The Washington PostDemocracy Dies in Darkness

With bulk of agenda on the line, Democrats gird for battle over $3.5 trillion budget plan

Lawmakers will try to assemble the White House agenda on health care and climate change programs

President Biden speaks to the media about the August jobs report last week. (Jim Lo Scalzo/Shutterstock)
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The fate of President Biden’s $3.5 trillion economic agenda hinges on work that’s slated to resume on Capitol Hill this week, as Democrats attempt to overcome their internal divisions and craft what could be the largest spending package in U.S. history.

The next few days could prove daunting for top lawmakers in the party tasked with assembling a bill that can satisfy their past promises to remake broad swaths of the American economy. The work is set to unfold primarily in the House beginning Thursday, when the chamber has scheduled a series of grueling marathon legislative sessions to toil over the finer details of its plans.

Biden and his Democratic allies have pledged to expand Medicare, commit new sums to combat climate change, raise taxes on the wealthy, and boost federal programs that aid low-income families and children. In doing so, they have made grand proclamations about the need for historic investments, especially in the penumbra of a coronavirus pandemic that has left millions of Americans facing financial ruin.

But significant political quarrels already have plagued the party, complicating its attempts to adopt a proposal as large as $3.5 trillion before the end of the month. Chief among their headaches is Sen. Joe Manchin III (D-W.Va.), who said last week that he would not support a package with that price tag and called on Congress to hit “pause” on its breakneck legislative pace.

Manchin’s threat created political complications even beyond the Senate, where Democrats possess only a tiebreaking majority and require his support to proceed. With no room for error, Democrats have been forced to confront the reality that they may have to compromise some of their own ambitions, not to overcome opposition from Republicans but rather to quiet dissent among their own ranks.

“If [Manchin] just wants to tank the whole effort, he just ought to say so,” said Rep. John Yarmuth (D-Ky.), the leader of the House Budget Committee, which oversees the spending process. “He’s playing this game that conceivably gives other members who might be on the fence some cover. That’s not helpful. I’m worried about it.”

But Yarmuth insisted he is optimistic about the road ahead, given polling he cited that shows Democrats’ plans are popular with the public. “It would be the largest single piece of legislation in history,” he said.

The precarious dynamic only underscores a tough political reality in Democrat-dominated Washington: Even with control of Congress and the White House, there are still limits to what the party can accomplish on its own.

Since the 2020 campaign that catapulted Biden and his allies to power, Democrats have rallied behind his oft-repeated promise to “build back better,” hoping to expand government to a level not seen in a generation. Their $3.5 trillion spending plan is a central part of that vision, which also includes a separate roughly $1.2 trillion measure to improve the country’s roads, bridges, pipes, ports and Internet connections.

Republicans joined Democrats in the Senate to adopt the infrastructure proposal in a rare overwhelming bipartisan vote last month. Some Republican lawmakers are expected to do the same when the House takes up the package later in September. But they have rejected the rest of Biden’s agenda, arguing another round of trillion-dollar spending could worsen the country’s fiscal troubles and intensify inflation. GOP leaders also have fought vigorously against its proposed tax increases, which would reverse the cuts they secured four years ago under former president Donald Trump.

To sidestep that Republican opposition, especially in the narrowly divided Senate, Democrats plan to advance their economic package through a legislative move known as reconciliation. Biden has described both spending plans in equally urgent terms, stressing last week they would help ensure future prosperity.

“It’s about investing in America’s future, not about short-term stimulus. That’s not what we’re talking about,” the president said in a speech at the White House on the heels of a disappointing jobs report Friday.

First, though, Democrats actually need to agree on a bill.

Top House lawmakers began unfurling some of their early thinking on Tuesday. The tax-focused Ways and Means Committee, for example, unveiled its plan to create a new, national paid family and medical leave program that guarantees workers up to 12 weeks of benefits. The panel’s chairman, Rep. Richard E. Neal (D-Mass.), also proposed new retirement aid for workers — and an expansion to Medicare that could allow seniors to obtain hearing, dental and vision coverage.

“This is our historic opportunity to support working families and ensure our economy is stronger, more inclusive, and more resilient for generations to come," Neal said in a statement.

Rep. Maxine Waters (D-Calif.), the chairwoman of the House Financial Services Committee, also communicated to members on Tuesday her plans to spend nearly $322 billion, according to Democratic aide who has seen the plan, who spoke on condition of anonymity to describe the party’s thinking. Most of the aid is concentrated on housing affordability and rental assistance programs, the source said, including $80 billion for a federal initiative to improve public housing and their surrounding communities as well as $95 billion for relocation and rental assistance aid for low-income families.

Looming over these Democratic lawmakers, however, is a forthcoming fight over their package’s price tag, since the final figure ultimately determines the policies that lawmakers can adopt. Moderates including Sen. Kyrsten Sinema (D-Ariz.) already have sounded public skepticism about shelling out as much as $3.5 trillion on reconciliation, while others, such as Manchin, have raised fears that too much spending would worsen the deficit at a time when prices are on the rise.

