On The Money — Shutdown looms as Congress spars over funding
Lawmakers don’t have much time to avert a government shutdown and have many problems to solve before they can get there. We’ll also look at why the Federal Reserve is trying to put people out of work and a new rule that may help you save money on plane tickets.
But first, check out the seven Senate seats most likely to flip.
Shutdown risk grows as lawmakers struggle for deal
The heat is dialing up on Congress to quickly strike an agreement on government funding as lawmakers stare down a critical deadline to avert a shutdown at week’s end.
Lawmakers on both sides have been pressing for a short-term funding bill, often referred to as a continuing resolution (CR), that would keep the government funded at current levels until after the midterm elections and buy time for a larger deal on government spending for fiscal 2023.
- Most expect that Congress will find a way to pass a short-term measure before midnight Friday, as it is not in either party’s interest to be blamed for a shutdown weeks before the midterm elections. But the timeline and disagreements won’t make it easy.
- One of the biggest holdups to passage is an ongoing push by Sen. Joe Manchin (D-W.Va.), a key centrist, and Democratic leadership to use the must-pass bill as a vehicle for changes to the country’s permitting process for energy projects.
- Since its release, Manchin’s proposal has drawn mixed reviews in the Senate, where some Democrats have criticized the plan for going too far, as advocates argue it will undercut environmental reviews. Meanwhile, Republicans say it doesn’t go far enough.
Senate Majority Leader Charles Schumer (D-N.Y.) told reporters on Thursday that the proposal “will be on the CR” and that senators are “going to vote next week,” but he wouldn’t say whether he thought the overall package would fetch the 60 votes needed for passage.
The Senate is poised to vote on legislation sent from the House on Tuesday afternoon that will be used to link Manchin’s permitting reform proposal and the CR.
Aris has more here.
THE FED’S FIGHT
Why the Fed is pushing unemployment higher
Federal Reserve Chair Jerome Powell said Wednesday it will be almost impossible for the central bank to beat inflation without hundreds of thousands of Americans losing their jobs.
Fed officials expect the unemployment rate to rise to 4.4 percent next year, up from 3.7 percent in August, as they jack up borrowing costs and slow the economy, according to projections released Wednesday.
Put simply, the Fed knows its past and future rate hikes will lead to higher unemployment and won’t stop fighting inflation because of it. But higher joblessness isn’t just a side effect of the Fed’s plans: It’s a goal.
- Powell and scores of other economists believe the U.S. job market is too strong to allow inflation to fall. He has argued for months that the Fed must bring the labor market into “balance.”
- But that means putting people out of work and leaving them with much fewer opportunities to find jobs after nearly two years of rapid inflation.
“It’s going to be extremely painful for those families who are going to be hit with a double whammy. Not only are prices continuing to go up, at this very high inflation rate, they might lose their jobs as well,” said Derek Tang, co-founder and economist at research firm Monetary Policy Analytics.
Sylvan breaks it down here.
Biden to propose new rule requiring airlines to disclose extra fees upfront
President Biden on Monday afternoon will propose a new rule requiring airlines and travel search websites to disclose extra fees upfront when passengers purchase their tickets.
The rule is the administration’s latest step to increase accountability in the airline industry as passenger complaints over delays and cancellations have soared in recent months.
- The proposal would require airlines and websites to disclose added fees when they first display airfares to potential customers.
- Those include fees to change and cancel flights, check baggage or for parents to sit with their child.
The Hill’s Zach Schonfeld has more here.
Biden’s student loan forgiveness plan to cost about $400 billion: CBO
The Biden administration’s sweeping effort to provide widespread student loan forgiveness for some Americans will cost about $400 billion, according to new reporting by Congress’s nonpartisan budget scorekeeper.
The estimate applies to the plan Biden announced last month to forgive $10,000 in federal student loan debt for borrowers earning less than $125,000 and $20,000 for borrowers who received Pell Grants.
- The Congressional Budget Office (CBO) said 43 million borrowers shared $1.6 trillion in federal student loan debt as of June 30. Under Biden’s plan, about $430 billion of that debt will be wiped out, the reporting shows.
- The CBO also estimated the costs for the Biden administration’s recent renewal of the moratorium on federal student loan payments and interest accrual, which had been set to lapse at the end of August. The extension, which punts the deadline to the end of the year, was projected to cost $20 billion in the new report.
Aris has the details here.
Good to Know
Remote work is a driving force behind surging home prices during the pandemic, according to a study from the Federal Reserve Bank of San Francisco released Monday.
The research found that increased demand for working from home accounted for 60 percent of persistent price hikes between November 2019 and November 2021. Over that period, national house prices soared 24 percent to record levels.
Here’s what else we have our eye on:
- Senate Republican leaders are urging their GOP colleagues to stay unified against a permitting reform bill sponsored by West Virginia Sen. Joe Manchin (D) and to support instead a competing bill sponsored by his home-state colleague.
- The staff of Rep. Andy Levin (D-Mich.) voted to unionize on Monday, becoming the first congressional office in history to form a union.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.