Infrastructure and reconciliation bills + Debt Ceiling = Negative GOP media blitz
Biden had to finally show his face and intervene in the Democrats civil war, by removing the urgency of passing both infrastructure and reconciliation bills in order to allow for the debt ceiling fight to be a negative press attack on the GOP. It is the only way the moderate Dems can get a small reconciliation bill through and still have wiggle room to expand it to accommodate progressive initiatives while passing infrastructure.
These next two weeks are critical not only for debt ceiling, but for all 3 bills. The Democrats will have to make the first move in showing their hand as to whether they move to raise the debt ceiling alone in a standalone bill or continue to attach it to Reconciliation. Our view is that they will attempt to marry both issues to increase pressure on the GOP with a more than willing media acting as attack dogs. This barrage of bad news, coupled with option expiration this week, will likely have significant negative implications for the stock market.
What remains to be seen is the veracity of Jayapal’s opposition to not only the dual path for the bills to pass, but now the price tag of the Reconciliation bill. She is undoubtedly targeting Pelosi for leadership in 2022, so her position on Reconciliation cannot be compromised or she will look weak to her progressive bloc.