CBO: Fully extended reconciliation bill could cost $3 trillion
Dems have proposed many programs to be temporary, but costs would soar if they became permanent, according to the budget agency
The Democratic tax and spending package to expand the social safety net and combat climate change would increase federal deficits by $3 trillion over 10 years if most programs were made permanent, the Congressional Budget Office said Friday.
Republicans seized on the new cost estimate to argue that the Democrats’ reconciliation measure is unaffordable and would only accelerate rising inflation.
“I am urging the Democratic party to stop the madness,” said South Carolina Sen. Lindsey Graham, the Senate Budget Committee’s ranking Republican, who requested the cost estimate from the nonpartisan budget agency along with his House counterpart, Rep. Jason Smith, R-Mo.
Graham and Smith, using CBO figures, estimated the gross cost of the package would come to $4.9 trillion over a decade, assuming all programs were made permanent without additional revenue or savings. That price tag would be more than double the roughly $2.2 trillion estimate of costs for new spending and tax breaks in the House-passed bill, before offsets.
The Democratic reconciliation bill, as passed by the House, would increase deficits by $231 billion over 10 years, after accounting for spending for increased tax enforcement and interest costs on the debt, the nonpartisan budget agency said. To keep costs down, Democrats called for many of their programs to be temporary — particularly the child tax credit, which would expire in a year. And some programs would take years to get started.
But if those programs were made permanent, the CBO said, costs would soar, increasing deficits in the first decade by more than $3 trillion, under a set of assumptions requested by Republican lawmakers.
Much of the cost increase comes from extending the expanded child tax credit, which provides most families with up to $3,600 per child annually, which households can opt to receive in monthly installments.
As passed by the House, the one-year expanded credit would cost $185 billion. But if extended over the decade, as Democrats say they want to do eventually, the cost jumps to nearly $1.6 trillion.
Similarly, child care subsidies and universal preschool programs, which would expire after 2027 in the House bill, would cost $381 billion over 10 years. But if they are made permanent, the cost jumps to $752 billion, the CBO said.
“Nobody believes these programs were going to end,” Graham said at a news conference he held to call attention to the CBO report. “They will never go away if you leave it up to the Democratic Party.”
The estimate from the nonpartisan budget agency came on the same day the Labor Department reported that the consumer price index rose by 6.8 percent over the 12 months ending in November, the highest increase since June 1982.
“It is unthinkable that Senate Democrats would try to respond to this inflation report by ramming through another massive socialist spending package in a matter of days,” Senate Minority Leader Mitch McConnell said in a statement Friday.
Democrats have denied that their reconciliation bill would spur inflation, saying the programs in it are fully paid for with tax increases on corporations and upper-income households, along with increased tax enforcement and prescription drug cost savings. And they said it would actually reduce deficits by $2 trillion in the second decade since many programs would expire but the tax increases and drug savings would remain in place.
They have acknowledged wanting to extend the life of many programs, particularly the expanded child tax credit, but have said the costs of any future spending would be offset with new revenue or savings, as President Joe Biden has promised.
In a statement Friday, Senate Majority Leader Charles E. Schumer called the new analysis a “fake CBO score” that doesn’t take into account Democratic commitments to offset any costs of future extensions. He said Graham’s request was “nothing more than a partisan attempt to mislead the public.”
Graham, at his news conference, trained his focus on the one Senate Democrat considered most likely to block the reconciliation package from passing: West Virginia Sen. Joe Manchin III, who has called for a “pause” and expressed concerns about spurring more inflation. Graham said he talked with Manchin Friday morning to discuss the new CBO report.
“Joe Manchin, I believe, will listen to the facts,” Graham said.
Jennifer Shutt contributed to this report.