The hard slog to 50 Senate votes is just beginning, as key Democratic centrists are starting to ask questions about the fiscal package guidelines their Budget Committee colleagues agreed to on Tuesday.
West Virginia Sen. Joe Manchin III, a crucial Democratic swing vote in the equally divided Senate, became the first senator Wednesday to say he’s not ready to support the $3.5 trillion figure that party leaders settled on for a budget reconciliation package.
In a statement, Manchin promised to “reserve any final judgement” until he’s had an opportunity to review the proposal, while raising some key questions about what Budget Committee Democrats agreed to Tuesday night in a meeting with Senate Majority Leader Charles E. Schumer and White House officials.
“I’m also very interested in how this proposal is paid for and how it enables us to remain globally competitive,” he said.
President Joe Biden and top Democrats have proposed raising the corporate tax rate, implementing a new floor for multinational corporations’ tax liability overseas and other revenue raisers that businesses have criticized.
Schumer said Tuesday night in announcing the agreement alongside the Budget panel members that the $3.5 trillion topline will fund “every major program” Biden proposed in his economic plans.
Those include subsidies for child care, universal prekindergarten education, two years of free community college, paid leave, home health care and workforce development programs. Senate Democrats are also planning to add an expansion of Medicare to cover dental, vision and hearing benefits.
Manchin’s not the only caucus member reserving judgment.
Another red state Democrat, Montana’s Jon Tester, said he’ll at minimum vote to proceed to the budget resolution needed to unlock the reconciliation procedure enabling a filibuster-proof package. But before voting for final adoption, he wants more details.
“I’m open to it,” Tester said Wednesday. “I just need to know what’s in it, how it’s paid for, how the money’s going to be applied, how it’s going to be administered.”
The Democrat-only budget package would come on top of a separate, bipartisan plan to spend about $579 billion on physical infrastructure programs over the next five years, such as highways, bridges, subways, airports, water projects, rural broadband and electric vehicle charging stations.
Senate negotiators are still working with the White House on offsets for that separate package, but have said it will include things like more IRS resources to collect taxes, customs user fees, Strategic Petroleum Reserve sales and chemical industry fees.
Combined with the still-evolving Democratic budget plan, the total price tag for the “hard” and “soft” infrastructure plans, as they’re being referred to, would be $4.1 trillion.
Democratic Sen. Mark Warner of Virginia, a key centrist on the Budget Committee, said Tuesday night the $3.5 trillion piece will be “fully paid for,” but he didn’t say how much of the cost would be offset from new revenues and how much would be from other savings.
Warner, who sits on the Finance Committee, made clear on a separate call with reporters Wednesday the plan will make changes to the 2017 GOP tax cuts, but offered few details.
“On the reconciliation plan clearly there’s going to be some efforts to make our tax code fairer, and if you’re going to make the tax code fairer — as you read about the very wealthiest folks in our country not paying any taxes — you’re going to have to revisit the 2017 tax code,” he said.
But he also warned party unity was key to the entire package.
“We’ve got to get a plan that all 50 Democrats can agree upon,” Warner said. “Any single Democrat could upset this plan so we’ve got to show some unity.”
Senate Finance Chair Ron Wyden, D-Ore., also indicated that the exact combination of offsets is still being worked through and that there were some discussions in the caucus about whether to use dynamic scoring methods that take long-term growth impacts into account.
Drug pricing, immigration
On Wednesday, Wyden said Democrats were “moving very aggressively” to put together a prescription drug price reduction plan “to protect millions of Americans who believe that they’re getting mugged.”
He wouldn’t elaborate on details but said “the last couple of weeks have been, in my view, very positive,” and pointed to comments from Speaker Nancy Pelosi reiterating support for drug price negotiation provisions that were “very welcome.”
Budget Chairman Bernie Sanders, I-Vt., told reporters Wednesday that “immigration is in there,” though he wouldn’t get into details. Sanders and other Democrats have been seeking to provide a pathway to legal status or possibly citizenship for a number of categories of immigrants through the reconciliation process.
“This is a work in progress. But all I can tell you is that every issue that I have been talking about is in this proposal,” he said.
Biden is joining Senate Democrats for lunch in the Capitol on Wednesday to help leadership sell the budget agreement to the broader caucus.
Schumer began that pitch in floor remarks Wednesday, calling it a “landmark agreement” that will “pave the way for historic legislation later this year.”
“Very simply, this budget resolution will allow us to pass the most significant legislation to expand support and help American families since the New Deal — since the New Deal,” Schumer said. “This is generational, transformational change to help American families.”
On the climate front, an important component of the larger package for progressive Democrats, Schumer said the topline will allow for spending on clean and renewable power, resiliency projects, green housing and more proposals from Biden’s plans. Senate Democrats will also add provisions to reduce methane emissions, he said.
Warner said that Democrats were looking to address climate change, in part, by finding ways to “make agriculture production more carbon friendly.”
He cited “use of the tax code” as part of a plan to “invest” in clean energy projects. That could be a reference to a tax incentive bill the Finance Committee reported out in May, that combined elements of Biden’s plans with other ideas that Wyden has been pushing for years. That bill also would repeal several tax breaks for fossil fuels industries to partially offset the cost.
Wyden wouldn’t comment on specific energy tax proposals for the reconciliation package, but said “the Finance Committee bill will be the linchpin of our approach to climate change.”
Border adjustment redux?
Warner also suggested that lawmakers might look to impose “border adjustment fees” on imports of products that increase emissions, similar to what the European Union, Canada and the United Kingdom are discussing.
The Biden team floated a similar proposal during his presidential campaign, the idea being to offset higher costs borne by U.S. companies of more stringent emissions requirements so they stay competitive with firms based in countries with fewer restrictions and lower costs.
Warner said “if some country doesn’t have any constraints on carbon, is producing a product in an extremely dirty manner, and in your host country you’re putting in some more carbon restrictions — well that gives that foreign business an unfair advantage.”
Added Warner: “Not only for the sake of the climate but also for the sake of business competitiveness we need to look at that initiative as well.”
A similar border adjustment fee mechanism was included in legislation the House passed in 2009 to implement a “cap and trade” system to limit greenhouse gas emissions, which the Senate never took up.
And a broader border adjustment tax that would have hit a broad swath of imported goods failed to gain traction during the 2017 Republican tax overhaul discussions, amid concerns from retailers, energy companies and others that would be hit with higher costs.
‘We are going to get this done’
Once the broader caucus signs off on the $3.5 trillion spending target or a different number, the Budget Committee will draft a fiscal 2022 budget resolution with reconciliation instructions further breaking down the topline into allocations for committees of jurisdiction to write the implementing legislation.
Schumer wants the Senate to adopt the budget resolution before lawmakers leave for the August recess, with hopes of passing the implementing legislation later this fall.
“This is only the first step on a long road we will have to travel and must travel,” Schumer said. “But we are going to get this done, because we so fervently believe that we must make average American lives a whole lot better.”
The overall reconciliation target is well shy of the $6 trillion Sanders initially sought. But he explained Wednesday that he’s aware of political realities and vote-counting.
“This is a huge deal,” Sanders said. “Now if you’re asking me, would I have liked to get an even larger number? Yes I would have. But there are 50 members in the Democratic caucus, we’re getting zero support from Republicans who are simply concerned about more tax breaks for their rich friends.”
Paul M. Krawzak and David Lerman contributed to this report.