief executive of Nasdaq. “And we would expect that the markets will react very, very negatively.”Mr. McConnell of Kentucky had long said Democrats must use a more complicated process known as reconciliation to overcome Republican opposition to raising the debt ceiling. In his statement on Wednesday, he reiterated that the reconciliation process was the only option he supported for a longer-term increase in the limit, unless “Democrats abandon their efforts to ram through another historically reckless taxing and spending spree.”The financial sector had been projecting a grim two weeks ahead. A report released by Goldman Sachs said that there was little reason to believe Congress would meet the Oct. 18 deadline, but that “the public and financial market response would likely force a quick political resolution.”Senate Democrats are still weighing their options for a path forward. Jen Psaki, the White House press secretary, told reporters on Wednesday that the White House did not want to keep prolonging things with an extension. “We don’t need to go through a cumbersome process that every day brings additional risks,” Ms. Psaki said.Asked why the White House does not support a short-term debt ceiling increase that could, at least temporarily, calm financial markets, Ms. Psaki replied, “Why not just get it done now?” She said Mr. Biden and Mr. McConnell had not yet spoken about the debt limit.The budget process of reconciliation would most likely involve two marathons of politically charged votes that Mr. Biden has predicted would be “fraught with all kinds of potential danger for miscalculation.” Democrats say there is no guarantee that Republicans wouldn’t drag those votes out to inflict procedural and political discomfort.Understand the U.S. Debt CeilingCard 1 of 9What is the debt ceiling? More

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    Biden Calls Republicans 'Reckless' Over the Debt Limit Increase

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    The president warned Republicans “not to use procedural tricks to block us from doing the job.”President Biden said Americans could see the implications as early as this week if Senate Democrats were not able to vote to increase the debt limit.Doug Mills/The New York TimesWASHINGTON — President Biden excoriated Republicans on Monday for blocking his party’s efforts to raise the debt ceiling weeks before a projected government default, calling their tactics “reckless” and “disgraceful” and warning they risked causing “a self-inflicted wound that takes our economy over a cliff.”Mr. Biden, trying to convey the risks to everyday Americans, warned that they could see the effects as early as this week if Senate Democrats were not able to vote to raise the debt limit. That cap dictates the amount of money the government can borrow to fulfill its financial obligations, including paying Social Security checks, salaries for military personnel and other bills.“As soon as this week, your savings and your pocketbook could be directly impacted by this Republican stunt,” Mr. Biden said, cautioning that a failed vote could rattle financial markets, sending stock prices lower and interest rates higher. “A meteor is headed for our economy.”Despite Mr. Biden’s attempts to blame Republicans for the impasse, Democrats are increasingly confronting the possibility that they may need to raise the debt limit through the one legislative path that Republicans have left open: a process known as budget reconciliation that bypasses a Senate filibuster. Mr. Biden and Democratic leaders have chafed at that approach, saying Republicans bear a share of responsibility for Washington’s ongoing budget deficits and must at least allow an up-or-down vote, as has been the case under previous presidents.Investors in U.S. government debt are already getting spooked: Yields for certain Treasury bonds that could be affected by a default spiked on Monday, as investors demanded higher interest payments to offset the risk.The Treasury Department has warned the United States will run out of money to pay all its bills by Oct. 18 if the borrowing cap is not raised, a situation that could force the government into default and wreak havoc on an American economy already shaken by the coronavirus.The dire stakes of the debt limit impasse add a level of seriousness to what has become a perennial exercise of political brinkmanship in Washington. Mr. Biden and congressional Democrats say Republicans are putting the entire economy at risk by blocking a Senate vote that would raise the debt limit with just Democrat support. Republicans, who have allowed such votes to occur in the past, have twice blocked Democrats from taking up a bill and are trying to force the party to use reconciliation, which is a more complicated process that could take a week or more to come together.On Monday, the president said that he could not guarantee the limit would be raised.“That’s up to Mitch McConnell,” Mr. Biden said, referencing the senator of Kentucky and minority leader. “I don’t believe it. But can I guarantee it? If I could, I would, but I can’t.”The president’s remarks escalated a showdown with Mr. McConnell, who on Monday sent a letter to Mr. Biden stating that he would not relent in using the filibuster to prevent a Senate vote and that the onus was on Democrats to find a solution.Senator Mitch McConnell, the minority leader, sent a letter to Mr. Biden stating that the onus was on Democrats to find a solution to the debt-limit problem.T.J. Kirkpatrick for The New York Times“I respectfully submit that it is time for you to engage directly with congressional Democrats on this matter,” Mr. McConnell wrote in a letter to Mr. Biden. “Your lieutenants in Congress must understand that you do not want your unified Democratic government to sleepwalk toward an avoidable catastrophe when they have had nearly three months’ notice to do their job.”Democratic leaders in the Senate, along with Mr. Biden, have bristled at Mr. McConnell’s stance, saying Republicans bear responsibility for having approved spending that now requires more government borrowing, and have no right to stand in the way of a Senate vote.