Democrats brace for new spending fights over Biden agenda

Democrats are bracing for intraparty fights over crafting a multitrillion-dollar package to advance President Biden’s agenda.

The House this week adopted a $3.5 trillion budget plan that paves the way for lawmakers to pass the forthcoming legislation without any Republican votes. But the approval of the budget measure came after Speaker Nancy Pelosi (D-Calif.) was pressured into striking a deal with a group of moderate Democrats who were threatening to derail the party’s spending plans.

Democrats are now expecting further challenges in getting consensus in their caucus as they draft and attempt to advance the spending bill. Congressional Democratic leaders and top committee members will need to balance the priorities of moderates and progressives, as well as House members and senators, since nearly every Democrat will need to vote for the bill in order for it to pass.

“A margin this close, any four people who feel strongly enough right now can upset the cart,” Rep. Lloyd Doggett (D-Texas), a senior member of the House Ways and Means Committee, told reporters Tuesday. “It is a question of the fact that nobody really gets it all their way.”

The House is expected to take action on the spending bill before the Senate, and Democratic leaders have set an ambitious timeline. Their goal is to have each House committee with jurisdiction over the package advance their portion of the measure by Sept. 15. From there, the House would aim to vote on the entire measure before Oct. 1.

The final legislation is expected to touch on a wide range of topics, including paid family leave, education, health care and climate. The cost of new spending is expected to be at least partially offset by tax increases on high-income Americans and corporations.

“The coming weeks will be intense, but … we will achieve our goals, working with the Senate to ensure passage of our historic legislation,” Pelosi wrote Wednesday in a letter to colleagues.

The relevant House committees have already started cobbling together the legislation, holding discussions with their Senate counterparts in the process, and are likely to continue that work in the coming days.

The House isn’t scheduled to hold a floor vote again until Sept. 20, but committee action on the spending package is expected to take place before then, both in-person and virtually.

As lawmakers write the bill, they will have to confront some issues where Democratic divisions have emerged. One such issue is the size of the bill.

The budget plan allows Democrats to include as much as $3.5 trillion of spending and tax cuts — a top-line number that came about as a result of an agreement in the Senate. But some moderates, most prominently Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), have taken issue with that price tag. Some progressive lawmakers initially sought legislation in the range of $4 trillion to $6 trillion.

“I would love to see more spending, but that’s the number the Senate agreed upon,” said House Budget Committee Chairman John Yarmuth (D-Ky.), who is also a member of the Congressional Progressive Caucus. “Hopefully we can do what they agreed upon.”

Another key challenge will be determining how much of the new spending should be paid for, and how to raise the revenue needed to offset those costs. Biden has floated a number of ways to raise taxes on wealthy individuals and corporations, but some of these ideas generated pushback from some Democratic lawmakers — particularly his call for raising the corporate tax rate from 21 percent to 28 percent and his proposals to increase capital gains taxes.

“I’d like to have it totally paid for. We’ll see what is possible,” Pelosi said during a press conference Wednesday.

Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, said it would be “pretty remarkable” if Democrats are able to reach an agreement to raise $1 trillion in revenue, an amount that is less than one-third of their spending target.

“You’re asking Democrats only to vote for a really big tax increase. And that’s really hard to do,” he said. 

Democratic leaders will also need to address the desire of some lawmakers to get their specific priorities included in the massive bill. Many lawmakers view the spending package as their best shot to get their longtime economic policy goals enacted.

For example, many Democratic lawmakers from high-tax states such as New York, New Jersey and California have insisted that the bill undo a cap on the state and local tax deduction that was imposed by the GOP tax reform law in 2017. Lifting the cap, however, would reduce federal revenue and could largely benefit high-income households, depending on how it’s designed.

House Ways and Means Committee Chairman Richard Neal (D-Mass.) said his panel is discussing that issue “pretty assertively.”

Other potential challenges pertain to the Senate’s arcane budget rules. One part of those rules requires every provision in a reconciliation bill to have an impact on the federal budget, and for that impact to not be “merely incidental” to non-budgetary parts of the provision. That rule could prevent Democrats from including certain priorities in the bill, including immigration-related provisions and a clean-energy standard.

As part of Pelosi’s deal with moderates on the budget resolution, the Speaker said the House would only bring up a spending bill that could pass the Senate. Pelosi said Wednesday the House would work with the Senate as it’s crafting legislation to help make that happen.

“We write a bill with the Senate because it’s no use our doing a bill that is not going to pass the Senate,” Pelosi said.

Rep. Stephanie Murphy (D-Fla.), one of the 10 moderates who threatened to vote against the budget resolution earlier this week, told reporters Tuesday that Pelosi’s commitment to coordinate with the Senate is “critically important because I’m not here to pass messaging bills. I’m here to pass bills that will actually become law and help the American people.”

The Democratic-only spending bill won’t be the only item on lawmakers’ agenda next month. Pelosi has promised moderates that the House will vote on the $1.2 trillion Senate-passed bipartisan infrastructure bill by Sept. 27, though progressives are insistent that Congress pass the Democratic-only spending bill first.

Lawmakers will also need to pass a government spending bill by Sept. 30 to prevent a federal shutdown on Oct. 1, and may need to take action to raise the debt limit as well.

Gleckman said the negotiations between Pelosi and the group of moderates this week foreshadowed the amount of dealmaking that will be required in the coming weeks for the budget reconciliation package.

“What you saw this week was kind of a microcosm of what Nancy Pelosi has to do,” he said.