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House kicks budget reconciliation bill vote to Friday as GOP leader keeps talking

McCarthy used the 'magic minute' afforded leaders to hold the floor past midnight

Speaker Nancy Pelosi conducts her weekly news conference in the Capitol Visitor Center on Thursday.
Speaker Nancy Pelosi conducts her weekly news conference in the Capitol Visitor Center on Thursday. (Tom Williams/CQ Roll Call)

The House delayed a planned vote on Democrats’ roughly $2.2 trillion package of spending and tax breaks Thursday night when the Republican leader delivered an hourslong speech in opposition that ran into Friday.

Minority Leader Kevin McCarthy of California used his leader’s privilege to speak far beyond his allotted time, and Democrats decided to postpone their vote as his floor remarks ran past the four-hour mark.

Majority Leader Steny H. Hoyer of Maryland said the House would return at 8 a.m., with a vote on passage scheduled.

Democrats had been confident they had the votes to secure passage earlier in the evening, even predicting an early wrap-up to the night session.

Passing the budget reconciliation measure would represent a significant step toward enacting key elements of President Joe Biden’s economic agenda, including free universal prekindergarten; child and elder care support; clean energy incentives; and extensions of expanded tax credits for families and health insurance.

The Congressional Budget Office wrapped up its initial analysis of the House’s 2,100-page-plus budget reconciliation package in advance of a potential vote Thursday night, showing nearly $160 billion in added deficits over a decade.

A handful of centrists had insisted on delaying a final vote until official scores were available, so the CBO information should clear remaining obstacles to a floor vote. In a “Dear Colleague” letter Thursday afternoon, Speaker Nancy Pelosi told lawmakers a revised rule for floor consideration, containing a handful of changes to the bill in a six-page manager’s amendment, would come to the floor.

“At the close of the debate, all that remains is to take up the vote,” Pelosi wrote. She later sent out an update telling lawmakers the vote would occur Thursday night, which a notice from House GOP leaders estimated would occur around 10 p.m.

The potential deficit impact is larger than the White House previously estimated. But that was expected based on differences between the CBO and Treasury Department on “scoring” IRS enforcement dollars. Rather than bringing in $480 billion in fresh revenue, for instance, the CBO estimated a $207 billion haul resulting from nearly $80 billion in new IRS spending.

Overall, the measure would provide roughly $2.2 trillion in new spending and tax breaks, based on the CBO estimates, with offsets negating most but not all of those costs. Some moderates were concerned about voting for a bill that wasn’t fully paid for, but they also pointed to language they negotiated in House rules exempting climate change mitigation measures from pay-as-you-go requirements. 

The House began debating the package on the floor Thursday morning, pausing around 12:30 p.m. to wait on final changes resulting from the Senate’s “privilege scrub” of the legislation. Anything found in violation would need to be changed before the package gets to the Senate or the measure would lose its privileged status that allows it to pass with a simple majority instead of the usual 60 needed to end debate.  

As a result, a handful of changes were incorporated into the manager’s amendment, which the House Rules Committee met to consider Thursday evening. The panel tucked the changes into a revised rule that would make them part of the underlying bill upon adoption — a process known as “self-executing.”

Tallying the numbers

The CBO estimates came in roughly as expected, if a bit of a disappointment for deficit hawks. 

For budget enforcement purposes, the important number is $389.2 billion; that’s the figure that counts under budget rules that determine what’s allowable under reconciliation.

It discounts the additional IRS collections from giving the agency more money to enforce tax laws, which can’t be part of scores for legislation under longstanding budget guidelines. But the revenue will show up later in the CBO’s updated deficit forecasts. 

The $389.2 billion figure also excludes “off-budget” revenue collections, mainly Social Security payroll taxes, which aren’t counted toward budget targets in reconciliation. Even so, on net the figure is well within the total $1.75 trillion deficit allowance under the original fiscal 2022 budget resolution instructions.

One hurdle Democrats will have to deal with is the Judiciary Committee’s title of the bill, which as currently drafted exceeds its budget instruction, coming in at $121.7 billion in “on-budget” costs. The panel only had $107.5 billion to spend, however. 

And in the second decade, the immigration-related provisions would add another $311.9 billion to deficits —a likely “Byrd rule” violation in the Senate, in addition to other problems with the underlying language to grant work and travel permits to undocumented immigrants.

Estimates for other panel’s pieces of the package came in more or less in line with previous expectations. The White House had expected prescription drug pricing provisions in the Ways and Means title would bring in around $250 billion in savings to offset spending in the bill; the CBO estimate was nearly $300 billion.

