Democratic Infighting Risks Agenda Timetable: Congress Update

House Democrats this week are advancing through committee the tax provisions to pay for President Joe Biden’s economic agenda with the intention of completing work by Wednesday on revenue raisers worth some $2 trillion. 

The House Ways and Means Committee met Tuesday for its third day of debate on its portion of the tax and spending plan, which aims to raise $2.9 trillion in revenue for social projects. While President Joe Biden has pledged that those earning less than $400,000 won’t see higher taxes, the House panel’s draft proposals would lead to some increases for that category, an official scorekeeper said.

The committee has already green-lighted an expansion of Medicare and paid family leave, new funds for elder-care workers and a provision bolstering retirement savings. The focus for the next two days will be on a major overhaul of the nation’s tax code, ranging from capital gains to tobacco taxes. 

In the Senate, Democratic leaders are trying to get the full caucus behind the size and scope of the legislative package, the largest such undertaking since Franklin D. Roosevelt’s New Deal. Budget Committee Chairman Bernie Sanders paints the current price tag as a compromise relative to his initial $6 trillion, while moderates led by West Virginia’s Joe Manchin want a bill smaller than $3.5 trillion under consideration. Republicans have vowed to oppose the bill, requiring unity in the Democratic caucus.

Key Stories and Developments: 

  • Democrats’ entire health agenda is in jeopardy amid opposition from a trio of House Democrats over empowering the government to demand lower prices for medicines while limiting future drug price increases based on inflation.
  • House Democrats are considering a two-year repeal as one of their potential paths to undoing the $10,000 cap on the federal deduction for state and local taxes.
  • What’s in the tax plan? High earners and companies are in Democrats’ sights.
  • The second-ranking Senate Democrat, Dick Durbin, said he has “no idea” if his party can push through a tax and spending plan anywhere near the $3.5 trillion sought by President Joe Biden.

All times are U.S. Eastern Time:

Democratic Infighting Risks Agenda Timetable (4:35 p.m.)

Senate Finance Committee Chairman Ron Wyden said he won’t commit to any timetable for an agreement with House Democrats on critical tax and health care provisions of a massive tax and spending plan, potentially dragging out work on the package to enact much of Biden’s agenda. 

The Oregon Democrat has signaled he doesn’t think the House proposal goes far enough to tax the wealthy and has put forward a series of proposals not in the House bill, including a 2% tax on company stock buybacks. He also has said wants energy tax credits to be more directly tied to a measurement of carbon emissions reduction.

Majority Leader Chuck Schumer acknowledged several differences remain between the chambers, including on tax provisions.

Senate Democrats began talks Tuesday afternoon behind closed doors as they start hashing out consensus on a reconciliation bill that can get support of all 50 Democrats, but they don’t appear to be anywhere close to a deal in that chamber.

“We have to come together and we will come together,” Schumer said after meeting with his caucus. -- Laura Litvan and Erik Wasson

Democratic Plan Raises Some Taxes on Middle Class: Scorekeeper (2:05 p.m.)

The House Democratic tax plan being debated at the Ways and Means Committee raises the tax burden on the middle class in the latter part of this decade, according to official analysis -- raising questions about whether it violates President Joe Biden’s pledge not to raise taxes on those making less than $400,000.

The Joint Committee on Taxation estimates that, beginning in 2027, the overall effective tax rates on those making more than $30,000 will see an increase. In that year, those making $30,000 to $40,000 will see a 0.1% rise, while those making more than $1 million will see a 10.5% hike. In 2031, those making $50,000 to $75,000 will see an average increase of 0.7%, compared with a 9.2% bump for those with $1 million in income.

While the bill doesn’t raise income tax rates on the middle class, it does double excise taxes on tobacco products, while corporate-tax increases could lead to costs being passed in the form of higher prices and lower wages. 

“Although most of the corporate tax is borne by those with incomes above $400,000 there are workers and shareholders below that threshold that will face the committee’s proposed tax increases,” said Kyle Pomerleau, a senior fellow focused on federal tax policy at the American Enterprise Institute. -- Erik Wasson and Colin Wilhelm

IRS Bank-Data Measure Could Surface at Ways and Means (12:30 p.m.)