“Why? Why are we doing this?” Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, said on Monday. “Because McConnell wants to make a point.”Senator Jon Tester, Democrat of Montana, visibly frustrated, said the brinkmanship “speaks to how broken this country is.”“I mean it’s crazy — we’re offering a way to do it, where he doesn’t have to have any members vote for it, and he said that’s not good enough,” Mr. Tester said. “It’s got to be on this piece of legislation or we’re out.”Senator Chuck Schumer of New York, the majority leader, told Democrats that a bill that would raise the debt limit would need to reach Mr. Biden’s desk within days, not weeks, and threatened to hold members in Washington over the weekend and cancel an upcoming recess to do it.“Let me be clear about the task ahead of us: We must get a bill to the President’s desk dealing with the debt limit by the end of the week. Period. We do not have the luxury of waiting until Oct. 18,” he wrote in a “dear colleague” letter dated Monday.Mr. McConnell made clear that the Republican decision to filibuster a vote was driven by politics. He cited the votes Mr. Biden cast against raising the debt limit under former President George W. Bush, which he said “made Republicans do it ourselves.”“Bipartisanship is not a light switch that Speaker Pelosi and Leader Schumer may flip on to borrow money and flip off to spend it,” Mr. McConnell wrote. “For two and a half months, we have simply warned that since your party wishes to govern alone, it must handle the debt limit alone as well.”Administration officials and Democratic leaders note a large difference between the votes under Mr. Bush and the ones now: Democrats did not filibuster those votes, allowing Republicans to bring a bill to the floor and raise the limit on their own.With that avenue in peril, administration officials and congressional leaders are privately sifting through the party’s options if Mr. McConnell does not budge and the vote fails. If that happens, Mr. Biden could face increased pressure to get Mr. Schumer and other party leaders to use budget reconciliation.The reconciliation process would likely involve two marathons of politically charged votes that could extend for the better part of a day. Democrats say there is no guarantee that Republicans won’t drag those votes out to inflict procedural and political discomfort.Understand the U.S. Debt CeilingCard 1 of 8What is the debt limit? More

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    Democrats Move to Avert Shutdown, but Divisions Imperil Biden’s Agenda

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    Democrats prepared a spending bill to keep the government funded past a Thursday deadline, but moderates dug in harder against their ambitious social safety net bill.WASHINGTON — Democrats prepared legislation on Wednesday to avert a government shutdown this week, but they were desperately trying to salvage President Biden’s domestic agenda as conservative-leaning holdouts dug in against an ambitious $3.5 trillion social safety net and climate bill that carries many of the party’s top priorities.Congressional leaders moved to address the most immediate threat, working to complete a bill to prevent a government funding lapse at midnight on Thursday. Yet after days of intensive negotiations to bridge bitter differences in their party over Mr. Biden’s two biggest legislative priorities, the president and top Democrats appeared as far as ever from an agreement on their marquee social policy package, which the White House calls the Build Back Better plan.That, in turn, was imperiling a $1 trillion bipartisan infrastructure bill that was scheduled for a House vote on Thursday.The fate of the two measures could define the success of Mr. Biden’s presidency, and the intense negotiations surrounding them have posed a test of his skills as a deal maker, which he highlighted as a calling card during his campaign for the White House. But after days of personal meetings with lawmakers in the Oval Office and phone calls to key players, Mr. Biden remained far short of a deal.Dramatizing the challenge, Senator Joe Manchin III of West Virginia, a leading holdout on the social policy bill, issued a lengthy and strongly worded statement on Wednesday evening reiterating his opposition to the proposal as currently constituted, saying it amounted to “fiscal insanity.”“While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot — and will not — support trillions in spending or an all-or-nothing approach that ignores the brutal fiscal reality our nation faces,” Mr. Manchin wrote, denouncing an approach that he said would “vengefully tax for the sake of wishful spending.”The statement was the polar opposite of what Mr. Biden and top Democrats had hoped to extract from Mr. Manchin and other centrist critics of the bill by week’s end — a firm public commitment to eventually vote for the social policy measure, in order to placate liberals who want to ensure its enactment.Instead, it further enraged progressives who were already promising to oppose the infrastructure bill until Congress acted on the larger social policy plan, which Democrats plan to push through using a fast-track process known as budget reconciliation to shield it from a filibuster. They have been pressing to push off the infrastructure vote until after votes on the reconciliation bill — or, at the very least, after the centrist holdouts provided a firm sense of what they would accept in that package.