House passes budget package after cost concerns abate
Bill likely to be changed in the Senate, where support of all 50 Democratic caucus members is needed
The House passed a roughly $2.2 trillion package of spending and tax breaks to expand the social safety net and combat climate change Friday morning, with nearly all Democrats backing the massive bill after months of painstaking intraparty negotiations.
The party-line vote of 220-213 on the budget reconciliation measure represented 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.
To help pay for the package, the measure also would, for the first time, provide Medicare authority to negotiate prescription drug prices in order to push down the cost of older, more expensive drugs lacking marketplace competition. And it would impose a variety of new taxes on the wealthiest households and multinational corporations while giving the IRS money to hire thousands of new agents to better enforce the tax laws.
But the bill is likely to be changed in the Senate, where Biden needs the support of all 50 Democratic caucus members in the evenly divided chamber. Two key holdouts —West Virginia’s Joe Manchin III and Arizona’s Kyrsten Sinema — have yet to offer a public endorsement of the package. Senate Majority Leader Charles E. Schumer, D-N.Y., set a Christmas deadline for final passage.
House passage came Friday morning, after a stemwinder of a speech from Minority Leader Kevin McCarthy, R-Calif., that went for more than 8 1/2 hours — breaking the previous record held by Speaker Nancy Pelosi, D-Calif.
McCarthy used his leadership privileges for an extended speech, the closest thing the House has to a talking filibuster in the Senate, that ranged into numerous topics, including immigration policy, Tiananmen Square, mask mandates and late 1970s inflation.
"I know some of you are mad at me, think I've spoken too long. But I've had enough. America has had enough," McCarthy said at 10:25 p.m., after he'd been speaking for nearly two hours.
An hour later, McCarthy said: "I'm just getting geared up." He wasn't kidding. Within an hour after that statement, House leaders announced the vote on final passage would slip to Friday morning.
Pelosi's previous record for speech length was set in Februry 2018, when as minority leader she held the floor for eight hours and six minutes. She was protesting legislation to suspend the debt ceiling and set higher spending caps for appropriators since it didn't address immigration measures Democrats sought.
Not in doubt
The final outcome wasn't much in doubt after centrist Democrats' deficit concerns largely melted away.
The vote came hours after the Congressional Budget Office issued its official cost estimate of the sweeping legislation, which moderate Democrats eagerly awaited to ease their concerns over the fiscal impact. The Biden administration and Democratic backers of the bill have insisted it would pay for itself and not add to federal deficits.
The nonpartisan CBO, the official scorekeeper, offered a cost estimate with a little wiggle room. It said the measure would increase deficits by $367 billion over 10 years — but that doesn't count additional revenue that could come from increased IRS tax enforcement.
How much new revenue that effort would yield has been hotly debated. The White House has said increased enforcement, aided by an additional $80 billion in IRS funding, would produce $480 billion in new revenue over a decade. The CBO took a more cautious view, saying the effort might produce $207 billion.
The net effect, after accounting for that revenue, would mean the package would increase deficits by $160 billion over 10 years, falling a bit short of paying for itself. But Democratic centrists said they were willing to count on more generous estimates of tax enforcement revenue and felt comfortable that the bill largely pays for itself.
'Look what we got'
A White House tally shared with House Democrats showed the measure would actually reduce deficits, by $112 billion over a decade, once the more generous Treasury Department estimate of IRS enforcement revenue is factored in.
“We put in the work and look what we got,” tweeted Rep. Carolyn Bourdeaux, D-Ga., a centrist who is vulnerable in next year's elections and who had expressed concerns about the measure. “A Build Back Better Act that’s fully paid for, reduces the deficit, and helps American families!”
Other moderate holdouts also quickly fell in line after the CBO and White House estimates were released. The vote wasn't unanimous on the Democratic side.
Rep. Jared Golden, D-Maine, voted "no" due to the bill's inclusion of a higher $80,000 cap on state and local tax deductions, which the Joint Committee on Taxation and others have said would disproportionately benefit wealthier households.
Top Senate Democrats have said they're likely to alter the "SALT" provision, however, by phasing out the benefit for upper-income earners.
House Democrats pared back the size of their bill from an original $3.5 trillion-plus to accommodate the cost concerns of Manchin and Sinema, as well as some shared by House centrists.
Democrats dropped several tax increases from the original bill and scaled back the drug price negotiation plan to protect new drug development and small biotech firms, which were among conditions Sinema had outlined.
Sinema has not made any public statements on the House bill, but she called a White House framework the measure is based on "significant progress."