A new government paid leave benefit, expected to cost around $194 billion, is slightly higher in the CBO estimate — about $205 billion.

The Joint Committee on Taxation previously estimated the Ways and Means panel’s tax increases on wealthy individuals and corporations would bring in about $1.5 trillion, making up the bulk of the package’s offsets.

Pelosi nonetheless tried to assuage deficit hawks by continuing to cite Treasury’s IRS enforcement estimate in a chart summarizing the bill’s impact.

The document she sent out Thursday night after the CBO estimates were released assumes the measure would actually reduce deficits by $112.5 billion over a decade, which Pelosi wrote shows the bill “will be more than fully paid for.”

Floor debate 

House Budget Chairman John Yarmuth, D-Ky., and ranking member Jason Smith, R-Mo., led the first hour of floor debate on the package Thursday morning. 

Democrats spent their time talking up the benefits of the new programs in the package from universal prekindergarten, child care subsidies and paid leave to a host of climate programs and tax incentives to health care policies to lower insurance and prescription drug costs. 

“Each of these investments on its own will make an extraordinary impact in the lives of American families,” Yarmuth said. “Together, they will be transformational.”

Republicans, meanwhile, attacked Democrats on policy and process. Most complained about the trillions in spending and said the measure would exacerbate already high inflation costs. Some argued Democrats are hiding the true cost of the legislation by sunsetting programs early in anticipation of extending them later. 

“It bankrupts the economy,” Smith said. “They will try to tell you that the bill is less than $2 trillion. They’ll try to tell you that a $4.5 trillion spending bill will cost zero. Well the American people [are] not stupid. You don’t spend $4.5 trillion and it costs zero. … We know there’s all kind of budget gimmicks.”

Ways and Means Chairman Richard E. Neal, D-Mass., and ranking member Kevin Brady, R-Texas., controlled the second hour of debate, which hit on some of the earlier themes but also focused on the aspects of the package the tax writing committee controls. 

Neal touted Ways and Means contributions of a new federal paid family and medical leave program, expanded tax credits for subsidizing health care premiums and a hodgepodge of clean energy tax breaks. 

“Getting to this point has not been fast or easy and some might say it’s even been a bit messy, but that’s what democracy looks like. We have examined the issues, have had thoughtful — even spirited — debate, and we have refined our proposals,” Neal said.

The partisan divide over the legislation, which is expected to draw zero Republican votes, was evident throughout the debate. 

As Connecticut Democrat John B. Larson took his turn to speak, he joked, “Can you feel the love in this room today?”

‘SALT’ controversy

Multiple Republicans hit Democrats on the bill’s provision to increase the existing $10,000 cap on state and local tax deductions from their 2017 tax overhaul to $80,000. 

“What I can’t understand for the life of me is that in this bill that’s supposed to go after the inequity gap in our country, they have the largest spending program as a giveaway to millionaires from high tax state of New York and California,” Rep. Jodey C. Arrington, R-Texas, said. “This looks likes a Christmas tree of giveaways to political allies.”

While the provision is likely to remain in the House version, many Democrats are nervous about JCT and outside analyses confirming the benefits of raising the “SALT” cap would flow to many millionaire households. In the Senate, Budget Chairman Bernie Sanders, I-Vt., and Bob Menendez, D-N.J., are working to fix that by leaving the $10,000 cap in place but exempting taxpayers earning less than a certain threshold.

But the senators have yet to settle on an income level to begin phasing out the exemption, with Sanders floating $400,000 to align with President Joe Biden’s tax pledge and Menendez favoring a level around $550,000 to exempt most taxpayers in his state.

The senators were waiting on more information on a level that would make the plan revenue neutral before they settled on details. Rep. Tom Malinowski, D-N.J., a lead proponent of the House’s SALT fix, said Senate progress has been delayed because of technical difficulties in estimating how much an income-based exemption would cost or raise with specificity, and because Democrats want to see the state-by-state impact of that option.

“Presumably we will come back together at some point and resolve any remaining differences,” Malinowski said. “Whatever we end up enacting… will have a solid provision that’s consistent with the principles of both our version and what the senators have discussed for us to do.”

The House provision would actually boost revenue over the 10-year budget window by $14.8 billion, according to update JCT figures released along with the CBO estimates Thursday.

That’s because the current cap is set to expire completely after 2025, so extending any limits brings in more money. In addition, the measure would lower the cap back to $10,000 in the bill’s final year. Through 2025, however, the provision would cut taxes by nearly $230 billion, updated estimates show, much of which would flow to wealthier households.

David Lerman and Laura Weiss contributed to this report.

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