“I assume he’s saying that the president is insane, because this is the president’s agenda,” Representative Pramila Jayapal, Democrat of Washington and the leader of the Congressional Progressive Caucus, said of Mr. Manchin. “Look, this is why we’re not voting for that bipartisan bill until we get agreement on the reconciliation bill. It’s clear we’ve got a ways to go.”“I tell you, after that statement, we probably have even more people willing to vote ‘no’ on the bipartisan bill,” she added.The impasse left unclear the fate of the infrastructure measure. While a handful of centrist Republicans plan to support it, G.O.P. leaders are urging their members to oppose it, leaving Democrats who hold a slim majority short of votes to pass the bill if progressives revolt.“The plan is to bring the bill to the floor,” Speaker Nancy Pelosi told reporters, returning to Capitol Hill after huddling at the White House with Mr. Biden and Senator Chuck Schumer of New York, the majority leader. Asked whether she was concerned about the votes, she added, “One hour at a time.”She spoke shortly after the House passed legislation lifting the statutory limit on federal borrowing until Dec. 16, 2022, an effort to avert a catastrophic federal debt default next month when the Treasury Department says it will breach the current cap.Senate Republicans blocked a Democratic effort to pair the increase with a spending bill to keep the government funded, and are likely to oppose the House-passed bill, which was approved on a nearly party-line vote of 219 to 212 on Wednesday. Still, the move signaled that Democrats were willing to act on the government funding measure separately, steering clear of a shutdown even as the debt ceiling remains unresolved for now.But much of the urgency on Wednesday was focused on salvaging the president’s agenda, after Mr. Biden and his aides cleared his schedule on Wednesday in an attempt to broker a deal among Democrats.Some Democrats have complained this week that the president has not engaged in talks to their satisfaction. He welcomed groups of progressives and moderates to the White House last week, for example, but met with each separately, as opposed to holding a group negotiating session.And efforts by Mr. Biden and his team to pressure Mr. Manchin and Senator Kyrsten Sinema of Arizona, another Democratic holdout on the reconciliation bill, appear to have fallen flat. Officials have been working for days to persuade the pair to specify how much they would be willing to spend on the package, calculating that such a commitment would allay the worries of progressives now refusing to support the infrastructure bill.Both Ms. Sinema and Mr. Manchin visited the White House on Tuesday, but after their meetings, neither they nor White House officials would enumerate the contours of a bill they could support. Top White House officials also trekked to Capitol Hill on Wednesday to huddle privately with Ms. Sinema for more than two hours.“The president felt it was constructive, felt they moved the ball forward, felt there was an agreement, that we’re at a pivotal moment,” Jen Psaki, the White House press secretary, told reporters on Tuesday, characterizing the meetings. “It’s important to continue to finalize the path forward to get the job done for the American people.”Mr. Biden held conversations with various lawmakers throughout the day on Wednesday and planned to continue them on Thursday, White House officials said.Senator Kyrsten Sinema of Arizona and other centrist holdouts haven’t provided a firm sense of what they would accept in the reconciliation bill.Sarahbeth Maney/The New York TimesPrivately, administration officials said Mr. Biden was continuing to take an encouraging role with Mr. Manchin and Ms. Sinema, and not demanding they agree to anything immediately. Both senators have yet to publicly do so, even as liberal Democrats continue to publicly fume over the reticence.In his statement on Wednesday, Mr. Manchin said he wanted to set income thresholds for many of the social program expansions Democrats have proposed. He suggested that he would be open to undoing some components of the 2017 tax cut.Moderate House Democrats, who helped secure a commitment for a vote this week on the infrastructure bill, warned that a failed vote would worsen the already deep mistrust between the two factions of the party.“If the vote were to fail tomorrow or be delayed, there would be a significant breach of trust that would slow the momentum in moving forward on delivering the Biden agenda,” said Representative Stephanie Murphy of Florida, one of the moderates who sought to decouple the two plans.Even as they labored to work out philosophical differences in their party on the bill, Democrats suffered yet another setback on Wednesday when the Senate’s top rules enforcer rejected a second proposal to include a path to legal status for about eight million undocumented immigrants in the reconciliation bill.In a memo obtained by The New York Times, Elizabeth MacDonough, the Senate parliamentarian, wrote that the policy change “vastly outweighs its budgetary impact,” effectively disqualifying it from inclusion in a measure whose contents must have a direct impact on the federal budget.In their latest effort, Democrats had proposed moving up the date for a process known as immigration registry, which allows otherwise law-abiding undocumented immigrants who have been in the United States continuously since a certain date to adjust their status and gain a pathway to citizenship. The current date, established in 