Pelosi Hails ‘Historic’ Bill as House Poised to Pass Biden Plan

(Bloomberg) -- House Speaker Nancy Pelsoi hailed President Joe Biden’s roughly $2 trillion economic agenda as “historic, transformative and larger than anything we have done before,” as the chamber was poised to pass the legislation Friday morning.

The House reconvened for the vote Friday after Republican leader Kevin McCarthy delayed action with a more than eight-hour floor speech that lasted into the early morning. 

McCarthy used his privilege as minority leader to camp out on the House floor just after 8:30 p.m. Thursday in a speech criticizing the tax and spending bill in particular -- and Democrats in general -- that stretched until just past 5 a.m.

Flanked by his GOP allies and heckled by Democrats, the California Republican called the bill the “single most reckless and irresponsible spending bill in our nation’s history.”

Pelosi began her remarks with a dig at McCarthy, saying that “as a courtesy to my colleagues I will be brief.”

Debate in the House opened Thursday as the nonpartisan Congressional Budget Office released its estimate that Biden’s signature economic package doesn’t contain enough tax increases to pay for itself.

The determination countered the Biden administration’s analysis, but moderate Democrats who had been holding out to see the CBO score said they were ready to back the bill, clearing the path to passage.

“While I continue to have reservations about the overall size of the legislation -- and concerns about certain policy provisions that are extraneous or unwise -- I believe there are too many badly-needed investments in this bill not to advance it in the legislative process,” Florida Representative Stephanie Murphy, one of the moderate holdouts, said in a statement.

Maine Representative Jared Golden was the only Democrat to announce his opposition.

The CBO found that the House legislation contains $1.636 trillion of spending, while raising $1.269 trillion in revenue over 10 years. That would add $367 billion to U.S. budget deficits over the decade.

The Biden administration and Democratic leaders have long been prepared for the CBO to find a deficit increase. The White House produced its own rival score for the bill showing a $112.5 billion deficit decrease, when its estimate of revenue gains from stricter tax enforcement is included.

A key reason the CBO finds the bill does not pay for itself involves estimates of how much increased tax collection can result from expanding the Internal Revenue Service’s budget. While the White House has projected that increasing the number of enforcement agents at the Internal Revenue Service would yield $400 billion in higher revenue, the CBO does not agree.

The CBO, which has rules about counting effects from increased appropriations, does not formally credit the IRS provision with raising any revenue in its tables and in a footnote projects that giving the IRS $80 billion in further funding would net just $127.2 billion in possible revenue. Even that inflow wasn’t included in the overall revenue-raising tally, because of particular budget-estimating rules, the CBO said. Using CBO’s own estimate of tax enforcement the bill would only add $160 billion in deficits.

The CBO score will, however, give ammunition to Republicans -- who are attacking the bill by arguing it will increase inflation, stifle job creation and foster dependency on the government, in addition to saying it will add to the national debt. 

“It is no secret this bill is too extreme, too costly, and too liberal,” McCarthy said on the House floor.

The White House continued to assert that the bill’s revenue is enough to pay for new spending. 

“The combination of CBO’s scores over the last week, the Joint Committee on Taxation estimates, and Treasury analysis, make it clear that Build Back Better is fully paid for, and in fact will reduce our nation’s debt over time by generating more than $2 trillion through reforms that ask the wealthiest Americans and large corporations to pay their fair share,” Treasury Secretary Janet Yellen said in a statement.

The CBO’s spending estimate cannot be directly compared with the $1.75 trillion top-line number that the Biden administration has used when presenting its framework, or a revised White House estimate that the House bill, when paid family leave and other benefits are added, amounts to a $2 trillion “investment.” The CBO doesn’t consider money spent on tax credits in their top-line spending figure, but rather counts them as lost revenue.

Even if the bill passes the House, there is no guarantee it can clear the Senate -- where Democrats have yet to line up the 50 votes they need to pass it using a filibuster-proof budget process known as reconciliation. 

The Build Back Better proposal, as Biden’s plan is known, would provide universal pre-K, childcare subsidies, four weeks of subsidized paid family leave, subsidized Obamacare premiums and an alternative to Medicaid in some states, and would allow Medicare to negotiate prescription drug prices for the first time while capping out-of-pocket costs for seniors.

The CBO estimated that allowing Medicare to negotiate some drug prices will save $79 billion over a decade, but result in one fewer drug being brought to market over that time and four fewer in the following decade. 

The program aims to fight climate change by imposing a fee on methane and providing a slew of tax credits for renewable energy and electric vehicle purchases, and it would provide relief from deportation for millions of undocumented immigrants.

On the tax side, the bill would extend expanded child tax credits and make them permanently refundable to those without sufficient income-tax liability to get the full benefit. It would also increase the cap on federal deductions for state and local taxes. To raise revenue, it would impose a new 15% corporate minimum tax and a 5% surtax on individual incomes over $10 million, with an additional 3% tax above income of $25 million. There are also taxes on large individual retirement accounts, stock buybacks and nicotine. 

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