Speaker Nancy Pelosi said Tuesday that Democrats need to make crucial decisions “in the next few days” about how to cut their $3.5 trillion partisan tax and spending budget reconciliation package if they’re going to meet a self-imposed end-of-month deadline.
That seems like a tall order, however, considering Democrats have not made a single decision about what social spending or climate programs they would cut to drop the price tag closer to the approximately $2 trillion level President Joe Biden thinks moderate and progressive Democrats in the narrowly divided Congress can all support.
“You must be kidding,” Pelosi said at her weekly press conference Tuesday when asked what should be cut first to lower the cost. “That’s a negotiation. That’s not something that I would be announcing here. And I don’t even know what that would be.”
Instead of offering a program that should be cut, Pelosi said she’d first look to trim the duration of programs. The House package that 13 committees put together was written with the $3.5 trillion top line in mind. There is not yet an official Congressional Budget Office score, but some outside budget experts estimate it could total more than $4 trillion, although more than half would be offset.
Keeping more programs with earlier sunsets seemed to conflict with Pelosi's letter to House Democrats Monday night that said members “overwhelmingly” were suggesting the package “do fewer things well so that we can still have a transformative impact on families in the workplace and responsibly address the climate crisis.”
The House’s biggest moderate caucus, the New Democrat Coalition, has argued that a smaller package should focus on long-term certainty for a handful of priority programs.
Specifically, the New Democrats have suggested prioritizing four things: extending a costly but popular expansion of the child tax credit enacted in the March coronavirus relief law through at least 2025, as in the House bill; permanently extending that law’s expansion of premium tax credits for subsidizing health insurance costs and providing broader access to Medicaid in states that did not expand the program; providing “robust” 10-year economic development grants and technical assistance to persistently distressed communities; and going “big” on climate programs that aim to reduce carbon emissions.
The Congressional Progressive Caucus has been pushing the opposite strategy, urging colleagues to fund as many programs as possible, even if it means a future Congress will have to vote to extend them.
"What the Progressive Caucus would like to have is not some false choice of just doing a couple of things and pitting communities against each other and leaving people behind, but actually reducing the number of years slightly if we need to,” Rep. Pramila Jayapal, the group’s chairwoman, said on a press call Tuesday.
The Washington Democrat said progressives “were happy to see” that Pelosi said something similar in her press conference earlier that day.
The Progressive Caucus, however, has long had five priorities it wants to see in any bill and continues to push those: “care economy” investments like paid leave, child care and home health care; affordable housing; allowing Medicare to negotiate drug prices and expanding program benefits; climate programs like a clean energy standard and a civilian climate corps; and a pathway to citizenship for certain undocumented immigrants.
Expanding Medicare to cover dental, vision and hearing benefits "is not negotiable," Senate Budget Chairman Bernie Sanders said on the call. Jayapal confirmed the Progressive Caucus shares that belief.
‘We’ll have that discussion’
Pelosi acknowledged at the news conference that her Monday letter caused a stir over the approach to cuts.
“Some members have written back to me and said, ‘I want to do everything.’ So we’ll have that discussion,” she said.
Later Tuesday, Pelosi and her chief spokesman both said that while no final decisions have been made, the cuts will likely come from a combination of timing decisions and fully eliminating some programs.
It was an acknowledgement of the reality that there’s unlikely to be enough cuts from shortening programs alone, especially since many would be complex new entitlements that could take years to fully implement. In drafting the measure, House committees had already shortened the duration of some programs to reach the $3.5 trillion goal.
“We have to make tighter decisions now,” Pelosi said.
For example, the House bill would only fund universal pre-kindergarten through fiscal 2028 and child care subsidies designed to limit costs to no more than 7 percent of a family’s income through fiscal 2027.
But even with those limits, those two programs and the child tax credit extension through 2025 cost over $1 trillion. Although that’s half of the newly envisioned top line for the package, Pelosi said she doesn’t want to eliminate any one of those three child care-focused measures because they are designed to work best in combination.
“They’re part of meeting the same need,” she said.
Throughout her news conference, Pelosi spoke broadly about the need to ensure the programs the package does fund remain “transformative.”
“Some of it has to have enough money in order to have sustainability that can be counted on,” she said.
Jayapal acknowledged that some programs in the bill would be difficult to fund for less than the full 10-year budget window, like a clean energy program that rewards utilities that move to renewable electricity sources and penalizes those that don’t.
“Because it's a market-driven program, you know there are real arguments for keeping that to 10 years,” she said. If the program were too short, utility companies could decide paying the penalties would be less costly than overhauling its operations to shift away from carbon emitting energy sources.
Universality and immediacy
Overall, the progressives' goal is to get programs started quickly so low- and middle-income Americans won’t have to wait long to see the benefits.
“The universality of benefits and the immediacy of benefits are absolutely critical,” Jayapal said. “And that, frankly, is more important to us than having it for the entire 10 years.”
While centrist Democrats, like West Virginia Sen. Joe Manchin III, have called for means testing programs, progressives argue that making them universal but perhaps with an overall cap on income, like the 7 percent cap for child care subsidies, is better to ensure the benefits actually reach the people they’re designed to help.
That “is far more effective, far easier to administer and also addresses the tremendous variability of costs from rural to urban, from state to state," Jayapal said.
For example, she cited rental assistance Democrats enacted in the March coronavirus relief law as being too complex in its qualification requirements, so most of the money never got out the door. The administration has had to go back and relax some of the requirements after its eviction moratorium expired to try to spur allocation of the aid.
Democrats have acknowledged that part of the issue was messaging on the availability of rental aid and other elements of the coronavirus relief law. And one of the arguments made by those advocating fewer programs for a longer period of time is that they will be easier to explain and sell to the American people.
Pelosi acknowledged that “it is hard to break through” in messaging specific program benefits of such a comprehensive package.
“It is a vast bill, it has a lot in it, and we will have to continue to make sure the public does [know about it],” she said. “But whether they know it or not, they overwhelmingly support it. And by the way women, much more than men. Men like the infrastructure.”