1986, is set at Jan. 1, 1972. Democrats had sought to change that date to Jan. 1, 2010.After days of personal meetings with lawmakers in the Oval Office and phone calls to key players, President Biden remained far short of a deal. Doug Mills/The New York TimesLast week, Ms. MacDonough rejected Democrats’ initial proposal to grant legal status to several categories of undocumented people, including those brought to the United States as children, known as Dreamers; immigrants who were granted Temporary Protected Status for humanitarian reasons; people working in the country under nonimmigrant visas; close to one million farmworkers; and millions more who are deemed “essential workers.”She said those changes to immigration law could not be included, under the Senate rules, in the reconciliation package because they represented a “tremendous and enduring policy change that dwarfs its budgetary impact.”Democrats said they would continue to look for alternative strategies to aid immigrants through the reconciliation process.Luke Broadwater More

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    U.S. Debt-Limit Brinksmanship Has Become a Political Game

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    Republicans and Democrats have long sparred over raising the debt ceiling. But this time, the odds are growing that the U.S. could default.WASHINGTON — For nearly two decades, lawmakers in Washington have waged an escalating display of brinkmanship over the federal government’s ability to borrow money to pay its bills. They have forced administrations of both parties to take evasive actions, pushing the nation dangerously close to economic calamity. But they have never actually tipped the United States into default.The dance is repeating this fall, but this time the dynamics are different — and the threat of default is greater than ever.Republicans in Congress have refused to help raise the nation’s debt limit, even though the need to borrow stems from the bipartisan practice of running large budget deficits. Republicans agree the U.S. must pay its bills, but on Monday they are expected to block a measure in the Senate that would enable the government to do so. Democrats, insistent that Republicans help pay for past decisions to boost spending and cut taxes, have so far refused to use a special process to raise the limit on their own.Observers inside and outside Washington are worried neither side will budge in time, roiling financial markets and capsizing the economy’s nascent recovery from the pandemic downturn.If the limit is not raised or suspended, officials at the Treasury Department warn, the government will soon exhaust its ability to borrow money, forcing officials to choose between missing payments on military salaries, Social Security benefits and the interest it owes to investors who have financed America’s spending spree.Yet Republicans have threatened to filibuster any attempt by Senate Democrats to pass a simple bill to increase borrowing. Party leaders like Senator Mitch McConnell of Kentucky want to force Democrats to raise the limit on their own, through a fast-track congressional process that bypasses a Republican filibuster. That could take weeks to come to fruition, raising the stakes every day that Democratic leaders decline to pursue that option.The problem is further compounded by the fact that no one is quite sure when the government will run out of money. The Covid-19 pandemic continues to ravage the United States in waves, frequently disrupting economic activity and the taxes the government collects, complicating Treasury’s ability to gauge its cash flow. Estimates for what’s known as the “X-date” range from as early as Oct. 15 to mid-November..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Amid that uncertainty, congressional leaders and President Biden aren’t even attempting to negotiate a resolution. Instead, they are sparring over who should be saddled with a vote that could be used against them, raising the odds that partisan stubbornness will propel the country into a fiscal unknown.It all adds up to an impasse rooted in political messaging, midterm campaign advertising and a desire by Republican leaders to do whatever they can to protest Mr. Biden’s economic agenda, including the $3.5 trillion spending bill that Democrats hope to pass along party lines using a fast-track budget process.Republicans say they will not supply any votes to lift the debt cap, despite having run up trillions in new debt to pay for the 2017 tax cuts, additional government spending and pandemic aid during the Trump administration. Democrats, in contrast, helped President Donald J. Trump increase borrowing in 2017 and 2019.“If they want to tax, borrow, and spend historic sums of money without our input,” Mr. McConnell said on the Senate floor this week, “they will have to raise the debt limit without our help.”Thus far, Mr. Biden and Democratic leaders in Congress have declined to do so, even though employing that process would end the threat of default.Jon Lieber, a former aide to Mr. McConnell who is now with the Eurasia Group, a political-risk consultancy in Washington, wrote in a warning to clients this week that there is a one-in-five chance the standoff will push the country into at least a technical debt default — forcing the government to choose between paying bondholders and honoring all its spending commitments — this fall.