Biden Musters Early Congress Momentum for Tax-Spend Vision

President Joe Biden is likely to see some version of his $4 trillion economic plan passed in Congress by September or October if he can keep various Democratic factions from splintering the party and continue fending off Republican attempts to paint it as radical.

Biden holds some advantages in pushing for what would be a massive expansion of the government, not the least of which is that the trillions of dollars spent to counter the economic dislocation of the Covid-19 pandemic reset expectations in Congress and among voters about fiscal policy.

Once Biden’s plan is put into legislative text, Democrats can use Senate rules to bypass Republican opposition to most of it. The GOP, meanwhile, has struggled to make a focused attack on the Biden plan amid an internal power struggle between loyalists to former President Donald Trump and establishment Republicans aligned with Senate Minority Leader Mitch McConnell.

But the president’s proposals won’t emerge from Congress unscathed, and it’s not yet clear which parts will be left on the cutting room floor or what might be added. There is also the question of whether Congress, with Democrats holding only the narrowest margin of control, sticks to Biden’s two-part vision of a roughly $2.3 trillion tranche focused on infrastructure and manufacturing and $1.8 trillion package focused on education and child care.

The first test will be infrastructure. There is a strong possibility that Congress is able to come together on a smaller, bipartisan measure focused on roads, bridges, transit, water and broadband internet in the coming weeks. Republicans, led by West Virginia Senator Shelley Moore Capito, have made a $568 billion counteroffer.

While much smaller than Biden’s $2.3 trillion more broadly defined infrastructure plan, it is nearly the size of the Obama-era stimulus bill, a sign of how much expectations have shifted.

The White House said Biden spoke with Capito by phone on Thursday and may schedule an in-person meeting soon. Capito, in a tweet, called the conversation “constructive & substantive.”

“It’s all moving forward, it’s all positive,” she told reporters at the Capitol earlier in the day.

GOP Senator James Inhofe of Oklahoma said he thinks a deal on that portion of Biden’s plans is in reach, and if Democrats want to then try to pass the social spending on their own, “Let them do that.”

Biden ally Senator Chris Coons of Delaware said trying to strike a deal with Republicans on some portion of Biden’s plan is necessary because there are Democrats who will balk at trying to pass the rest of it on a partisan basis as was done with the $1.9 trillion Covid-relief bill earlier this year.

Negotiating with Republicans is crucial “both for the benefits of bipartisanship on its own and for internal and political reasons,” Coons said. “We don’t have a path towards passing $2.3 trillion by reconciliation without trying.”

That was reinforced by West Virginia Democratic Senator Joe Manchin, one of the moderates whose vote would be pivotal to Biden’s plans in a Senate split 50-50 between the two parties.

“I just want to try to work with all my colleagues and they’ve got to prove me wrong first that they’re basically not willing to do anything,” he said

Democratic Factions

Negotiations won’t end even if Democrats go it alone on the bigger part of Biden’s plan.

The Senate Democratic caucus spans the gamut from self-described democratic socialist Bernie Sanders, who is already pushing to add an expansion of Medicare to the mix, to Manchin, who is already calling the level of spending “uncomfortable.” Manchin has expressed concern that the tax increases on corporations Biden proposes to pay for his plans could hurt the economy.

“He has given an overview of where he would like to see the country go, our job in the Congress is to write the laws and I look forward to it,” Budget Chairman Sanders said after Biden’s address to Congress on Wednesday.

In the House, Democrats currently hold only a six-vote majority. It will be a challenge to manage the competing interests of the Congressional Progressive Caucus, which is pushing for trillions more in spending to be added to the Biden plans, and moderates who worry about keeping their seats in the 2022 midterms where the GOP will have a redistricting advantage.

The moderate Blue Dog Coalition warned in a Wednesday statement that Democrats must be realistic in crafting the bills and that “messaging bills that cannot pass both chambers do not put people back to work, do not help open small businesses, and do not lower the costs of health care.”

In addition, there is a faction of lawmakers from high-tax states threatening to withhold support on any tax-related legislation unless it also repeal the $10,000 cap on deductions for state and local taxes.

So far, House Speaker Nancy Pelosi hasn’t laid out a legislative strategy for the Biden plans.

“Congress will work its will,” she said at a news conference Thursday. “We have many ideas in our caucus and our committees are hard at work.”

Republican Attacks

Now that Biden has summed up his vision in a speech before Congress, the size and scope of his spending and tax increases has become clear. That could allow Republicans to put the Trump-related infighting behind them and focus on attacking the Biden agenda as too costly and too divisive.

Eroding public support for Biden’s proposals would put pressure on swing-state Democrats, including Manchin and Arizona’s Kyrsten Sinema, to demand a dramatic downsizing.

Senator Tim Scott delivered the opening broadside on the Biden agenda in the Republican televised rebuttal to the president’s speech.

“Our best future won’t come from Washington schemes or socialist dreams. It will come from you — the American people,” Scott said.

McConnell on Thursday said Biden was dividing the country and warned that changes made without GOP support in Congress could easily be reversed whenever Republicans regain control of Washington.

“On traditionally bipartisan issues as pandemic relief, voting rights and infrastructure, Democrats are addicted to divide and conquer,” he said. “Whatever partisan Democrats get done through brute force will be fragile.”

Even as McConnell trained his fire on the Biden plans, Trump was appearing at the same time on Fox Business Network calling on the party to oust McConnell as leader -- a sign that internal bickering would continue to cloud the GOP’s message.

©2021 Bloomberg L.P.

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