A proposal to require banks and other financial institutions to report data on customers’ account outflows and inflows to the IRS -- bolstering tax-collection efforts -- could surface this week during House Ways and Means Committee debate on President Joe Biden’s economic package. 

The measure, which Biden had proposed, didn’t make the cut for the package of tax hikes the committee released Monday. Representative Dan Kildee, a Michigan Democrat, told reporters Tuesday that there were some concerns over how the measure would be structured. He said the committee isn’t ready to move forward with the change yet.

A Ways and Means tax aide told Bloomberg that the committee is working with the administration and the Treasury Department to come up with a proposal that satisfies all members. The issue might get raised later in the panel’s markup, the aide said. 

The Biden administration estimates the change would generate about $463 billion in revenue over 10 years. -- Allyson Versprille 

Senate Democrats to Huddle on House Economic Plan (11:48 a.m.)

Senate Democrats will meet behind closed doors Tuesday to review House text of portions of the $3.5 trillion package as they begin the delicate process of trying to craft a final deal that can keep all 50 members of the Senate Democratic caucus united.

“Everyone, everyone is going to have input into this legislation,” Majority Leader Chuck Schumer said on the Senate floor Tuesday morning. “But of course, our unity is our strength and if we’re not unified with 50 votes, we can’t get anything done.”

Some key Senate panels continue to work out their own versions of the tax, climate, immigration and other parts of the economic package. None have yet drafted their own legislation despite a Sept. 15 target to do so, but Schumer said the package was on track. 

“Working with our colleagues in the House, we will have met the target date of Sept. 15 in the budget resolution for producing text to review,” Schumer said.  

There is talk among leaders of both parties about ending Senate work for the week after Tuesday due to the Jewish holiday on Thursday, said Senator John Thune of South Dakota, the No. 2 Republican leader. That would curtail further face-to-face Democratic negotiations until next week. -- Laura Litvan

Drug Pricing Plan in Peril Amid Democratic Division (11:40 a.m.)

The drug pricing portion of the larger economic package faces opposition from within their own party as Representative Scott Peters of California announced he won’t vote to advance the legislation out of the House Energy and Commerce Committee.

Peters said in a statement Tuesday he has an “alternative” drug pricing overhaul he prefers to the one the committee is slated to vote on Tuesday. Two other Democrats on that panel, Representatives Kurt Schrader of Oregon and Kathleen Rice of New York, have supported Peters’ bill but not committed to voting against the drug pricing bill proposed by committee leaders.

Peters’ bill, a narrower version of the committee legislation, allows Medicare to negotiate with drugmakers but only for Part B, the hospital benefit, and makes the cap on what seniors pay for costs means-tested.

Schrader said Monday he opposed the larger reconciliation package proposed by his party. House Speaker Nancy Pelosi can only afford to lose three members on a House floor vote on the budget reconciliation package, given that all Republicans are expected to vote no. -- Alexander Ruoff

Republicans Argue Tax Plan Hurts Poor, Benefits Wealthy (11:10 a.m.)

Republicans on the Ways and Means Committee argued Tuesday that the House Democratic proposal hurts the poor and middle class while benefiting the wealthy, in particular singling out tobacco taxes and electric vehicle tax credits.

The draft bill would provide tax credits for the purchase of plug-in electric vehicles, cutting off eligibility for the benefit at $400,000 of individual income or $800,000 for joint filers.

“Speaking of outrageous green welfare, this bill allows a near-millionaire family to buy a $75,000 Beemer, Jaguar, or Benz luxury electric vehicle -- and their maid is forced to send them a $12,500 subsidy from her taxes,” said panel top Republican Kevin Brady of Texas.

The draft bill before the committee also seeks to raise $97 billion by doubling the excise taxes on cigarettes, small cigars and roll-your-own tobacco. Republicans Drew Ferguson of Georgia and Ron Estes of Kansas asked staff who is likely to foot the bill of the higher taxes and were told that most smokers earn less than $200,000 per year. -- Erik Wasson 

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