The Progressive Policy Institute (PPI) recently published a report detailing what such a package could entail. Our blueprint includes $925 billion for a permanently expanded Child Tax Credit, universal preschool and a more robust system for non-college-educated workers to acquire marketable skills. To combat climate change, we propose $600 billion for tax credits and other incentives that would encourage the adoption of affordable electric vehicles and technologies such as carbon capture, hydrogen and geothermal energy and advanced nuclear power. Finally, we propose $425 billion to strengthen the Affordable Care Act (ACA) by giving coverage to working families who don’t already have it and pairing that with other measures to control health-care costs.
While many Democrats in Congress support focusing the package on a manageable set of major initiatives, some on the left want to cut corners and use gimmicks to fit their entire wish list within a smaller top-line. For example, rather than spend $225 billion every year in the 10-year window used by the Congressional Budget Office, the package might spend $450 billion each year for five years before abruptly expiring. Progressives hope these programs will prove too popular for future Congresses to let expire.
But that approach is dangerous: If, instead of having to vote to repeal the ACA, Republicans could have just allowed it to expire in 2017, President Barack Obama’s signature domestic policy would very likely be gone. Additionally, this gimmicky approach wouldn’t address the underlying fiscal concerns of the Democrats’ pragmatic wing. Not only would it add half its costs to the deficit for the first five years, but if the spending programs are eventually made permanent, the costs may never be offset.
It’s critical that this package fulfills Biden’s promise not to add to the deficit. A recent poll of voters in battleground districts and states commissioned by PPI found that 88 percent believe deficits and debt are a “serious problem.” More than 70 percent worry about inflation and express concern that Democrats want to “spend too much without paying for it.” It’s hard to dismiss the fears of these voters — and the lawmakers who represent them — after nearly $6 trillion in deficit-financed covid-19 relief passed over the last year exacerbated supply-chain bottlenecks and helped put prices on track to rise more than 5 percent in 2021.
Given these concerns, the bill’s ultimate price tag must match the revenue that most Democrats agree can be raised without harming economic investment and growth. Fortunately, Sen. Joe Manchin III, (D-W.Va.), one of the most fiscally conservative Democrats in Congress, has already committed to support a package of revenue proposals that could raise roughly $1.2 trillion over the next decade. Many Democrats, including Manchin, also want to get savings by allowing Medicare to negotiate prescription drug prices. Although several moderates oppose the aggressive version being pushed by leadership, a compromise proposal such as one offered by Rep. Scott Peters (D-Calif.), could raise another $200 billion.
Those offsets would be enough to cover the non-climate proposals in PPI’s blueprint. That may be sufficient: A group of House moderates led by Rep. Stephanie Murphy (D-Fla.), who co-chairs the centrist Blue Dog Coalition, have expressed openness to borrowing for climate investments if the rest of the package is fully paid for. This approach could be justified because standard scoring models don’t incorporate the benefits of preventing the catastrophic consequences of climate change. But it would still be better if lawmakers would draw from other reasonable revenue options, such as tightening the step-up basis loophole, to pay for the full package, since our government already faces massive structural deficits caused by noninvestment spending programs for which it makes no sense to borrow.
Balancing this many political and policy concerns won’t be easy. Lawmakers must resist the pressure to tack on costly provisions that weren’t in Biden’s original blueprint, whether that’s an expansion of Medicare sought by the left or a weakening of the cap on state and local tax deductions sought by some centrists. But a framework along these lines can unite Democrats of all stripes in Congress and give both Biden and the American people a transformative win.