Democrats’ ability to reimagine the social safety net and cement their and President Joe Biden’s domestic policy legacy for decades to come is about to be tested like never before.
This September, senators return to Capitol Hill with a crushing set of deadlines, a looming debt ceiling crisis, oversight to conduct over the Biden administration’s handling of the military’s final days in Afghanistan and Republicans waiting in the wings to use any missteps against the President and his party in the midterms.
Bottom line: It’s about to be one of the busiest seasons yet on Capitol Hill as lawmakers rush to fund the government, raise the nation’s borrowing limit, dive deeper into their probe over what went wrong at the deadly January 6 riot on Capitol Hill, and pass not one, but two major legislative proposals through the House by September 27.
It may not be impossible, but pulling it off when Democrats are just beginning to grapple with the deep schisms within their own ranks is going to make it a challenge.
- Finalize the $3.5 trillion social safety net bill by Wednesday.
- Pass that legislation through the House next week.
- Vote on a separate, $1 trillion bipartisan infrastructure bill in the House by September 27.
- Fund the government by October 1
- Raise the debt ceiling by mid-October
What we know
For months, Democrats have been preparing for this moment, building unity over a budget proposal, cobbling together a $1.2 trillion bipartisan infrastructure plan and passing it through the Senate with 19 Republican votes. But, each of those efforts put off what was always going to be the most difficult step in this process: finding a way to get progressives in the House and moderate Democrats in the Senate to agree on not just the child tax credit or paid family leave – items that are relatively popular– but agree on major changes to how the US taxes corporations and individuals, how the US handles the cost of prescription drugs and how big the social safety net in the US should be.
These are massive and fundamental questions that Democrats are really just beginning to answer. Yes, many of these items have been a cornerstone of Democratic messaging for decades, but just like Republicans pledge to repeal Obamacare, a campaign slogan is much easier than legislating.
The sticking points
At the outset, Democrats haven’t even agreed on how big this economic package should be. Progressives had argued the bipartisan infrastructure package was meager.
Moderates including Sen. Joe Manchin of West Virginia have said they don’t want the bigger Democratic bill to cost much more than $1 or $1.5 trillion. That’s $2 trillion less than what the $3.5 trillion budget would allow for, and it’s a massive gap that the White House has been trying to work with Manchin for weeks to resolve.
Manchin is just the tip of the iceberg. As CNN’s Daniella Diaz’s reporting revealed on Sunday, Democratic Sen. Mark Warner of Virginia has been telling people he’d vote no on the bigger economic bill if he didn’t get more of his way on affordable housing. Other moderate Democrats have made clear they have serious concerns about changes that have been floating on changing the estate tax and what is known as “step up.” That’s before you get to real concerns about how much Democrats are actually willing to raise individual and corporate taxes in the face of a lobbying blitz that is just beginning.
What to watch
So far, Manchin has been the most outspoken about his demands, laying them out on CNN’s “State of the Union” on Sunday on energy policy, taxes and the overall cost of the bill. But, in the next several days, expect other Democrats in the House and the Senate to make a much more public showing of what they demand.
The reality is in a House with a three-vote margin and a Senate where there is no room for error, every single vote matters here. Every single demand has to be listened to and leadership is keenly aware that they are going to have to make some major concessions in the next several weeks to get these items over the finish line.
A litmus test
The influential House Ways and Means Committee started circulating its list of policies for how to pay for the proposal on Sunday evening where they quickly leaked downtown.
For months, Chairman Richard Neal, a Massachusetts Democrat, has kept those financing plans under wraps in part because he’s told me repeatedly, once they come out, they are immediately political ammunition for Republican opponents. But, watch over the next several days at which of those ideas to finance this large Democratic economic package actually survive the onslaught of lobbying. Watch to see what is amended and reimagined. The ability to finance the social agenda plan is critical to its passage, but as one Democratic aide told CNN, the great irony is that the people who most want the plan paid for are the same members who have the most issues with how to pay for it.
The tax plan as it stands
Democrats believe that their methods for financing the plan fully cover the cost of the $3.5 trillion plan. Here’s how they break it down:
- Going after individuals who aren’t paying their full tax bill ($120 billion)
- Overhauling prescription drug costs ($700 billion)
- Surtax on high-income individuals ($127 billion)
- Increase corporate tax rate to 26.5% ($540 billion)
- Changes to the international tax code for businesses. (Score still TBD, but document estimated it would be around $900 billion)
- Changes to carried interest ($14 billion)
- Accelerating drawdown of doubling of estate tax exemption ($50 billion)
The other things that are going to get in the way
If infrastructure was the only thing on the table, it would be a busy month, but the looming deadline for government funding is complicating everything.
It’s expected Democrats and Republicans will have to come together to punt the deadline with a short-term funding bill, but that effort could be complicated if Democrats include an increase of the debt ceiling.
That’s under discussion, but Republicans in the Senate have already pledged to vote against it. Forty six Republican signed a letter before the August recess vowing to vote “no” on any increase in the debt ceiling.
Democrats could have included it in their $3.5 trillion budget outline, but they didn’t because they argue that the debt driven up over the last several years isn’t just their responsibility – it’s Republicans’ too. Including the debt ceiling increase in the budget also would have required Democrats to raise it to a certain level and that’s a tough vote for moderates facing reelection in 2022.