A preliminary Senate Democratic budget outline envisions a smaller net tax increase on businesses and upper-income households than President Joe Biden proposed and sizable prescription drug cost savings to go along with more spending on health care, immigration benefits, tuition aid, broadband access and other items.
According to a summary circulating on and off Capitol Hill, the plan under development by Senate Budget Chairman Bernie Sanders would overshoot Biden’s proposed spending by nearly $1.6 trillion over a decade, for a hair under $6 trillion. The summary is dubbed a “discussion draft” for an eventual fiscal 2022 budget resolution, with reconciliation instructions for a filibuster-proof package.
The proposed revenue increases would drop by $1.2 trillion, to $2.4 trillion, supplemented by over $600 billion in potential drug pricing savings that weren’t outlined in Biden’s budget. The tax proposals aren’t specified in the Senate document and would be up to the Finance Committee to decide.
The result would be a roughly $6 trillion package of gross spending increases that on net would add $3 trillion to deficits over the next decade. That’s far more than the roughly $850 billion in bigger deficits over 10 years in Biden’s plans, though the White House says his over $4.4 trillion in new spending would be fully offset after year 15.
Some broad parameters were made public last week, with Sanders confirming the $6 trillion figure. But details underpinning his plan haven’t been released, and Democratic aides declined to discuss the documents except to say they are out of date and do not reflect the latest conversations among Democratic senators and staff.
A source familiar with the documents said they were produced by Budget Committee staff with input from other Senate committees.
Medicare, drug savings, immigration
A budget resolution is a nonbinding document that isn’t signed into law by the president. But its contents help guide the committees of jurisdiction charged with assembling the eventual legislative package, and the documents are usually drafted with input from those authorizing committees.
The budget targets for each committee outlined in the blueprint are a critical part of the reconciliation process, which both chambers need to adopt for a bill to be eligible for reconciliation protections
The preliminary outlines form an ambitious package that Sanders is just beginning to sound out other Democrats on. It’s not clear he’d be able to achieve unity in his own caucus, let alone backing from the White House and Democrats across the Capitol.
There’s broad support for several aspects of the plan; Senate Majority Leader Charles E. Schumer, D-N.Y., tweeted out his approval of expanding Medicare benefits to dental, hearing and vision coverage on Sunday, for instance.
But other Democrats have said the price tag may be a little high, and the Biden administration — which in addition to advocating a smaller-scale, lower-deficit plan is also still negotiating a bipartisan infrastructure plan — hasn’t endorsed it either.
“We’re not quite there yet,” White House Press Secretary Jen Psaki said Monday.
About $500 billion of the spending increase over Biden’s plans would be set aside for expanding Medicare to dental, vision and hearing coverage while lowering the minimum age of eligibility from 65 to 60.
Another $74 billion over the Biden request would go toward other health care programs, including $25 billion for hospital construction and modernization; $19 billion for veterans dental care; $18 billion over the request for graduate medical education; and an extra $12 billion for maternal and behavioral health programs.
The health care section would be offset by a purported $617 billion obtained through Medicare drug price negotiation authority and other drug pricing savings.
Sanders, I-Vt., wants to spend about $330 billion more than Biden on affordable housing programs — explanatory materials cite a new multiyear rental voucher program for low-income families — and $140 billion more on free college tuition and child care. Part of the higher education plan’s added costs appear to come from giving students the option of two years of free tuition at four-year public colleges and universities or the two years of free community college that Biden has proposed.
There’s $150 billion set aside for immigration programs, mostly for what appears to be a pathway to lawful permanent resident status for certain protected categories such as Deferred Action for Childhood Arrivals beneficiaries, farmworkers, essential workers and those with Temporary Protected Status from certain countries.
Explanatory documents argue that including such policies in a reconciliation bill would likely pass muster with the Senate parliamentarian, citing a 2005 precedent for Senate-passed provisions to increase the number of immigrant visas in similar fashion.
The immigration total includes $24 billion in mandatory spending for border infrastructure and modernizing land ports of entry.
The preliminary proposal also notes that the budget package could potentially include a version of labor-backed legislation aimed at making it easier for workers to unionize and override state “right to work” laws. “To be discussed,” the summary says.
The preliminary documents spell out a proposed $120 billion in relief from a $10,000 cap on state and local tax deductions. That’s not enough for a permanent repeal, but enough for perhaps two years of an uncapped ‘SALT’ break, or a limit higher than the current $10,000 for a longer period.
That’s a top priority for lawmakers from high-tax states with a higher cost of living than most, such as New York and California. But it might not sit as well with progressive Democrats who argue SALT cap repeal would tilt too much towards wealthier households and who’d rather spend the money on things like a permanently expanded child tax credit.
For all the new spending, the blueprint doesn’t envision extending an expanded child tax credit beyond 2025. For this year, the latest pandemic relief package provides a bigger tax credit for lower-income households and for younger children; Biden would extend that break through 2025, which many Democrats want to make permanent.
“The proposal right now is that we would extend it for five years. It’s an enormous amount of money to extend it permanently. But it is a fight that we are having,” Speaker Nancy Pelosi, D-Calif., said Monday.
The White House meanwhile designated Monday as “Child Tax Credit Awareness Day,” with various events across the country including a visit to Pittsburgh by Vice President Kamala Harris.
Harris told the crowd the expanded tax credit, which offers a fully refundable credit worth up to $3,000 for children through age 17, and $3,600 for kids under 6, would benefit 140,000 Pennsylvania children.
“And remember: The increase and the expansion of the child tax credit is only for 2021. Okay?” Harris said. “So, we are working, as an administration with all our friends, to extend it for years and years through our American Families Plan, which is what we are negotiating now and talking about in Washington, D.C.”
The Senate blueprint envisions spending less on clean energy tax incentives than the White House plan, and would be more in line with the roughly $260 billion bill Senate Finance Chairman Ron Wyden, D-Ore., marked up late last month.
But the Sanders plan also would provide an extra $150 billion to implement a clean energy standard, which was proposed but not funded in Biden’s budget. Explanatory documents mention an incentives program “benchmarked to meeting certain emission reduction targets” with a goal of 80 percent clean energy usage by 2030.
There’s also $75 billion more in grants for electric buses; $50 billion on top of Biden’s plan for a proposed “Civilian Climate Corps”; $39 billion more for residential solar build-out; and $20 billion more for electric vehicle charging infrastructure.
There’s also an extra $132 billion for an agriculture and forestry-related title of the climate provisions, plus another $48 billion for rural broadband and telemedicine.
The plan also would increase the asset test to be eligible for Supplemental Security Income benefits, from $2,000 to $10,000, and eliminate a provision that reduces benefits for some married couples that are each eligible as individuals.
Going to the floor
The next step is for Senate Democrats to bring the fiscal 2022 budget blueprint to the floor, which will have the reconciliation instructions for various committees to draft the implementing legislation for what would become a filibuster-proof package. Schumer wants that to happen next month.
If they can get all 50 Senate Democrats on board, they will also need unity among House Democrats, who are writing their own budget plan they also plan to take up in July.
House Budget Chairman John Yarmuth, D-Ky., said last week that a final reconciliation bill may not be ready until the fall, and the White House continues to negotiate with a bipartisan group of senators on a much smaller, $1.2 trillion infrastructure package in the meantime.
If those talks yield agreement, pieces of the broader budget plan could be broken out and move separately under “regular order,” or through the usual 60-vote cloture process in the Senate.