“That’s crazy high for an event like this,” Mr. Lieber said in an interview, noting that the odds are significantly higher than in past standoffs. “But I feel really confident that’s the level of panic we should be having.”Republican leaders like Senator Mitch McConnell of Kentucky, the minority leader, are making no demands — suggesting no concessions that Mr. Biden and his party could offer to win their votes.Sarahbeth Maney/The New York TimesUnder President George W. Bush, Democrats, including Mr. Biden, voted in 2006 against a debt limit increase, citing Mr. Bush’s budget deficits that were swollen by tax cuts and wars in Iraq and Afghanistan. They did so despite warnings from administration officials that a default would hurt the nation’s credit rating and economy.Mr. Biden, like many other Democrats, said he could not abet Mr. Bush’s fiscal decisions. But his party did not filibuster a vote and Republicans were able to pass a debt limit increase along party lines. White House officials say Mr. Biden’s vote was symbolic, noting that the ability of Republicans to raise the debt ceiling was never in question.Leaders of both parties have, at times, made a version of the core argument in favor of raising the limit: that it is simply a way to allow the government to pay bills it has already incurred. Both parties also have shown no sign of slowing the nation’s borrowing spree, which accelerated last year as lawmakers approved trillions of dollars of aid for people and businesses struggling through the pandemic recession. Each party has recently occupied the White House and controlled Congress, but neither has come close in recent years to approving a budget that would balance — which is to say, not require additional borrowing and a debt-limit increase — within a decade.Biden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.Sarahbeth Maney/The New York TimesBiden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.“I think it’s scary for consumer confidence and for confidence in U.S. businesses and potential credit ratings if we don’t make sure that we raise that debt ceiling,” Andy Jassy, the chief executive officer of Amazon, said on CNBC earlier this 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a:hover{-webkit-text-decoration:none;text-decoration:none;}Democrats say Republicans have a responsibility to help raise the limit, noting that they helped when Mr. Trump needed to do it. White House officials called Mr. McConnell’s position hypocritical.“Republicans in Congress have spent a decade ushering in a new era where the prospect of default and a global economic meltdown has become a dangerous political football,” Michael Gwin, a White House spokesman, said in an email. “As we rebound from the deep recession caused by the pandemic, it’s more important now than ever to put partisanship aside, remove this cloud from over our economy, and responsibly address the debt limit — just like Democrats did three times under the previous administration.”Mr. Lieber and other analysts worry party leaders are talking past each other. Experts suggest it would take a week or two for Democratic leaders to steer a debt limit increase through the fast-track budget process. That could leave the government vulnerable to a sudden crisis. On Friday, the independent Bipartisan Policy Center, a Washington think tank, said the government could run out of cash to pay its bill by mid-October.Mr. Lieber said he is worried about “the risk of miscalculation of both sides,” in part because this standoff is not the same as the ones under Mr. Obama. “The Republicans aren’t asking for anything,” he said. “So their position is, there’s nothing you can do to get us to vote for a debt ceiling increase. That’s a dangerous situation.”Goldman Sachs researchers warned in a note to clients this month that the volatile nature of tax receipts this year, a product of the pandemic, makes the debt limit “riskier than usual” for the economy and markets. They said the standoff was at least as risky as in 2011, when brinkmanship disrupted bond yields and the stock market.Other financial analysts continue to believe that, as they have in the past, the sides will eventually find an agreement — largely because of the consequences of failure.“We believe Congress will raise or suspend the debt ceiling,” Beth Ann Bovino, S&P U.S. chief economist, wrote this week. “A default by the U.S. government would be substantially worse than the collapse of Lehman Brothers in 2008, devastating global markets and the economy.”In the meantime, Republicans are awaiting a vote by Democrats to raise the limit. Senator Rick Scott of Florida, who heads Republicans’ campaign arm in the Senate, told an NBC reporter he was eager to highlight Democratic support for raising the limit in midterm advertisements. More

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    House Passes Spending Bill and Debt Limit Increase Over G.O.P. Opposition

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    The measure now heads to the Senate, setting up a clash with Republicans, who have warned they will block any debt ceiling increase.WASHINGTON — The House on Tuesday approved legislation to keep the government funded through early December, lift the limit on federal borrowing through the end of 2022 and provide emergency money for Afghan refugees and natural disaster recovery, setting up a fiscal showdown as Republicans warn they will block the measure in the Senate.The bill is urgently needed to avert a government shutdown when funding lapses next week, and a first-ever debt default when the Treasury Department reaches the limit of its borrowing authority within weeks. But it has become ensnared in partisan politics, with Republicans refusing to allow a debt ceiling increase at a time when Democrats control Congress and the White House.In pairing the debt limit raise with the spending package, Democrats had hoped to pressure Republicans into dropping their opposition to raising the debt ceiling, a routine step that allows the government to meet its obligations. But