Democrats Prepare to Tackle Biden’s Sweeping Spending Package
Democrats Prepare to Tackle Biden’s Sweeping Spending Package
(Bloomberg) -- Democrats return to Washington Monday to begin considering President Joe Biden’s $2.25 trillion spending and tax proposal as party leaders sort out how ambitious a package they can push through Congress with the slimmest of majorities.
The decisions will largely fall to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer on how to package Biden’s proposal, which rivals the scope of Lyndon Johnson’s Great Society and Franklin Roosevelt’s New Deal programs. In addition to the American Jobs Plan, focused on infrastructure and some social measures, Biden is expected to ask for another massive investment in programs focused on health and families.
The president plans to meet with a bipartisan group of centrist lawmakers on Monday as part of his pitch to support initiatives that he said would address inequality, strengthen the U.S. economy and rebuild the country’s infrastructure. The difficult part will be selling Republicans -- and some Democrats -- on his call to increase taxes on corporations to offset the massive cost.
The House and Senate will proceed on parallel tracks, with committees starting to write and vote on transportation and taxation provisions in the coming weeks. Backroom talks between the White House and congressional leaders will determine whether the plan will be broken into several bills or move as one massive package.
Democrats must navigate procedural hurdles, pressure from progressives for even bolder action, broad opposition from Republicans and concern from centrist Democrats like West Virginia’s Joe Manchin that the proposal goes to far. This process will be much slower than the $1.9 trillion coronavirus relief bill Democrats rushed through in March with the unifying pressure of addressing a global pandemic.
Wooing Republicans
The 100-member Senate, divided evenly between the two parties, poses the biggest political and procedural constraints for what will be included in the final version.
Manchin has already said the plan should raise corporate taxes to 25% from the current 21% -- lower than the 28% Biden proposed. He also said such consequential legislation should be bipartisan and not abuse the budget reconciliation process that Democrats could use to pass some provisions without any Republican votes.
An early test for wooing Republicans will come in the Senate Environment and Public Works Committee, where Chairman Tom Carper, a Delaware Democrat, plans to produce a surface transportation bill by the end of May. One tool to win GOP support will be the earmarking process to designate funds for specific projects, in which Republicans said they would participate.
In the Senate Finance Committee, Chairman Ron Wyden has floated his own proposal to overhaul the U.S. international tax system, which largely repeals the GOP’s 2017 global tax makeover, imposes a 21% global minimum tax and introduces other measures to discourage profit shifting outside the U.S.
Wyden, an Oregon Democrat, said that unlike Republicans in 2017, Democrats are “putting out ideas out early. We are interested in getting input from all sides, and this is our sense of an approach that is wide enough to get broad support.”
Wyden has also said he plans to introduce a bill later this spring to prevent many wealthy individuals from deferring capital gains taxes on their assets. The current system requires people to only pay levies on those investments when they are sold. That change could raise significant revenue to offset infrastructure costs.
‘Not Big Enough’
House committees will also be working on legislation this month to fulfill Biden’s proposal, which Pelosi said her chamber could pass before the July 4 recess and the Senate could send to Biden’s desk by August.
How the House legislation is packaged will be the subject of intense caucus debate, and opposition from just a handful of Democrats could sink the measure if all Republicans vote against it.
Progressives are pushing for one massive bill that will include the jobs and infrastructure measures, as well as the family and health provisions. Some have called for spending as much as $10 trillion just on climate change initiatives.
“I have no doubt that we will have a great bill in the House,” Pelosi said Sunday on CBS’s “Face the Nation.” “Let’s find out where we can find our common ground. We always have a responsibility to strive for bipartisanship.”
Pelosi said Thursday she thinks the American Jobs Plan will stay separate from the family-related measures, although some initiatives could fit in either bill. While she didn’t estimate the total cost she said, “what the president has proposed is probably appropriate, as we have some in our party who are saying it’s not big enough.”
“We have to start with what this country needs. This country needs a major infrastructure plan – jobs bill that enables everyone to participate in how we build back better,” Pelosi added. “And then, at that point, then we’ll find out what, how much money we need.”
Covering Costs
Like its Senate counterpart, the House Transportation and Infrastructure Committee will be crafting its core piece of the bill: a surface transportation measure modeled on a nearly $500 billion draft bill from last year to invest in roads, rail and safety measures.
If Republicans participate in Wednesday’s committee hearing to discuss lawmakers’ priority projects, it would be a good sign for bipartisan talks. House members have until April 23 to submit requests for spending earmarked for specific projects. The committee will write the bill after those requests are in, and Republicans have said they plan to submit projects for their districts.
Committee Chairman Peter DeFazio, an Oregon Democrat, has said he plans to hold votes on the surface transportation bill the third week of May although aides say that could slip to the end of the month. He said the biggest debate will be over the inclusion of climate-change provisions, like money for electric vehicle charging stations.
DeFazio said he hopes to get the GOP on board, but “if not, we are going to go without them.”
The Energy and Commerce Committee is expected to craft spending proposals for broadband internet and the electric grid. The panel could also work on a measure to allow Medicare to negotiate drug prices, which Pelosi said would save the government $500 billion -- an amount that could cover part of the cost of the infrastructure bill.
There is also disagreement in the House over the plan’s tax provisions, which would fall under the purview of the Ways and Means Committee. Democrats from high-tax states like New Jersey’s Josh Gottheimer are threatening to vote against any package that doesn’t repeal the $10,000 cap on state and local tax deductions enacted in the 2017 tax law.
“I could not vote for a bill that has meaningful tax impacts on my constituents unless it addresses SALT,” Tom Malinowski, another New Jersey Democrat, said in an interview. “We have to do something about SALT or else I can’t be for it.”
White House Press Secretary Jen Psaki has said that any changes to the SALT cap must be offset with additional revenue, and Appropriations Chair Rosa DeLauro, a Connecticut Democrat, said there will “be a vigorous discussion about all this.”
Representative Liz Cheney of Wyoming, the No. 3 Republican in the House, said Sunday that Biden’s proposal should be “fundamentally redone” to “actually focus on infrastructure.”
Only 6% of the plan addresses projects traditionally deemed infrastructure, like roads and bridges, Cheney said on CBS, picking up on a current GOP talking point. Democrats say the meaning of infrastructure needs a 21st-century reboot. Cheney also said she was concerned about stoking inflation.
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