House Democrats this week wrapped up the bulk of committee work on a $3.5 trillion package of social benefits and climate programs — a massive undertaking that advances what would be a legacy-defining domestic agenda for President Biden.
Now the harder part begins.
While 13 separate committees succeeded in drafting, massaging and ultimately approving the portions of the package under their jurisdiction, the process featured plenty of infighting between disparate factions over various provisions — differences that have created headaches for Democratic leaders and will need resolving before the legislation hits the floor.
Those clashes have threatened to sink a major cost-slashing drug benefit, risking liberal defections and potentially alienating moderates if deficit estimates swell as a result. A separate battle over tax benefits risks an erosion of support from a handful of Democrats in high-income regions — enough to bring the legislation to a halt.
The combination is raising new questions about whether House leaders have the votes to pass the package on the floor with a minuscule majority demanding virtual unanimity to overcome the communal opposition of Republicans.
And that’s all before the looming fight in the evenly split Senate, where Democrats can afford zero defections — and centrists and progressives have been sniping for months over the size and scope of the package.
Amid the turbulence, Speaker Nancy Pelosi (D-Calif.) — a master at rallying support behind even the most controversial bills — is projecting an aura of confidence. But it’s being accompanied by an understated plea: stick together or Republicans win.
“Let’s stay united in our quest to reach our goal and honor our values,” she wrote to Democrats this week.
Pelosi has her work cut out.
In the Ways and Means Committee this week, Democrats from wealthier parts of the country — including New York and New Jersey — balked when the tax package unveiled by Chairman Richard Neal (D-Mass.) did not hike the federal deduction for state and local taxes, known as SALT. In 2017, as part of the Republicans’ tax overhaul, the SALT benefit was restricted to $10,000, and Democrats like Rep. Tom Suozzi (N.Y.) are demanding that the cap be lifted.
“I have remained consistent for six months, ‘No SALT, no deal,’ ” Suozzi said Wednesday after the package was advanced by Ways and Means.
The SALT debate is a tricky one for Democrats, who have bashed Republicans for adopting tax reforms that favored the wealthy and piled trillions of dollars onto the federal debt. Some liberals have cautioned that eliminating the SALT cap would not only step on that message, but also exacerbate the nation’s deepening inequality.
Still, Pelosi has backed the idea of lifting the cap, and there seems to be room to maneuver in search of a compromise. Indeed, cap critics like Rep. Bill Pascrell (D-N.J.) say they’re willing to accept tweaks to the ceiling, in lieu of a full repeal. And even Suozzi supported the bill in the committee. Suozzi has been discussing the issue with Pelosi, Senate Majority Leader Charles Schumer (D-N.Y.) and top White House officials, and said he’s now “confident” leadership will include a SALT fix in the final legislation.
Another potentially larger hurdle emerged this week in the Energy and Commerce Committee, where three centrist Democrats blocked a proposal empowering Medicare to negotiate lower prescription drug prices on behalf of seniors. That concept has been a top Pelosi priority for the better part of the last two decades, and the resistance from the moderates — Reps. Scott Peters (Calif.), Kurt Schrader (Ore.) and Kathleen Rice (N.Y.), who warned the change would stifle innovation — marked a major setback for Democratic leaders hoping to use the hundreds of billions of dollars in estimated savings to offset new spending elsewhere in the mammoth package.
Angry liberals were quick to point out that the drug provision can be added to the package when it moves to the Rules Committee, which will have the last crack at the bill before it hits the House floor. But that assumes the centrist critics will put aside their opposition when confronted with the prospect of blocking the entire package, and not just those provisions specific to the Energy and Commerce panel.
As with the SALT debate, there appears to be plenty of room for compromise on drug pricing. Peters, Schrader and Rice have all endorsed a scaled-back version of the House bill, and Sen. Ron Wyden (D-Ore.) is drafting legislation that’s also expected to be narrower in scope.
Other moderates don’t have specific policy complaints; they are just griping that the overall process seems rushed and the size and scope of the tax-and-spending package is too large. Rep. Stephanie Murphy (Fla.), the only Democrat to vote against the Ways and Means portions of the bill, said in a vague statement that, for now, she is opposed to the full $3.5 trillion package.
“[T]here are also spending and tax provisions that give me pause, and so I cannot vote for the bill at this early stage,” said Murphy, who heads the Blue Dog Coalition of centrist Democrats. “As this process moves forward, I remain optimistic that the comprehensive reconciliation package will be appropriately targeted and fiscally responsible — paid for by tax provisions that promote fairness but do not hurt working families.”
All of this is complicating the math for Pelosi and her leadership team, who given their historically narrow 220-212 majority can lose no more than three Democratic votes. Timing is another headache for the Speaker: She’s promised moderates she will bring the Senate-passed $1.2 trillion infrastructure package to the floor by Sept. 27. But top progressives have threatened to oppose that smaller package until the larger $3.5 trillion bill is headed to Biden’s desk.
With his legislative legacy on the line, Biden has begun to take a more hands-on role in reaching out to potential holdouts on Capitol Hill and whipping support. On Wednesday, Biden hosted centrist Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) in separate meetings at the White House; both have demanded that the $3.5 trillion package Biden wants be scaled back significantly. Biden’s top aides also have been in constant communication with skeptical House moderates.
Coming on the heels of Biden’s $1.9 trillion American Rescue Plan, which passed in March to address the coronavirus pandemic, the Democrats’ $3.5 trillion domestic spending package marks the most expensive expansion of social safety net programs in decades. It would extend health benefits for seniors, paid leave for workers, child care for parents, and subsidies for those in public housing, among countless other programs designed to help the working classes after 40 years of wage stagnation.
To offset the costs, Democrats have proposed to raise taxes on the highest earners, corporations and those who get income from capital gains. The bill would levy additional taxes on tobacco products, attach new limits to the carried interest benefit and provide $80 billion for the IRS to bolster its audit powers in search of tax cheats. Unlike a proposal in the Senate, it would not tax wealth or the transfer of large fortunes to heirs — another topic of contention that’s sure to gain prominence as the package moves toward Biden’s desk.
Republicans have consistently panned the legislation as an egregious over-expansion of the federal government — one that they say would discourage innovation, harm the economy and explode the federal debt. Not a single Republican in either chamber is expected to support the package, putting pressure on Democratic leaders in both chambers to unite their troops behind whatever emerges as the final product.
They have little room to spare.