even with crucial funding for their states on the line, no Republicans voted for the legislation.The bill passed with only Democratic votes in the closely divided House, 220 to 211.And the prospects for passage in the 50-50 Senate appeared dim, as Republicans vowed they would neither vote for the legislation nor allow it to advance in the chamber, where 60 votes are needed to move forward.The legislation, released only hours before the House vote, would extend government funding through Dec. 3, buying more time for lawmakers to negotiate the dozen annual spending bills, which are otherwise on track to lapse when the new fiscal year begins on Oct. 1. The package would also provide $6.3 billion to help Afghan refugees resettle in the United States and $28.6 billion to help communities rebuild from hurricanes, wildfires and other recent natural disasters. It would lift the federal debt limit through Dec. 16, 2022.“As this bill provides critical support for our families and communities it also addresses recent emergencies that require federal resources and incorporates feedback from members on both sides of the aisle,” said Representative Rosa DeLauro of Connecticut, the chairwoman of the House Appropriations Committee, in a speech on the House floor.Led by Senator Mitch McConnell of Kentucky, the minority leader, Republicans have warned for weeks that they had no intention of helping Democrats raise the limit on the Treasury Department’s ability to borrow. While the debt has been incurred with the approval of both parties, Mr. McConnell has repeatedly pointed to Democrats’ efforts to push multitrillion-dollar legislation into law over Republican opposition.But in remarks on Tuesday, Mr. McConnell made a purely political argument for refusing to support raising the debt ceiling, saying the party in power should shoulder the task on its own.“America must never default — we never have, and we never will,” Mr. McConnell said, speaking at his weekly news conference. “But whose obligation it is to do that changes from time to time, depending upon the government the American people have elected. Right now, we have a Democratic president, Democratic House, Democratic Senate.”“The debt ceiling will be raised, as it always should be,” he added. “But it will be raised by the Democrats.”As soon as the House vote gaveled shut, Mr. McConnell and Senator Richard C. Shelby of Alabama, the top Republican on the Senate Appropriations Committee, unveiled their own funding legislation, without the debt ceiling increase. Democrats, who joined with Republicans during the Trump administration to raise the debt ceiling, have argued that the G.O.P. is setting a double standard that threatens to sabotage the economy. Should the government default on its debt for the first time, it would prompt a financial crisis, shaking faith in American credit and cratering the stock market.Senator Mitch McConnell of Kentucky, the minority leader, has warned for weeks that Republicans had no intention of helping Democrats raise the limit.Stefani Reynolds for The New York TimesSenate Democrats are expected to take up the bill in the coming days, essentially daring Republicans to vote against it. But without 10 Republicans in support, it would fail to advance past the 60-vote filibuster threshold.Lawmakers and aides have conceded that it is likely possible for Democrats, who control both chambers and the White House, to address the debt ceiling on their own, using the same fast-track budget process they are employing to muscle through their $3.5 trillion social safety net plan over unified Republican opposition. That process, known as reconciliation, shields legislation from a filibuster.But Democratic leaders have rejected that approach, which would be a time-consuming and tricky maneuver that could imperil their marquee domestic legislation, already at risk amid party infighting over its price tag and details. Instead, they have argued that Republicans should do their part to protect American credit and avoid a catastrophic default.“Both Senate and House leadership have decided that that’s not an option they want to pursue,” said Representative John Yarmuth, Democrat of Kentucky and the chairman of the Budget Committee, on Monday. “I want to raise it to a gazillion dollars and just be done with it.”He blasted Mr. McConnell’s position on the federal borrowing limit, saying, “For him to say, ‘The debt ceiling has to be done, but we’re not going to do it’ is to me just the most ludicrous statement I’ve ever heard from a public official.”Mr. McConnell and other Senate Republicans have said they would support a stopgap spending package with the emergency relief attached, as long as the debt limit increase was removed.“I begged the White House, starting about two and a half weeks ago, not to do it, and they’re going to do it anyway,” said Senator John Kennedy, Republican of Louisiana. “It tells me that they’re not really serious about helping my state.”But Mr. Kennedy said he would still probably vote for the combined package because it provided disaster aid for his state.The drama surrounding the bill illustrated the exceedingly delicate task Democratic leaders face in the coming weeks in averting fiscal disaster and enacting both a $1 trillion infrastructure compromise and their far-reaching, $3.5 trillion social policy package. Facing immovable Republican opposition to most of their agenda and razor-thin majorities in both chambers, they must find a way to unite moderate and progressive members to cobble together the bare minimum votes needed to pass any bill.On Tuesday, House Democrats were forced to strip $1 billion that had been included in the spending legislation for Israel’s Iron Dome air defense system, after progressives — some of whom have accused Israel of human rights abuses against Palestinians — balked at its inclusion in an emergency spending package.The decision to jettison it for now infuriated some moderates in their ranks and sparked a flurry of Republican criticism. But Representative Steny H. Hoyer of Maryland, the majority leader, said he would bring up a bill to provide that funding later in the week under a suspension of the House rules.