On The Money — Democrats eye tough choices as deadline looms

Happy Wednesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: digital-release.thehill.com/newsletter-signup.

Today’s Big Deal: How Democrats are paring back their sprawling agenda.

For The Hill, I’m Sylvan Lane. Write me at slane@digital-release.thehill.com or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@digital-release.thehill.com or @NJagoda and Aris Folley at afolley@digital-release.thehill.com or @ArisFolley.

Let’s get to it.

Under pressure, Democrats cut back spending 

Democratic lawmakers are swiftly cutting back their spending on the Build Back Better agenda after President Biden made clear to progressive lawmakers that the package will spend far less than they had hoped on key priorities.

Progressive and centrist Democrats alike say a new reality is setting in after weeks of stalemate over the shape and size of the social spending bill, which had also brought work on an infrastructure measure passed by the Senate to an impasse.

“We are facing the reality that without all 50 Democrats we don’t get anything done. And demanding 100 percent of what each member wants means we’ll end up with 100 percent of nothing,” said Sen. Elizabeth Warren (D-Mass.), a prominent progressive.

• Many liberal lawmakers had hoped that Biden and Senate Majority Leader Charles Schumer (D-N.Y.) would be able to convince holdout centrist Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) to support a package of $3 trillion.

• Now there’s a sense of resignation that the bill will top out at $1.9 trillion or $2 trillion and that key priorities such as a national paid family leave program and long-term home health care for the elderly and disabled will be cut down. Other priorities such as free community college may be dropped completely.

• Despite the disappointment, there’s also a recognition on the part of a number of liberals that the stalemate was becoming a political liability, and that it would be better to move a watered-down bill than to keep spinning their wheels.

The Hill’s Alexander Bolton breaks it down here.

LEADING THE DAY

Powerful Democrats push back on one-year extension of child tax credit

A host of powerful Democrats are lining up on Wednesday to insist on a long-term extension of the child tax credit as part of President Biden’s economic agenda.

Rep. Richard Neal (D-Mass.) had ushered large parts of the Democrats’ $3.5 trillion social spending wish list through the Ways and Means Committee last month, including an expansion of the child tax credit through 2025. And he’s pressing party leaders to keep that timeline as negotiators draft the final package.

“We’re going to continue to fight for the House position,” Neal told reporters following a closed-door meeting of the Democratic caucus in the Capitol.

Rep. Rosa DeLauro (D-Conn.), head of the powerful Appropriations Committee, was even more terse.

“A one-year extension is a big mistake,” she said, vowing to “continue to pressure for a new framework that’s more enduring for children and for families.”

The ardent position of Neal and DeLauro, which was echoed by a number of other influential Democrats, suggests a looming clash within the Democratic Party as Biden and leaders seek to trim the cost of the initial $3.5 trillion plan to win the support of moderate fiscal hawks.

Naomi and Mike Lillis have it all here.

Read more: Democrats at odds with Manchin over child tax credit provision

‘WE ARE NOT SIMPLY GOING ALONG’

Waters hopes there’s no attempt to make deep cuts to housing proposal

House Financial Services Chair Maxine Waters (D-Calif.) said she hopes lawmakers won’t make deep cuts to the affordable housing aid she’s pushing to be included in her party’s sweeping social benefits and climate spending plan, as Democrats look to trim the massive package to meet demands from moderates.

“We are not simply going to go along to get along. We’re probably going to have to give an alternative to whatever is being suggested, and I certainly hope that there is no attempt by which to do deep cuts in housing,” Waters said at a press conference on Wednesday afternoon.

The congresswoman, a fierce housing advocate, has pushed hard for affordable housing aid to remain in the Democrats’ spending plan, which the party aims to move through Congress using a procedure called reconciliation that will let them pass the bill without Republican support in the evenly-split Senate.

Aris takes us to the conference here.

GROWING PAINS

Yellen sees stronger labor market after US shakes off ‘shock’ from delta

Treasury Secretary Janet Yellen says that the U.S. economy is still on track for a strong recovery from the “very unusual shock” of the pandemic despite labor shortages and high inflation.

In an interview with MSNBC’s Stephanie Ruhle that aired Wednesday, Yellen expressed confidence that hiring troubles would fade and leave workers better off than they were before the pandemic as the U.S. shakes off a delta-driven slowdown.

• Surging cases driven by the delta variant dramatically slowed job growth in August and September while redirecting a rising tide of consumer spending away from the hard-hit service sector and toward goods. 
• Industries still struggling to recover from the pandemic saw job growth stall as the shift in spending stoked inflation and overloaded already overwhelmed supply chains.
• Employers struggling to keep up with demand have raised wages significantly for workers, rising by 0.6 percent last month alone, which has also kept up pressure on inflation. 

Even so, Yellen said she expected progress against the pandemic to bring back workers at compensation levels that were long overdue. I explain why here.

Read more: Labor shortage, inflation pose political obstacles for Biden.

Good to Know

Sen. Kyrsten Sinema (D-Ariz.) is opposed to raising tax rates on corporations and high-income households, prompting Democrats to consider paying for their social spending package in other ways, according to media reports.

Here’s what else have our eye on:

• Sen. Raphael Warnock (D-Ga.) implored his colleagues to include legislation expanding Medicaid as his party works quickly to craft its sweeping social benefit and climate spending plan, branding the measure as a means to advance equity in the nation’s healthcare system.
• Bitcoin’s value hit an all-time high of $66,893.22 on Wednesday, marking a new record from the crytocurrency’s previous April zenith of $64,899.

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.