Rather than keep negotiating with Manchin, House Democrats included provisions he opposes, like four weeks of paid family and medical leave, Medicare hearing benefits and a fee on methane emissions from oil and natural gas facilities above certain thresholds, in hopes he can be persuaded by the time the Senate takes up the package.
Biden has promised Sinema and Manchin will both vote for the package in the end, which persuaded House progressives to drop their demand for public assurances from the senators before they agreed to vote for a separate Senate-passed bipartisan infrastructure bill.
The House passed that measure, which contains $550 billion in new spending on top of a five-year reauthorization of existing programs, two weeks ago, and President Joe Biden signed it into law Monday.
Obstacles along the way
Some moderates had expressed unease passing the reconciliation bill without knowing what changes may await it in the Senate. Speaker Nancy Pelosi promised a group of them in August that the House would only pass something that could get 50 Senate votes and adhere to that chamber's "Byrd rule" for what’s allowed in reconciliation.
She went back on that promise, hoping to use the House vote to build momentum in the Senate, and moderates ultimately went along with that plan. But there’s still some uncertainty about whether Senate Parliamentarian Elizabeth MacDonough will approve various provisions in the bill related to immigration, for instance.
MacDonough already rejected two of Democrats' initial immigration plans to provide a pathway to citizenship for millions of undocumented immigrants as violating the Byrd rule, saying they are major policy changes that only have “merely incidental” impact on the budget.
A trio of Hispanic Democrats — Jesús "Chuy" García of Illinois, Lou Correa of California and Adriano Espaillat of New York — had initially threatened to vote against the package if it didn’t include a path to citizenship. But ultimately they voted for the bill, which contains narrower language providing temporary work permits and deportation protections.
Another Democratic trio — New York Rep. Tom Suozzi and New Jersey Reps. Josh Gottheimer and Mikie Sherrill — had conditioned their votes on providing relief for their constituents from the $10,000 "SALT" cap.
They had been pushing for a full repeal of the cap but that was too costly and regressive to win enough support from other Democrats. A variety of "SALT" options have been floated in recent weeks, but the New York and New Jersey lawmakers agreed to a compromise that would lift the cap to $80,000 starting this year.
The $80,000 cap would stay in place through 2030, then snap back to $10,000 in 2031 before expiring. The current $10,000 cap expires after 2025 under current law, but Democrats decided to extend the life of the cap to avoid adding costs to the bill. The provision is expected to raise $14.8 billion over the decade, but in the first five years it would cut taxes by nearly $230 billion.
A trio of Texas Democrats, Reps. Henry Cuellar, Vicente Gonzalez and Filemon Vela, had concerns about how the bill’s methane fee would impact oil and gas producers in their state, but they ultimately voted for the bill. Cuellar said he is hopeful it will get removed in the Senate, since Manchin, who also comes from a top natural gas producing state, shares their concerns.
'Worst piece of legislation'
The wide-ranging legislation, spanning more than 2,100 pages, offers a smorgasbord of spending programs and tax credits designed to make it easier to care for children, return to the workforce, house the elderly, pay for health insurance, care for sick relatives, and more. It also offers new tax incentives aimed at weaning the country off fossil fuels to curb greenhouse gas emissions.
Supporters likened the package to President Franklin D. Roosevelt’s New Deal, which included the creation of Social Security, or President Lyndon B. Johnson’s Great Society, which produced Medicare and Medicaid.
"Enacting this legislation will be a momentous achievement for Congress, but more importantly, it will change lives, it will save lives and deliver on the promise of the American Dream for generations to come," House Budget Chairman John Yarmuth, D-Ky., said.
Republicans unified against the bill, which they said amounted to costly government overreach that would accelerate inflation and lead to higher debt.
"It is the worst piece of legislation that I have seen in my entire life of public service," Budget ranking member Jason Smith, R-Mo., said. "It will completely change America as we know it, all at the expense of working class families."
Democrats insisted the bill was fully paid for so as not to increase future deficits. The measure would raise nearly $1.5 trillion in new revenue over 10 years, mostly through tax increases on corporations and upper-income households. That revenue, combined with nearly $300 billion in prescription drug savings and increased tax enforcement, would yield about $2.1 trillion over the decade to pay for a bevy of new programs and tax credits, according to the CBO.
Republicans accused Democratic bill writers of lowballing the cost by shortening the duration of new programs to keep the price tag artificially low. If those programs were extended, as a future Congress could do, the price tag could soar to $4.9 trillion, according to the Committee for a Responsible Federal Budget.
David Lerman, Jennifer Shutt, Jessica Wehrman and Laura Weiss contributed to this report.