“I was for that, I’m still for it — we ought to do it,” Mr. Hoyer said on the House floor, adding that he had spoken to Yair Lapid, the Israeli foreign minister, earlier in the day and offered his commitment to ensuring that it would clear the House. Senate Republicans included the provision in their own version of the spending package, released late Tuesday.To help support the resettlement of Afghan refugees, the legislation would distribute billions of dollars across the federal government, including $1.7 billion to help provide emergency housing, English language classes, and other support to refugees. It would also provide $1.8 billion for the State Department, to cover the cost of evacuations and essential assistance for refugees.The bill provides $2.2 billion for the Pentagon, and requires a report on how the funds are spent and oversight of the treatment and living conditions for refugees at any Defense Department facility. And it requires that the administration report to Congress on military property, equipment and supplies that were either destroyed, removed from or left in Afghanistan after the withdrawal of American troops.Disaster aid, according to a summary provided by the House Appropriations Committee, is intended to address the damage caused by Hurricanes Ida, Delta, Zeta, and Laura, wildfires, droughts, winter storms, and other instances of natural devastation. More

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    As Infrastructure Bill Nears Key Vote, Deficit Takes Back Seat

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    Many Republicans are disregarding the deficit impact for the sprawling infrastructure bill, but intend to change course for looming battles on social spending and the debt ceiling.WASHINGTON — The bipartisan shrug that greeted the news that the Senate’s infrastructure bill contains $256 billion worth of deficit spending marked a new moment in the post-Trump era, one that highlighted how deficits matter only situationally to Republicans and inflation fears ebb and flow, depending on the politics of the issue.With a key test vote on the infrastructure measure expected around noon on Saturday, the Republican Party’s blasé attitude toward deficits will last only a matter of days.By early next week, with the bill likely passed, Democratic leaders will have to decide how to deal with a looming crisis: the approaching statutory limit on how much the Treasury can borrow to finance the government’s debt.They will also be pressing for Senate passage of a budget resolution intended to speed approval of $3.5 trillion in spending on health care, education, child care, immigration and other social policies, much of which would be paid for by tax increases on corporations and the wealthy.And the muffled murmurs from Republicans over infrastructure costs will give way to howls of outrage.“That will be an extraordinary debate of enormous dimension,” Senator Mitch McConnell of Kentucky, the Republican leader, predicted. “I can’t think of a single issue that underscores the difference between the two parties more than the reckless tax-and-spending spree that we’ll be dealing with here in the next week or two.”In the past, the Congressional Budget Office has loomed like the sword of Damocles over delicate legislative compromises, a nonpartisan scorekeeper whose rulings on the nation’s finances and fortunes could sink or propel hard-fought policy measures. The budget office’s prediction that successive Republican measures to replace the Affordable Care Act would cost tens of millions of Americans their health insurance effectively doomed those efforts.But the 10-year price tag the budget office put out this week for the bipartisan infrastructure bill changed no minds, even though it reported that the measure would tack a quarter trillion dollars to an already swollen sea of federal red ink. Many Republicans are beginning to regard spending on highways, bridges, rail lines and broadband the way Democrats have for years — as a long-term investment in the nation’s economic future that need not cause short-term deficit heartburn, especially when borrowing costs are at rock-bottom rates.The federal budget deficit has reached staggering proportions, driven by successive pandemic rescue packages, an economic collapse and the huge 2017 tax cut signed by President Donald J. Trump. Without counting the costs of the infrastructure or social policy bills, the C.B.O. had projected the deficit for the fiscal year that ends Sept. 30 would reach $3 trillion; the federal debt held by the public will exceed the size of the entire economy. Within 10 years, that debt is poised to equal 106 percent of the economy, the highest level in the nation’s history.Despite a resurgent coronavirus, the economy appears to be recovering. Employers added 943,000 jobs in July, the Labor Department reported Friday, and Jerome H. Powell, the Federal Reserve chair, acknowledged in late July that inflation remained a real risk in the near term“We think that some of it will fall away naturally as the process of reopening the economy moves through,” Mr. Powell said of inflation, before adding, “It could take some time.”But the federal spending of the Trump era appears to have given his party permission to put austerity in the rearview mirror, at least for some measures.In a statement on Thursday in response to the C.B.O. price tag, Senators Rob Portman, Republican of Ohio, and Kyrsten Sinema, Democrat of Arizona, the two lead negotiators on the infrastructure deal, defended the bipartisan legislation as “a historic investment in our nation’s core infrastructure needs.”That rationale reflected longstanding arguments from liberals, which Mr. Portman and Ms. Sinema decidedly are not.