Centrist Democrats take a wait-and-see stance on $ 3.5 trillion budget

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WASHINGTON – Several centrist Democrats took a neutral stance on a new $ 3.5 trillion budget deal on Wednesday, saying they must review the details of a broad plan to fund expanded access to affordable early childhood care , broader health insurance benefits and programs to combat poverty and the currency climate.

Senate Majority Leader Chuck Schumer (D., NY) and Democratic members of the Budget Committee on Tuesday evening announced the $ 3.5 trillion deal, which will be used to craft a budget resolution outlining the parameters of legislation containing much of President Biden’s legislative agenda. Democrats hope to use a budget-related process known as reconciliation to pass the package without GOP backing, but will need to maintain full unity in their ranks to move it forward in the equally divided Senate.

“We’re going to get there,” Biden said on Capitol Hill Wednesday, raising his fist as he entered a lunchtime meeting with Senate Democrats where he approved the 3.5 trillion dollar plan. dollars and stressed the importance of unity, according to lawmakers.

Senate Majority Leader Chuck Schumer, left, escorted President Biden to the United States Capitol on Wednesday for a Democratic lunch.


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saul loeb / Agence France-Presse / Getty Images

The $ 3.5 trillion deal was bigger than some centrist Democrats had hoped for, but marked a softening in the stance of Senate Budget Committee chairman Bernie Sanders (I., Vermont), who had initially sought a $ 6 trillion package. Many moderate Senate Democrats critical to the package’s chances of passing, including the senses. Jon Tester of Montana, Jeanne Shaheen of New Hampshire and Kyrsten Sinema of Arizona, said they are still reviewing the details of the deal. Senator Joe Manchin (D., W.Va.) said he raised concerns about the impact of the inflation package and its climate change provisions during the lunch meeting.

The bill is expected to include broad tax credits for clean energy investments, and Liberal Democrats are pushing to end fossil fuel subsidies.

“I am also concerned about maintaining the energy independence of the United States of America, and with that, you cannot move towards the elimination of the fossil,” Manchin said. “I hope we can agree that they understand that fossils are going to play a role.”

Senator Joe Manchin said he was concerned about the impact of the inflation package and its climate change provisions.


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jim lo scalzo / Shutterstock

Another central concern of Mr. Manchin is to cover the full cost of the $ 3.5 trillion bill. Democrats on the Budget Committee said on Tuesday evening that the package would be fully paid for with tax increases and other sources of revenue.

“Look, I’m open to this,” Tester said Wednesday, noting that he thought it was appropriate for the federal government to invest in housing, child care and workforce training. artwork. “I just need to know what’s in it, how it’s paid for.”

The White House has proposed to increase the corporate tax rate by 21%, to tighten the net tax on foreign profits of American companies and to increase the rate of capital gains for high-income households , among other changes. The plan will also build on capturing revenue from an enhanced Internal Revenue Service enforcement, which is also an idea lawmakers are considering as part of a separate, bipartisan infrastructure effort.

A spokesperson for Ms. Sinema said she would “carefully consider any idea that could strengthen Arizona’s economy and help Arizona families move forward.”

Likewise, the Liberal Democrats have said that while they are encouraged by the deal, they also want to look into the details.

“It’s a great dynamic,” said Representative Pramila Jayapal (D., Washington), chair of the Congressional Progressive Caucus. However, she warned, “the support of our caucus is only guaranteed when we see how our priorities fit into the proposed framework.”

Senator Ron Wyden said lawmakers are working on a deal to lower the cost of prescription drugs.


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Bill Clark / Zuma Press

A bipartisan group of lawmakers are working separately on a $ 1 trillion infrastructure package, of which roughly $ 600 billion would complement expected federal infrastructure spending. Democrats said that together, the two efforts would put the Senate on track to approve the bulk of Biden’s legislative proposals.

“We understand the moment here. We understand that it is rare for the same party to hold the House, the Senate and the Presidency, and that we have a special obligation to keep all of our promises, ”said Senator Brian Schatz (D., Hawaii) after the lunch with Mr. Biden.

White House press secretary Jen Psaki said the deal “currently represents and is aligned with the president’s priorities.”

Lawmakers have said the $ 3.5 trillion framework should not omit major legislative priorities, but rather reduce costs by shortening the duration of some benefits.

Republicans criticized Democrats for preparing to pump billions of dollars in additional federal funds into the economy, which they say could fuel inflation.

“It’s a huge spending spree and it’s the biggest tax increase in our country’s history,” said Sen. Rob Portman (R., Ohio).

Legislation Democrats are preparing is expected to include paid family and medical leave, subsidized child care, an extension of an expanded child tax credit, a universal preschool for three and four year olds, and affordable housing, among others. . It would also extend the expanded Affordable Care Act grants approved earlier this year.

Democrats said the bill would expand medicare significantly, both expanding its benefits to cover dental, vision and hearing care and potentially lowering its eligibility age below 65. They also aim to lower the cost of prescription drugs by allowing Medicare to negotiate their price, which has been estimated to be in the hundreds of billions of dollars.

“We are moving aggressively to put in place a prescription drug package that protects those millions of Americans who think they are being assaulted at the drugstore,” said Senate Finance Committee Chairman Ron Wyden (D., Oregon). It’s not clear. , however, that allowing Medicare to negotiate drug prices will be able to gain unanimous democratic support.

“I’m going to have to see what he says first before I pass judgment,” said Sen. Robert Menendez (D., NJ).

Mr Sanders said on Wednesday he also expected the package to include immigration provisions. Ms Jayapal said she believed the legislation would open a path to citizenship for several immigrant groups, including farm laborers, essential workers and dreamers, a category of undocumented immigrants brought to the United States then that they were children, among others.

The expanded child tax credit, characteristic of the $ 1.9 trillion coronavirus relief plan adopted by Democrats earlier this year, will likely be extended until 2024 as part of the reconciliation plan, according to reports. people familiar with the plan. In Bill Covid-19 enacted earlier this year, lawmakers increased the credit to $ 3,000 per child, with $ 3,600 for children under 6, distributed in monthly installments to many American families until ‘at the end of the year.

The White House initially offered to extend it until 2025, while some Democrats lobbied to make it permanent.

On climate change, Democrats are proposing a range of ideas, including tax credits for clean energy investments and a clean electricity standard, to reduce carbon emissions in the electricity sector by 80 % and 50% in the economy by 2030, according to a senior Democratic official. .

Democrats are also offering import fees for polluters, without providing details. Such fees could help reduce emissions globally while generating revenue for the United States, effectively acting as an emissions-based tariff, an idea that has become popular with policymakers in Europe and beyond. in addition to the United States. similar levies on imports from high-emitting countries, as part of a plan to reduce emissions of carbon dioxide and other gases that most scientists believe cause the earth to warm.

Other areas of the bill could include investments in housing, manufacturing finance, and incentives and penalties to protect workers.

Liberal Democrats in the House and Senate have indicated that they will only support the bipartisan infrastructure bill if there is sufficient support to pass the education and poverty package as well. Democrats can only move the budget package forward if all 50 members of their caucus support it, given that no Republican should vote for it.

“Would I have liked to have had an even larger number?” Yes, I would have, but there are 50 members in the Democratic caucus, ”Sanders said Wednesday.

Democrats in both chambers face many contentious decisions, including how they propose to raise taxes for wealthier Americans and businesses. Aides said any tax increase will not affect households earning less than $ 400,000 or small businesses.

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Read more articles on the Biden administration’s efforts, selected by WSJ editors

Write to Kristina Peterson at [email protected] and Andrew Duehren at [email protected]

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