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Senate Democrats announce plans for $3.5 trillion budget package to expand Medicare, advance Biden priorities

Agreement would mark effort to bridge differences between liberal, centrist wings of party

Senate Majority Leader Charles E. Schumer (D-N.Y.) on July 13 signaled an infrastructure reconciliation package could be fully paid for to increase support. (Video: The Washington Post)

Senate Democrats on Tuesday reached an early agreement to pursue a sweeping $3.5 trillion reconciliation package that would expand Medicare benefits, boost federal safety net programs and combat climate change, aiming to sidestep Republican opposition and deliver on President Biden’s top economic priorities.

The wide array of planned health, education and social programs would represent a historic burst of federal spending if lawmakers ultimately adopt it, as Democrats aim to seize on their slim but powerful majorities in Washington to expand the footprint of government and catalyze major changes in the economy.

Party leaders plan to fashion their agenda using a process known as reconciliation, a move that only requires them to stick together to turn their vision into law. It does not require the traditional 60 votes to advance. To help rally support and keep the caucus together, Biden plans to visit with congressional Democrats on Wednesday.

Democrats see the still-forming package as a critical companion piece to the roughly $1 trillion infrastructure deal that lawmakers from both parties are assembling to improve the nation’s roads, bridges, pipes, ports and Internet connections. Biden has sought both tranches of funding as part of jobs- and families-focused plans he released earlier this spring that totaled roughly $6 trillion.

But the fate of the two in many ways are unsettled, and politically intertwined, with some Democrats insisting on votes on both — even as Republicans line up in opposition to some of Biden’s plans to spend big sums and expand the role of government.

Senate Majority Leader Charles E. Schumer (D-N.Y.) joined top lawmakers on the chamber’s foremost budget committee in announcing the agreement at a news conference late Tuesday evening. He said “every major program” Biden had endorsed in past economic packages would be “funded in a robust way.” Schumer added that the Senate measure would also feature a robust expansion of Medicare, adding more federal money for seniors to obtain dental, vision and hearing coverage.

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Flanking Schumer, Sen. Mark R. Warner (D-Va.), one of the centrist lawmakers involved in the crafting of the package, said the budget measure would be fully financed. Democrats previously have said they planned to pay for much of their package using tax increases on wealthy Americans and corporations. Otherwise, the plan will not raise taxes on people making less than $400,000 per year, nor small businesses, in keeping with Biden’s prior commitments, according to a Democratic aide familiar with the discussions who spoke on the condition of anonymity to discuss the package.

The measure is smaller than the roughly $6 trillion package that some progressive-leaning lawmakers, including Sen. Bernie Sanders (I-Vt.), initially had sought earlier in the debate. Sanders, the powerful chairman of the chamber’s budget committee, had led allied lawmakers in arguing for months that Democrats could not afford to squander their seat of power in Washington by adopting a more scaled-down package.

In the end, though, Sanders and his Democratic peers settled on a lesser amount in a move that reflects the political realities inside a party whose centrist wing has sought to temper federal spending in the aftermath of the coronavirus pandemic. Democrats still must also sell the deal beyond those on the budget panel that helped craft it over a series of meetings in recent days. House lawmakers similarly must sync up their own aspirations with the Senate’s plans.

“This is the most significant piece of legislation passed since the Great Depression, and I’m delighted to be part of having helped to put it together,” Sanders told reporters late Tuesday. “A lot of work remains.”

The tactic that Democrats intend to use — reconciliation — has been used to advance signature pieces of legislation in recent years.

Democrats used it to shepherd passage of the Affordable Care Act during the Obama administration. In 2017, Republicans used reconciliation to advance a sweeping tax cut package, delivering on one of then-President Donald Trump’s top priorities. And Democrats used reconciliation earlier this year to adopt a nearly $2 trillion aid package in response to the coronavirus.

The early agreement on another reconciliation package came on a day when Democrats and Republicans sounded fresh alarms about federal spending levels and the impact on the country’s growing deficit. This has prompted some lawmakers to raise red flags that could force congressional negotiators to rethink some of their plans.

As Democrats tried to push ahead on the reconciliation package, the bipartisan budget talks confronted a different set of challenges. The financing mechanisms they have chosen to cover the costs of the new spending increasingly do not appear to add up — leaving its chief backers bracing for the potential that the Congressional Budget Office, the official arm of the Capitol that crunches the numbers, could find their infrastructure proposal adds to the deficit.

“We’re doing our best to work through that,” Sen. Susan Collins (R-Maine) said as she exited a roughly two-hour gathering.

Collins and other participants said the group had set a loose Thursday deadline by which they hope to resolve their substantive differences and start turning their ideas into an actual bill. Asked if the fiscal issues had strained the bipartisan effort, Collins said: “I don’t think that we have lost anyone.”

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The fiscal concerns have become especially pernicious roughly four months after Congress approved the roughly $2 trillion stimulus package. That law, known as the American Rescue Plan, is part of a series of emergency efforts that are expected to push the federal deficit to $3 trillion for the second consecutive year, the government said earlier this month, though the White House has said this spending has accelerated hiring and economic growth.

Still, large amounts of new spending has raised fresh alarms about the effects on inflation, particularly given the U.S. government’s new data Tuesday showing prices rose more than 5 percent in June compared to the same month last year. And it has inspired a new spirit of austerity among some centrist Democrats as well as Republicans, even in the years after GOP lawmakers swelled the deficit to pay for Trump’s priorities. This has made the outlook on large spending packages more uncertain, though Democratic leaders continue to try to push ahead.

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With the reconciliation package, rising concerns among centrist lawmakers had forced Democrats to rethink the scope of that package in recent days. Behind the scenes, centrists including Warner had privately warned Schumer and the White House that moderates are not likely to support a reconciliation measure as large as the $6 trillion package that Sanders initially sought, said two people familiar with the matter, who spoke on the condition of anonymity to discuss the deliberations. It became clear Tuesday evening that they were scaling the package back.

“Everything should be paid for,” Sen. Joe Manchin III (D-W.Va.) said earlier Tuesday. “How much more debt can y’all handle?”

Only the overall numbers, not the policies themselves, are set to be included in the budget resolution that Senate Democrats previewed on Tuesday — saving the real haggling for the weeks to come. Lawmakers still must hold separate votes on all the details, including tax changes or Medicare adjustments.

“These kinds of large negotiations, of course, are never done until it’s all done,” said Sen. Debbie Stabenow (D-Mich.).