House Democrats aim to vote this week on President Joe Biden’s roughly $2 trillion tax and spending bill, despite lingering uncertainty over the measure’s cost, GOP attacks over its potential inflationary impact and a wide-spread expectation that the Senate won’t act until December at the earliest.
A key milepost this week will be more analysis of revenue and spending of the legislation’s various provisions from the Congressional Budget Office.
The CBO’s work is central to a deal worked out between moderate and progressive Democrats before last week’s congressional break. That agreement cleared the way for progressives to consent to passage of a $550 billion infrastructure bill, which Biden is set to sign later Monday, in exchange for moderates backing a vote on the broader economic package this week.
The group of moderates, which included Representatives Josh Gottheimer of New Jersey and Stephanie Murphy of Florida, didn’t insist on a full CBO analysis. But they committed to voting for the bill if the CBO information is “consistent” with a White House
A White House estimate of the bill this month sees $2 trillion in net spending offset by $2.15 trillion in tax revenue and savings. That includes two provisions that aren’t fully settled: paid family leave and letting Medicare negotiate drug prices.
Progressives say they will demand a vote this week on the bill no matter what the status of the CBO score, given the moderates’ agreement.
“They’ve signed on the dotted line,” Illinois Representative Jan Schakowsky said.
“There may be some changes, but let’s face it: This is the president’s bill,” she said in an interview last week. “If we don’t deliver on those things, I think that will be a really difficult moment for the president, for Democrats and for the country.”
Democrats in the Senate are still working to resolve disputes over taxes, Medicare spending, paid family leave, immigration and the top-line of the bill. On top of that, Senate officials will likely need to work through next week’s Thanksgiving recess to scrub the House bill to make sure it complies with the chamber’s intricate rules before bringing it to the floor.
“On a bill of this magnitude, this process takes time and patience,” Senate Majority Leader Chuck Schumer said in a letter Sunday to Senate Democrats. He gave no timetable for a vote.
Democrats also have a new hurdle in front of them. Last week’s report showing prices in October increased 6.2% from a year ago — the fastest annual pace since 1990 — has given Republicans fresh fodder for their attacks on the president’s agenda.
“Inflation is really resonating with people,” said former Trump economic adviser Stephen Moore, who is leading a coalition of conservative groups working against the legislation. “I give us a 50-50 chance now of killing this bill.”
Workforce issues
Texas Representative Kevin Brady, the top Republican on the Ways and Means Committee, argued that the bill will spike inflation in part because spending for some provisions is front-loaded to the first year while revenue increases are spread out over 10 years. He also contended that providing government benefits like the Child Tax Credit without work requirements will cause some workers to leave jobs, exacerbating labor shortages that add to inflation pressure.
“So that will be another barrier to reconnecting Americans to their jobs that hurts main street businesses especially hard,” he said in an interview.
Also sending up inflation warning signals is West Virginia Democrat Joe Manchin, a pivotal vote when the legislation makes its way through the Senate.
“Inflation is a very big concern of mine,” he told reporters during an appearance in his home state last week. “I haven’t made up my mind on any of this. We are still in the negotiating stage. But that is very much concerning.”
Democrats argued that the bill, known as the Build Back Better Act, won’t add to inflation because it doesn’t rely on deficit spending, makes investments in long-term productivity and reduces some prices especially in health care.
“This bill is actually going to address the core costs that American families are facing in child care, in housing, in health care,” Brian Deese, director of the White House National Economic Council, said Sunday on ABC’s “This Week” program. “Far from adding to inflation concerns, this bill will do the opposite. Because it’s fully paid for, it doesn’t add aggregate demand to the economy.”
Deputy Press Secretary Karine Jean-Pierre said Monday on MSNBC that Biden has worked closely with business and labor leaders “to make sure that the administration could do all that it can to really attack this in a way that we lower these prices and make sure that we’re, like I said, continuing to deliver for the American people understanding what’s at stake right now for families.”
Several major tax issues remain unresolved between the House and the Senate. House leaders have directed lawmakers who are dissatisfied with their chamber’s bill to work with the senators to negotiate changes in the Senate’s version of the bill.
Among the outstanding debates is how to address the state and local tax, or SALT, deduction, a politically important tax break for lawmakers representing New York, New Jersey and California. How much to expand the write-off has divided Democrats because the benefits largely flow to relatively high earners in those areas, and do little to boost lower earners or taxpayers in areas of the country where local levies tend to be lower.
The House bill calls for increasing the cap on the SALT deduction to $80,000 up from $10,000 — a compromise that was reached after weeks of tense negotiations. Senators Bernie Sanders, a Vermont Independent, and Robert Menendez, a New Jersey Democrat, panned that idea and said they want to narrow eligibility by allowing those who earn less than about $400,000 to write-off all their SALT, while restricting the tax break above that. They are still working on the details of their plan.
The final compromise is likely to more closely resemble the Senate plans than the House bill.
“I can’t tell you which one we’ll end up closer to,” Ways and Means Chair Richard Neal said Friday. “But I can tell you this: that there’s going to have to be some accommodation of SALT, to get it all locked up.’
Plans for an immigration provision remain an open question. Democrats in both chambers are pursuing a plan that would provide about 7 million undocumented immigrants with deportation shields and the ability to apply for work permits. But it will be up to the Senate parliamentarian to decide if that fits within the tough confines of the budget reconciliation process and will qualify for filibuster protection.
The timing of Senate votes on the $2 trillion Biden bill will be complicated by a Dec. 3 deadline to avoid a government shutdown and likely mid-month deadline to raise the U.S. debt ceiling, as well as push to pass the annual defense policy bill.
Meanwhile, Representative Earl Blumenauer, an Oregon Democrat, said in a statement he is working with the Senate to craft changes to a 15% corporate minimum tax measure that is intended to target companies that pay little in federal taxes because of large numbers of tax breaks. And Senate Finance Committee Chairman Ron Wyden is continuing to push his idea to tax the unrealized gains of billionaires, despite continued opposition in the House and from Manchin.
— With assistance from Eric Martin, Christopher Anstey and Jennifer Jacobs
