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As the Biden administration and Democratic leadership work to bridge the gap between progressive and moderate lawmakers and pass the president's economic agenda, PIMCO's Head of Public Policy, Libby Cantrill, says "failure is just not an option."
Democrats are trying to figure out how to trim President Biden's $3.5 trillion social-spending plan, after opposition from more conservative members of the party. Progressives have vowed to oppose the roughly $1 trillion bipartisan infrastructure bill without the social-spending bill that they plan to pass with only Democratic votes.
Biden is meeting with a range of progressive and moderate lawmakers — including Sen. Joe Manchin (D., W.V.) and Sen. Kyrsten Sinema (D., Ariz.) — on Tuesday to discuss the path forward.
"They have to pass something," said Cantrill in an interview with Yahoo Finance at the Milken Conference in Los Angeles. "It's going to be a lot smaller than what Democrats have originally wanted."
As the administration and Congressional leaders look at ways to bring down the plan's price tag to appease moderates, they run the risk of losing progressive support. Progressives already view a $3.5 trillion package as a compromise.
"It was always inevitable that is was going to be much harder to pass something as big and bold as a $6 trillion deal," said Cantrill. "We do think something gets done, probably by the end of the year — but again, it will be more watered down...given the very narrow majorities in Congress that Democrats have."
Cantrill told Yahoo Finance some provisions aimed at expanding Medicare are "vulnerable" as negotiations continue — and if the overall package shrinks, some proposed tax hikes might not end up in the final bill.
"If the price tag is coming down, that likely means that there are going to probably be fewer tax increases," said Cantrill.
Democratic leaders have said they'd like to pass both the infrastructure and reconciliation bill before the end of the month — though many remain skeptical that timeline is possible. On Tuesday, White House Press Secretary Jen Psaki told reporters negotiations were nearing the final stages.