Democrats have a few reconciliation life hacks at their disposal
And they can help get both progressives and moderates on board
Life hacks aren’t just for millennials and their DIY projects, they are also for Democrats who craft mega reconciliation bills.
There are no easy-to-assemble reconciliation instructions to make Build Back Better as easy to construct as Ikea furniture. Besides allowing for no more than $1.75 trillion in deficit spending, the reconciliation instructions are bare bones. It doesn’t include steps on how to satisfy both West Virginian centrists and New England socialists.
But Democrats have a toolkit of policy hacks to appease their entire caucus and bridge the $1.5 trillion-$3.5 trillion bid-ask spread.
Democrats insist the legislation would be fully paid for, yet centrists have balked at several of the tax and drug pricing offsets. Legislation is scored by the nonpartisan Congressional Budget Office and the Joint Committee on Taxation. But politicians don’t let official scorekeepers get in the way of their policy priorities.
The Senate centrists who crafted the bipartisan infrastructure bill dismissed the CBO score that showed it was far from offset, noting that “their rules” had “limited” what’s included in a “formal score.” Republicans called the CBO scores “fake news” when doing reconciliation back in 2017. Even so-called deficit hawks cited “other rational scores” besides the CBO for the GOP tax cuts package as a pretense to support legislation that officially cost $1.5 trillion.
Democrats today have alternate scores at their disposal. First is for IRS measures to close the tax gap. The CBO estimated that an $80 billion increase in IRS funding would raise $200 billion in new revenue. That’s well below the Treasury’s estimate, which combined with other IRS provisions was projected at over $700 billion. But there are other scores out there. Five former Treasury secretaries called Treasury’s estimate “modest,” citing another estimate that $1.6 trillion could be raised. Even Larry Summers, the economist progressives love to hate, has a study showing such proposals could raise $1.2 trillion.
Another alternate score is revenue spurred from greater economic growth. This is the “tax cuts pay for themselves” playbook Republicans once deployed and Senate centrists used for the infrastructure bill. Favorable growth estimates today include one from Moody’s Mark Zandi, Democrats’ favorite “Republican economist.” The CBO also doesn’t score the savings of climate mitigation, something even centrist Democrats have said overestimates the cost of climate-related policy.
In addition to ignoring the scorekeepers, Democrats can manipulate them. There are scorable offsets that aren’t real or can be phased in and never implemented. The infrastructure bill includes several gimmicks like delaying an unimplemented Medicare rebate rule, something Democrats want to permanently “repeal” in reconciliation. The Affordable Care Act’s excise tax on certain health insurance was delayed until 2018. Subsequent legislation further delayed and eventually repealed it without the tax ever being implemented. These fake offsets could produce real revenue and greater fiscal space. It’s a policy hack even being considered by advocates for the state and local tax, or SALT, deduction to provide immediate relief on the $10,000 cap without any official cost.
Just as there are policy hacks to get centrists comfortable with a larger price tag without painful offsets, there are ways to get progressives OK with a smaller bill.
One tried and true method is sunsetting provisions. What Congress today giveth, Congress tomorrow hardly taketh. Whether the tradition of tax extenders or the temporary individual tax cuts in the 2017 tax law, Congress can avoid large price tags by sunsetting certain benefits in the hopes a future Congress will only further extend them. If not, that future Congress will have to answer to voters about why they are “taking away” their benefits. From the enhanced child tax credit to health care expansion, Democrats are betting less will eventually lead to more.
Finally, while Democrats’ athletic abilities are lacking this year, they can always shift the policy goal posts to declare victory. As Democratic leaders pivot from $3.5 trillion in reconciliation spending down to $2 trillion, “even a smaller bill can make historic investments,” as President Joe Biden said last week. When voters often take their cues from party leaders, championing any agreement as a win for Democrats and the Biden agenda will make progressive disappointment over the size of the bill fleeting. What’s more, Democrats could argue that the aggregate of the Biden agenda — $2 trillion in the Build Back Better Act, plus the $1.9 trillion American Rescue Plan, the $550 billion infrastructure bill and the $250 billion U.S. Innovation and Competition Act — exceeds $3.5 trillion in new spending.
It’ll be up to Democratic leaders to ensure these policy hacks are enough to keep all but three House Democrats and every Senate Democrat together in a final vote. If the political will is there, Democratic DIY could prove popular, not just on Etsy but the ballot box too.
Ben Koltun is the director of research at Beacon Policy Advisors LLC, an independent policy research firm based in Washington, D.C. Follow him on Twitter @Ben_Koltun.