Senate Democrats have unveiled a $3.5 trillion price tag for their antipoverty, education and climate plan. Here are details on the proposal and the steps needed to turn their broad budget framework into actual legislation and law, according to lawmakers and aides.
Why is the budget proposal important?
The $3.5 trillion in spending and tax credits—which the lawmakers hope to offset with tax increases and savings elsewhere—will determine the specific policy priorities that Democrats can fit into their antipoverty, education and climate legislation. They will seek to codify the agreement on the top-line spending figure into a budget resolution in the coming weeks and get it approved by Congress. The number marks a middle ground between the $6 trillion package some progressives were seeking and the roughly $2 trillion figure backed by some centrists.
What do Democrats expect to include in the emerging package?
The legislation Democrats are preparing is expected to include paid family and medical leave, subsidized child care, an extension of an expanded child tax credit, universal prekindergarten for three and four-year-olds and affordable housing, among other issues. It would also extend expanded Affordable Care Act subsidies approved earlier this year in the Covid-19 aid package.
The plan would broaden Medicare benefits to cover dental, vision and hearing—and would aim to reduce the cost of prescription drugs by allowing Medicare to negotiate prices, among other steps.
The Democrats’ Budget Plan—and the Path Ahead
Does the plan try to address climate change?
Yes. Democrats are proposing a series of ideas, including tax credits for clean energy investments and a clean electricity standard, aimed at reducing carbon emissions in the electricity sector by 80% and economywide by 50% by 2030.
Democrats are also proposing polluter import fees. Such fees could help lower emissions globally while generating revenue for the U.S., effectively acting as an emissions-based tariff.
How do Democrats plan to pay for the new spending?
President Biden has proposed increasing the corporate tax rate to 28% from 21%, tightening the net on U.S. companies’ foreign earnings and raising the top capital-gains tax rate to 43.4% from 23.8% to cover the cost of his roughly $4 trillion overall spending agenda over 15 years, which includes enhanced spending on infrastructure. Some Democrats have balked at the scale of the proposed tax increases, however. It is far from clear that Democrats will be able to coalesce behind the $3.5 trillion number.
What happens next?
Democrats will need to pass identical budget resolutions in both the House and Senate. The budget will likely face amendment votes in the Senate, requiring Democrats to be unified behind it. This doesn’t actually approve any spending, but it marks a needed step before committees then craft the details of the legislation within the overall framework. Later, likely this fall, Democrats plan to use their narrow control of the 50-50 Senate to advance the legislation through a budget maneuver called reconciliation, an exception to the 60-vote threshold required for most legislation.
What are the hurdles to passage?
Democratic leaders need to keep every single senator in line, as no GOP support is expected. Vice President
would cast the tiebreaking vote. In the House, Democrats have a very slim margin as well. The party will need to bridge gaps both on the spending side and on the revenue side, where lawmakers have aired disagreements over the capital-gains and corporate taxes proposed by Mr. Biden. They will also have to reach agreement on whether the plan increases budget deficits or not. Also, complicating matters, Democrats are hoping to move their partisan plan alongside a bipartisan infrastructure agreement. They plan to pass that proposal, which provides roughly $600 billion in funding above expected federal spending on infrastructure, through the normal Senate process requiring 60 votes.
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Source: WSJ – US News