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Senior Democrats prepare Medicare and climate initiatives as well as tax increases on wealthy as details of $3.5 trillion budget deal emerge

Lawmakers were still sorting through details of the plan reached Tuesday night, hopeful that it would ease passage for key parts of the Biden agenda

Congressional Democrats announced an agreement on a $3.5 trillion spending package on Tuesday night to advance much of President Biden’s domestic spending agenda. (Stefani Reynolds/Bloomberg News)

Senate Democrats on Wednesday offered fresh details about their sweeping $3.5 trillion budget proposal, promising that it would augment Medicare coverage, lower prescription drug costs, invest heavily in new programs to combat climate change and tackle long-standing policy priorities on immigration.

The plan lays the groundwork for a massive expansion in the size and power of the government, which supportive lawmakers likened in significance to the post-Depression era of the New Deal, stressing that they plan to fund much of the proposal with new taxes on wealthy Americans and corporations.

The budget package would pave the way for hundreds of billions of dollars in areas including elder care, home care, child care, prekindergarten, and paid family and medical leave, its sponsors said. On health care, it would open the door for millions of seniors to obtain vision, dental and hearing coverage on Medicare and allow more low-income families to enroll in Medicaid. And it would aid parents by extending the recently expanded child tax credit, the full benefits of which will start to be paid out this week.

The plan would allow for substantial sums to reach the president’s climate goals, incentivize clean energy and set up electric vehicle charging stations nationwide. Some of the new spending, including money to address emissions, had been previously put forward in the context of an overlapping debate about infrastructure reform — but the aid did not become part of the bipartisan package under negotiation in the Senate.

“What we are talking about is the most consequential piece of legislation passed since the 1930s,” said Senate Budget Committee Chairman Bernie Sanders (I-Vt.), stressing that it would “deal in a very significant way with the long-neglected needs of working-class Americans.”

The funding comes as part of a high-level budget agreement reached by top Democratic lawmakers a day earlier. Democrats plan to advance the measure using a process known as reconciliation, which allows them to move spending bills with a simple majority instead of 60 votes in the Senate.

Such a maneuver would allow Democrats to sidestep what is likely to be overwhelming Republican opposition, which otherwise would have doomed Democratic spending priorities along with the broader ambitions of President Biden’s economic agenda. Democrats, however, must stay united for the proposal to pass, and a number of lawmakers said Wednesday that they were still reviewing the package.

The political reality prompted Biden to pay a rare visit to the Capitol to try to rally support for the $3.5 trillion agreement as well as still-forming infrastructure plans. Entering a lunch gathering, the president sounded a note of optimism, stressing: “We’re going to get this done.”

Biden infrastructure deal could make it harder for tax cheats to elude the IRS

The spending side of the budget deal roughly consists of Biden’s $1.8 trillion American Families Plan and major parts of his $2.3 trillion American Jobs Plan. But the agreement still must be translated into policy, which means some of the more complicated ideas lawmakers raised Wednesday, such as immigration, remain in flux — and many of the truly tough fights have yet to come.

“It is still being fleshed out,” acknowledged Sen. Chris Van Hollen (D-Md.), a member of the Budget Committee.

In doing so, Democrats have said they plan to finance the measure in full. Along with tax increases, which would unwind cuts imposed in 2017, lawmakers have also sought to rethink key elements of the international tax code and raise new money from Americans’ investment returns. Other funding is likely to come from renewed efforts to empower the Internal Revenue Service to enforce its tax laws and collect sums it is owed.

Some congressional Democrats think that stepping up IRS enforcement in particular could help bring in as much as $1 trillion in uncollected taxes, although many tax experts are skeptical about the extent of savings that would materialize from the plan. The IRS changes were pushed in negotiations by Sen. Mark R. Warner (D-Va.), said two people familiar with the matter, who like two others spoke on the condition of anonymity to describe private deliberations.

“I will make sure that we generate the revenue to pay for the priorities of the caucus,” said Senate Finance Committee Chairman Ron Wyden (D-Ore.), who helped negotiate the budget agreement.

Lawmakers extensively discussed whether to include new bank reporting requirements, the four people said, which would require major financial institutions to send reams of data to the IRS to help the tax agency identify tax evasion and fraud. But it was unclear whether that would be part of the final package. For now, Wyden added that lawmakers are “looking at additional ways to make sure that tax cheats pay what they owe.”

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

In other instances, lawmakers seek to lower the total cost by slimming down some of the White House’s ideas while shortening the length of the president’s other proposed programs. Discussions among lawmakers included lowering the proposed sums for workforce development and manufacturing as well as research and development spending in Biden’s jobs plan, the four people said.

The plan is also likely to shorten the duration of Biden’s proposed social spending programs relative to the initial White House plan. The president’s jobs package, for instance, called for extending a more robust Child Tax Credit through 2025; congressional Democrats’ package could do so for fewer years, said the people familiar with the matter, though the duration has not yet been determined.

These changes are not expected to diminish the generosity of these programs for the years they are in effect, and Democrats are prepared to fight for their extension in future budget battles with Republicans. Yet financing mechanisms are critical, even in the eyes of Democrats, some of whom stressed Wednesday that they would like the budget plan to be fully funded.

“I just need to know what’s in it, and how it’s paid for,” said Sen. Jon Tester (D-Mont.) not long before entering the lunch with Biden.

Congressional Republicans, in the meantime, have blasted the proposal as a waste of taxpayer funding and likely to drive inflation higher.

“Just yesterday, Montana families woke up to more disastrous news on inflation, which is at a 13-year high, and they are quickly being priced out of affording everyday necessities like food and gasoline,” Sen. Steve Daines (R-Mont.) said in a statement. “Democrats are foolish to think a massive $3.5 trillion tax and spend plan will help Montana families.”