Dems Tackle Taxes, Health, Climate 09/18 10:38
Revamp the tax code and important federal health care and environment
programs. Spend $3.5 trillion over 10 years, but maybe a lot less. Ensure that
no more than three Democrats in all of Congress vote "no" because Republicans
will be unanimously opposed. That's what congressional Democrats face as they
try writing a final version of a massive bill bolstering the social safety net
and strengthening efforts to tame climate change.
WASHINGTON (AP) -- Revamp the tax code and important federal health care and
environment programs. Spend $3.5 trillion over 10 years, but maybe a lot less.
Ensure that no more than three Democrats in all of Congress vote "no" because
Republicans will be unanimously opposed.
Try to finish within the next couple of weeks. And oh yes: Failure means
President Joe Biden's own party will have repudiated him on the cornerstone of
his domestic agenda.
That's what congressional Democrats face as they try writing a final version
of a massive bill bolstering the social safety net and strengthening efforts to
tame climate change. Here's a guide to some pivotal differences they must
The White House and top Democrats compromised on a $3.5 trillion, 10-year
cost for the bill. That's a huge sum, though a fraction of the $61 trillion in
federal spending already slated over that period.
Moderates led by Sens. Joe Manchin of West Virginia and Kyrsten Sinema of
Arizona have said $3.5 trillion is too expensive, and votes from every Democrat
in the 50-50 Senate are mandatory for success. Biden, House Speaker Nancy
Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., have
recently acknowledged what seems inevitable: The final cost may have to drop.
Manchin has suggested limiting the total to $1 trillion to $1.5 trillion,
which progressives reject as paltry. Led by Senate Budget Committee Chairman
Bernie Sanders, I-Vt., they initially said at least $6 trillion was needed for
serious efforts to help families and curb global warming.
Eventually a compromise will be reached, with some expecting it in the $2
trillion to $2.5 trillion range. But since House committees just finished
crafting a $3.5 trillion version of the package, a smaller price tag means some
priorities would have to be trimmed.
To pay for much of the bill, the House Ways and Means Committee approved
$2.1 trillion in tax boosts, mostly on the rich and corporations. Some details
and numbers seem likely to change.
Biden, who's promised to not increase taxes on people earning under
$400,000, will probably get his proposal to raise the top individual income tax
rate on the richest Americans to 39.6%. That would be up from 37% approved
under former President Donald Trump.
But Democrats also want to raise other levies on the wealthiest. It's
unclear which proposals will survive and in what form.
For example, Senate Finance Committee Chairman Ron Wyden, D-Ore., has
expressed interest in boosting taxes on the value of some large estates that
heirs inherit. Ways and Means Chairman Richard Neal, D-Mass., omitted that from
his panel's plan.
Democrats want to provide tax credits for children, health care and child
care costs and low-income workers. If the bill's size shrinks, Democrats might
save money by delaying, gradually phasing in or out or limiting some of those
breaks. Some moderates say a proposed tax credit for buying electric vehicles
shouldn't go to higher-earning people.
Biden wants to raise the 21% corporate tax rate to 28% but may have to
settle for around 25%. Democrats face other differences over taxes on corporate
foreign income and stock buybacks.
Three moderate Democrats blocked a House committee from approving a top
priority for Biden and progressives: saving hundreds of billions by letting
Medicare negotiate lower prices for pharmaceuticals it buys. Another committee
approved the language, so it's not dead.
Still, the plan is opposed by drug manufacturers and some moderates want to
water it down.
Democrats planned to use the savings to pay for another progressive goal:
new dental, vision and hearing Medicare coverage. If the drug-pricing language
is diluted and produces less savings, it's unclear how the Medicare expansion
would be financed.
SALT AND IRS
In a town that loves acronyms, SALT, shorthand for state and local taxes, is
on the table.
Democrats from high-tax coastal communities are demanding an increase in the
current $10,000 limit on deductions taxpayers can claim for state and local
taxes they pay.
With Pelosi unable to afford losing more than three Democratic votes, many
think that deduction ceiling will be increased. To make up for the lost
revenue, the IRS could be given extra money or banks might be required to
report more financial transaction information to the IRS, ideas aimed at
bolstering tax collections.
The House has proposed grants for power companies that move toward renewable
fuels and fines on those that don't, a pillar of the chamber's climate change
agenda. Manchin, chairman of the Senate energy committee and a fierce defender
of his state's coal industry, has told colleagues he opposes that.
The House has proposed a plan for mandatory family leave that's
significantly costlier than what Senate Democrats envision. And lawmakers await
a decision from the Senate parliamentarian on whether language helping millions
of immigrants remain in the U.S. violates budget rules and must be omitted.
Last month, Pelosi told moderates that the House would consider their top
priority, a separate $1 trillion bill financing road and other infrastructure
projects, by Sept. 27.
In what seems a mutual political suicide pact, progressives have threatened
to vote against that bill unless unenthusiastic moderates support the $3.5
trillion package. Ideally, Democratic leaders would love for both bills to be
voted on together.
With so many loose ends, it seems highly unlikely the $3.5 trillion measure
will be finished then. That's raised questions about how Pelosi will keep her
party's antagonistic wings supportive of each other's priority bills and how
she will shepherd both to passage.
DEMOCRATS' TWO SECRET WEAPONS
For one thing, a collapse of the effort would mean a jarring failure to
enact their highest priorities, weakening their bid to retain their
congressional majorities in next year's elections. Every Democrat knows that.
Another is Pelosi herself, who's proven deft at holding Democrats together
and squeezing out votes she needs.
House Budget Committee Chairman John Yarmuth, D-Ky., cited both factors in
an interview last week, describing what he tells Democrats.
"I've said everybody should be posturing and doing the best you can to stand
up for your priorities, but in the final analysis you're going to vote for this
thing," Yarmuth said. "And by the way, have you met Nancy Pelosi?"