Adding to the trouble, Democrats also remain unsettled over exactly how to pay for the package, no matter its final size. Hoping to cover its costs in full, Biden has proposed tax increases, including raising the corporate rate from 21 percent to 28 percent, while newly seeking to extract more revenue from wealthy families and investments. Senate Democrats have explored additional elements, including new taxes targeting executive compensation and carbon emissions, according a plan circulated among lawmakers last week and obtained by The Washington Post.

Some in the party see in the spoils of the 2020 election a mandate to rethink the tax code so that those who earn more ultimately pay the government more. But Democrats are not united on how to accomplish these aims, creating the potential for public sparring between party members as key legislative committees convene for debates and votes starting Thursday.

One Democratic lawmaker, speaking on the condition of anonymity to describe the party’s internal deliberations, said they are already resigned to a corporate tax increase that is closer to 25 percent — and have yet to build enough support for other tax hikes targeting investments or corporate income earned abroad. “The money is just not there,” the lawmaker said, expressing a belief that the package is likely to come down closer to $2 trillion.

For now, House Speaker Nancy Pelosi (D-Calif.) has tasked each of the key panels to complete its work by Sept. 15, with the hopes of adopting the final reconciliation bill before the end of the month. Hoping to quicken the process, House Democrats also have huddled with their Senate counterparts over video and phone calls in recent days, aiming to try to address potential policy hurdles before they erupt in public view.

“We need 218 votes in the House, and we need a bill that can be passed in the Senate and signed by the president,” said Rep. Suzan DelBene (D-Wash.), the leader of the moderate-leaning New Democrat Coalition. She added that voting on policies that have the support of one chamber, but not the other, “doesn’t help anyone if we don’t get it across the finish line.”

But the tensions around taxes and spending for now have put centrists in direct conflict with Democrats’ more liberal wing, which had spent months encouraging Biden to go bigger. Many of these progressive Democrats see $3.5 trillion as their compromise, especially after recommending as much as double that amount for reconciliation earlier this year.

The dynamic flashed in a hearing last week, when a key climate-focused House panel led by Rep. Raúl M. Grijalva (D-Ariz.) began its work to consider how to spend roughly $30 billion to stem the deadly consequences of global warming. Democrats have said they hope to reverse years of underinvestment in the environment, but their new reconciliation efforts have raised some early concerns among panel moderates, especially about the cost.

“I have to ask, where are the revenues to support that spending coming from? We just borrowed over $5 trillion for covid-19 emergency assistance in the last 18 months,” said Rep. Ed Case (D-Hawaii), a centrist-leaning lawmaker on the panel. Noting his interest to address the threat of climate change, he added, “We cannot afford to continue these borrowings in reconciliation.”

Many liberal lawmakers contend that a smaller package forces Democrats to make improper trade-offs, sacrificing programs that families need in a way that threatens the party with lasting political harm.

“There is no flexibility on the price tag, and it’s not because I care about what the top line is,” said Rep. Pramila Jayapal (D-Wash.), the leader of the roughly 100-member strong Congressional Progressive Caucus. “It’s because I care about delivering on these benefits.”

Jayapal added the stakes are high for Democrats, given the package’s potential for “transforming lives” as well as the party’s own prospects entering what could be a tough midterm election cycle next year. “If we don’t deliver, then I think all of the people who came out and voted for Democrats to take control of the House, the Senate and the White House are going to come out and say, ‘That’s it,’” she said.

Behind the scenes, though, the work already has started to slim down some of the Democrats’ ambitions. Some party leaders have eyed scaling back some of their tax benefits, for instance, including a popular poverty-fighting credit program that aids low-income families with children. Increasingly, Democrats believe they should authorize these tax credits for a limited number of years, rather than making the spending permanent. The move could lessen the price tag of the reconciliation bill, but would require Democrats to reauthorize some of their work later.

The same cost concerns also threaten to hamstring a revived campaign on the part of nearly 130 Democrats to lower the Medicare eligibility age. Progressives and moderates alike introduced a new bill on the issue last week, hoping a reduction in enrollment age to 60 from 65 might become part of the reconciliation law. Democrats also have sought to expand Medicare to cover dental, vision and hearing benefits, while giving the government new powers to negotiate drug costs in a move that could lower seniors’ costs.

But lawmakers like Manchin previously have expressed opposition to lowering the age in the package. Nor is it clear Democrats even have the budgetary room to do it, given the wide array of other health programs they seek to fund, including the extension of expanded tax credits that lower the costs of other Americans’ insurance payments.

The tall task ahead of them has left some Democrats to acknowledge they may not have the money or votes to tackle one of their top priorities. The skeptics include Yarmuth, who joked about his decision to endorse the bill last week: “That doesn’t mean it can pass.”

The disagreements set the stage for an all-out scramble ahead of Sept. 27, at which point Pelosi has pledged to begin debate over the $1 trillion infrastructure bill that previously passed the Senate. The mad dash is a result of an earlier standoff between moderates and progressives over the order in which they would vote on the bills, a stalemate that ultimately led Pelosi to turn up the heat on her caucus.

“It creates pressure,” acknowledged DelBene, when asked about the road ahead. “But I’ve also found during my time in Congress that sometimes pressure is needed to force folks to come to conclusion on issues.”