Biden, Allies Agonize Over Cutting Economy Plan to Eke Out a Win
(Bloomberg) -- President Joe Biden’s team and Democratic lawmakers are agonizing over the size and scope of his multi-trillion dollar economic plan, as Biden’s approval rating sags and upcoming elections threaten to show his party’s vulnerability.
Negotiations over the legislation -- a package of social programs, tax increases and climate measures Biden calls “Build Back Better” -- have dragged on for weeks. White House officials are trying to raise pressure for the talks to wrap up, according to one administration official.
Speaker Nancy Pelosi and Democratic centrists want to scale back the bill to focus on a handful of well-funded programs that can be quickly implemented, so Democrats can boast about the accomplishments in 2022 mid-term campaigns. But progressives want to keep the legislation expansive, even if programs are partially funded or expire after only a few years.
Senior White House aides recognize that Biden’s legacy is bound to the economic plan. The legislation would bring into law a number of his campaign promises, including ensuring greater racial equity, fighting climate change and helping women, seniors, children and working families. Without it, the president and his party will be open to criticism from Republicans that they’re unable to govern.
The political repercussions may be imminent. Virginia will elect a new governor on Nov. 2, and the contest, between former Democratic Governor Terry McAuliffe and Republican Glenn Youngkin, may foreshadow midterm congressional elections in 2022.
Polls show a tighter race than Democrats had hoped. First lady Jill Biden and former President Barack Obama plan to travel to the state this month to try to boost McAuliffe.
Many Democratic lawmakers, meanwhile, regard the “Build Back Better” legislation as their only chance to advance favored policies in a narrowly divided Congress, including climate and tax measures. Some have threatened to withhold their support unless their pet projects are included.
“The problem they have is getting 218 votes,” in the House, said Thomas Kahn, a former Democratic staff director of the House Budget Committee who now teaches at American University. “The way to get there is to offer everyone a little something.”
But he added that it’s “much better to have two, three or four programs that you really fund and get off the ground and can point to when the bill is enacted and say, for example, ‘I got you the child tax credit.”’
House and Senate Democratic leaders are split on whether to concentrate spending on a handful of programs and eliminate others entirely or enact the full menu of programs but only for a few years, setting up expiration dates in the not-too-distant future.
While Pelosi wants fewer programs, Senator Dick Durbin, the no. 2 Democratic leader, said he’s confident popular programs with short expiration dates would be renewed by future Congresses. Senate Finance Committee Chairman Ron Wyden told reporters he’d also “favor a shorter number of years” over eliminating programs.
One potential casualty of the negotiations is an expansion of Medicare, the health program for the elderly and disabled, that would add dental, vision and hearing benefits. The provision is favored by progressives, but at $350 billion over 10 years, it is one of the costliest pieces of the bill. Worse, the new benefits wouldn’t begin until 2028, providing little immediate political benefit.
But Senator Bernie Sanders, a Vermont independent, and some other liberals have called the Medicare expansion non-negotiable.
Senators have also discussed scaling back the bill’s child tax credit, viewed as an especially popular provision. Senator Mark Warner, a Virginia Democrat, has floated restricting the credit to people under an income threshold, while Senator Joe Manchin, a West Virginia Democrat, has suggested requiring parents to prove they’re employed to claim the tax break.
The House version of the bill would extend the credit through 2025 at an estimated cost of $556 billion. Biden allies say both the president and Pelosi are strong proponents of keeping the child tax credit intact.
Time for ‘Choices’
“There are choices that need to be made,” White House Press Secretary Jen Psaki said at a briefing this week. Biden’s view, she said, is that even a scaled-back bill “can still do something historic and that will fundamentally change -- change the economy for the American people.”
Ultimately, Pelosi and Senate Majority Leader Chuck Schumer will likely have to combine paring back the cost of programs and cutting some altogether in order to appease both liberals in the House and the Senate’s two holdout centrists, Manchin and Kyrsten Sinema of Arizona.
The House-passed bill costs at least $3.5 trillion over a decade, while Manchin has said he won’t support more than $1.5 trillion. Biden has floated a range of about $2 trillion as a compromise.
Representative Pramila Jayapal, who co-chairs the House Progressive Caucus, said that the left flank of the party is willing to negotiate, but largely prefers shorter expiration dates for programs rather than erasing them from the bill.
“If we have to cut the numbers slightly, then we would reduce the number of years because the universality of benefits and the immediacy of benefits is absolutely critical,” Jayapal said. “Something we’re willing to look at is cutting back the years, say for example, on free community college.”
But she said that’s more difficult for programs with longer-term impact, such as measures to combat climate change. And reducing funding or expiration dates for some programs, such as paid family and medical leave or funding for child and senior care, could backfire. States and organizations responsible for implementing the programs might not bother if it’s uncertain the funding will continue.
“Pelosi has a very difficult job. I think she has to gather the things that are going to be the most dispositive, the most impactful, for the largest number of member votes,” said Chris Campbell, a former staff director for the Senate Finance Committee and former Treasury official. “There are going to be a lot of sleepless nights between now and December.”
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