“Almost every state, county and private-sector organization pays for ongoing operating expenses with ongoing revenue, and pays for physical infrastructure with debt financing,” Senator Brian Schatz, Democrat of Hawaii, said on Friday. “Anything that provides value over a long period of time should be paid for over a long period of time. This isn’t some wacky new political philosophy; it’s just smart money management.”And because Democrats have vowed to pay for their social policy spending with tax increases and other measures, such as allowing Medicare to bargain for lower drug prices, that legislation will not increase the deficit, said Senator Chris Van Hollen, Democrat of Maryland and a member of the Senate Budget Committee.“We are going to be paying for the American Family Plan; we are going to offset those investments, and yet you’re going to have Republicans again shedding crocodile tears over the deficit,” he said.“There is a good faith discussion about how much spending is too much,” Treasury Secretary Janet L. Yellen said this week.Stefani Reynolds for The New York TimesTreasury Secretary Janet L. Yellen is undergoing her own reappraisal of deficit spending. In recent years, she expressed concern about the nation’s fiscal situation, even suggesting that raising taxes and cutting retirement spending would be wise. But since becoming the Treasury chief, she has espoused the view that, with interest rates at historic lows, now is the time for big spending.“There is a good faith discussion about how much spending is too much,” Ms. Yellen said during a speech in Atlanta this week. “But if we are going to make these investments, now is fiscally the most strategic time to make them.”Those arguments are hurtling toward a separate but politically connected issue: the government’s statutory borrowing limit. The official deadline to raise the debt limit came and went at the beginning of the month, forcing Ms. Yellen to employ “extraordinary measures” to keep the nation from defaulting on its debt and provoking a global economic crisis..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}In a letter to Congress on Monday, Ms. Yellen warned lawmakers that they needed to take action to protect the “full faith and credit of the United States” and said she was already taking steps to stave off a default.Most analysts expect that the drop-dead deadline is sometime before November.Ms. Yellen has been reminding lawmakers who are reluctant to lift the debt limit that doing so does not authorize future spending; it merely allows the government to pay for expenditures that Congress has already enacted. That includes Mr. Trump’s $1.5 trillion tax cut.Mr. McConnell has threatened to withhold all Republican votes from a debt ceiling increase, a stance that Mr. Hollen called “part of a pattern of hypocrisy.” Republicans repeatedly raised the debt ceiling during the Trump years, even after their tax cut. But they have provoked a series of crises when a Democrat is in the White House.Even some conservatives say Republican inconsistency is undermining the party’s case for fiscal rectitude.“Republicans would have much more credibility on the debt ceiling argument if they weren’t about to vote to add hundreds of billions of dollars to the deficit” on the infrastructure bill, said Brian Riedl, a senior fellow at the conservative Manhattan Institute and a former economic aide to Mr. Portman.Democrats have a decision to make in the next few days. They could add an increase in the debt ceiling to their upcoming budget resolution, ensuring that the borrowing limit could be raised without the need for any Republican votes this fall. But that option would come with political costs: to do it, Senate rules require that the provision includes a hard number for the debt ceiling increase, like $10 trillion, which Republicans would say, inaccurately, is the true cost of the social policy bill.That is very much what Republicans want.“I think the majority has to solve this — they control the House and the Senate and the White House,” Senator Roy Blunt of Missouri, a member of Republican leadership, told reporters this week.If the debt ceiling is instead raised through a separate measure, the bill could simply set a date for the next debt ceiling increase, without a dollar number. But that would take Republican votes in the Senate to break a filibuster, votes Mr. McConnell has said he will not supply.Republicans have argued that debt ceiling showdowns have long been used to force a reluctant Congress to examine the structural issues that drive up debt. The debt ceiling crisis of 2011 forced both parties to accept the Budget Control Act, which reined in spending for nearly a decade, until it lapsed under Mr. Trump.“You can’t keep increasing the debt limit over and over again without some kind of reform that starts to address the fundamental issue, and that is deficit spending that goes out as far as we can see,” Senator Steve Daines, Republican of Montana, told Punchbowl News.That argument has Democrats livid, because the debt increase they must address was largely incurred through spending by Republicans.“This is Trump tax cut debt and Covid debt,” Senator Elizabeth Warren, Democrat of Massachusetts, said. “The United States will pay its bills.”Jeanna Smialek More