Washington walking fiscal tightrope

Fiscal issues were bubbling in Washington on Thursday as Congress passed a stopgap spending bill to fund the US government into early December.

Meanwhile, President Joe Biden's two signature spending packages totaling some $4.5 trillion remain under pressure.

And Treasury Secretary Janet Yellen, who once chaired the Federal Reserve, called Thursday for the "debt ceiling" limiting spending to be eliminated, previously saying that if it is not raised by Oct 18, the US probably will face a financial crisis and recession.

The House on Thursday approved the short-term funding measure by a 254-175 vote soon after the Senate passed it by a 65-35 vote. The votes will fund the government through Dec 3 and also will provide $6.3 billion to help Afghan refugees resettle in the US and $28.6 billion to help communities affected by hurricanes, wildfires and other natural disasters.

The legislation was needed to keep the government running once the current budget year ended at midnight Thursday.

"This is a good outcome, one I'm happy we are getting done," said Senate Majority Leader Chuck Schumer, Democrat of New York. "With so many things to take care of in Washington, the last thing the American people need is for the government to grind to a halt."

Democrats wanted to include an extension of the debt ceiling through 2022 in the stopgap measure but needed to withdraw it in order for Republicans to approve Thursday's funding agreement.

Democrats have struggled to push Biden's top domestic priorities over the finish line, including a $1 trillion infrastructure bill that got bipartisan support in the Senate but is at risk of stalling in the House.

The party faced internecine disagreements Thursday as House Speaker Nancy Pelosi looked to find a way to pass both the $1 trillion public works bill and the $3.5 trillion package, which features many social programs favored by the party's progressive left flank.

But progressives threatened to withhold votes on the roads-and-bridges infrastructure bill unless it was paired with Biden's $3.5 trillion proposal.

Pelosi promised a vote on Thursday, but as of 8:30 pm EDT, one hadn't materialized.

Also, Senator Joe Manchin, a West Virginia Democrat, said he wouldn't support spending any more than $1.5 trillion on the larger bill. Without his vote, Biden's plan couldn't pass the Senate, which is divided 50-50.

Democrats next will focus on raising the limit on federal borrowing, which now stands at $28.4 trillion.

Raising or suspending the debt limit allows the federal government to pay current obligations; it does not authorize new spending.

Republicans say Democrats have the votes to raise the debt limit on their own, and GOP Senate leader Mitch McConnell of Kentucky is insisting that they do so.

McConnell has argued that Democrats should pass a debt-limit extension with the same budgetary methods that they are using to try to pass Biden's $3.5 trillion effort to expand social safety net programs and address climate change.

"We're able to fund the government today because the majority accepted reality. The same thing will need to happen on the debt limit next week," McConnell said Thursday.

Democrats have labeled that option a "nonstarter".

"You are more interested in punishing Democrats than preserving our credit, and that is something I'm having a real tough time getting my head around," House Rules Committee Chairman Jim McGovern, a Massachusetts Democrat, told Republicans. "The idea of not paying bills just because we don't like (Biden's) policies is the wrong way to go."

Republicans argued that Democrats have chosen to ram through their political priorities on their own and thus are responsible for raising the debt limit the same way.

"So long as the Democratic majority continues to insist on spending money hand over fist, Republicans will refuse to help them lift the debt ceiling," said Representative Tom Cole, an Oklahoma Republican.

The $1 trillion bill invests in transportation, broadband internet, water systems and other projects. It has bipartisan support in the Senate but has been ensnared in the House over whether both bills would be put to a vote together.

Representative Pramila Jayapal, a Washington state Democrat and chairwoman of the Congressional Progressive Caucus, said after leaving Pelosi's office that the progressives' views were unchanged — they will not vote for one bill without the other.

"We're gonna stay here all weekend if we need to to see if we can get to a deal," she said. "We reiterated this again to the speaker, and we're in the same place: We will not be able to vote for the infrastructure bill until the reconciliation bill (on the larger package in the Senate) has passed," Jayapal said Thursday after meeting with Pelosi. Until that occurs, "there aren't the votes to pass it", she said of the infrastructure bill.

House Democratic centrists warned of canceling Thursday's vote as a "breach of trust that would slow the momentum in moving forward in delivering the Biden agenda", said Representative Stephanie Murphy, a Florida Democrat and leader of the centrist

"Blue Dog Democrats".

The fate of Biden's $3.5 trillion bill in the Senate appears contingent on Manchin and Kyrsten Sinema of Arizona, centrist Democrats who helped get the smaller bill passed. But both view the larger bill as too costly, which has sparked tension in the party.

Manchin called a news conference Thursday outside the Capitol, insisting that his top line has always been $1.5 trillion.

"I'm willing to sit down and work on the $1.5 (trillion)," Manchin told reporters Thursday. He said the focus should be on "what we can afford to do, without basically changing our whole society into an entitlement mentality".

Manchin sent out a statement Wednesday decrying the spending totals as "fiscal insanity".

A spokesman for Sinema said she has discussed spending limits and "continues to engage directly in good-faith discussions" with Biden and Schumer.

Manchin appears to have less concern about the revenue side of the equation — increased taxes on corporations and the wealthy — than the spending plans and particular policies, especially those related to climate change that would affect his coal-centric state. He also wants any expansion of aid programs to Americans to be based on income needs and not available to everyone.

Sinema focuses her questions on taxes, including the increased corporate rate that some in the business community argue could make the US less competitive overseas, and the individual rate, which others warn could snare small business owners.

The president maintains that the price tag of his agenda actually will be "zero" because the expansion of government programs would be largely paid for with those higher taxes on businesses earning more than $5 million a year, and individuals earning more than $400,000 a year ($450,000 for couples).

While Congress debates about which trillions to spend, the treasury secretary on Thursday told the House Financial Services Committee that she would support eliminating the debt ceiling.

"I believe when Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making," Yellen said. "And if to finance those spending and tax decisions it's necessary to issue additional debt, I believe it's very destructive to put the president and myself, the treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions."

The Associated Press and Reuters contributed to this story.