WASHINGTON — President Biden’s sweeping infrastructure, tax, climate and social policy agenda hangs on a political high-wire act now playing out on Capitol Hill at unprecedented speed.
The House and Senate are out of session for a July 4 holiday break, but discussions are continuing among Democrats about the parameters of potentially monumental legislation that represents Biden’s best chance to deliver on many of his campaign promises, according to interviews with more than a dozen lawmakers, aides and lobbyists.
This legislation, which is set to be passed without Republican support separately from a parallel, bipartisan infrastructure measure, may not be ultimately passed until fall or later. But Democrats have only a matter of weeks to settle many of the biggest policy questions surrounding a bill that could transform much of American life: How much will it spend? How much of that spending should be offset with tax increases and other revenue measures? And which competing items on a laundry list of priorities should ultimately be passed into law?
“This is going to be an incredibly intense period, because we’ve got to come to agreement on the big pieces quickly in order to meet the moment and accomplish our goals,” said Sen. Chris Van Hollen, D-Md., a Senate Budget Committee member. “And because we have no margin for error in the Senate, that means we’ve got to be burning up the phone lines and coming to some understandings.”
The discussions are taking place independently of the bipartisan talks on the separate bill that would fund “hard” infrastructure – roads, bridges, airports, railroads, pipes, broadband internet and other bricks-and-mortar spending that some Republicans are willing to support.
But it’s all part of the same legislative ballet: While Biden has insisted the two bills are moving on separate tracks, Democratic congressional leaders continue to insist they move in parallel in order to placate liberals concerned that their priorities might be left behind. That, in turn, has vexed many Republicans who believe the bipartisan bill will only enable a vast Democratic spending spree.
Now, key Democrats are focused on the second and potentially much larger bill that would include provisions that Republicans are not expected to support – items like climate measures, expansions of health-care coverage, broad new college subsidies and the tax increases necessary to make those measures permanent.
The speed and sensitivity of the negotiations reflect twin concerns: For one, Democrats are operating with some of the thinnest voting margins Capitol Hill has even seen, with a 50-50 Senate majority secured by Vice President Kamala Harris’s tiebreaking vote, and a mere four-seat margin in the House. Passing anything without Republicans will require virtual unanimity.
For another, Democrats must work within the esoteric bounds of a 47-year-old federal law that sets out the narrow path a Senate majority must follow in order to evade the filibuster, the 60-vote supermajority requirement for most legislation. To take advantage of the 51-vote “reconciliation” process, lawmakers first must pass preliminary legislation, called a budget resolution, that sets out the fiscal parameters for the ultimate bill.
With the political clock ticking, Senate Majority Leader Chuck Schumer, D-N.Y., has pledged to advance that preliminary resolution by the end of July, in tandem with the bipartisan infrastructure bill now being written based on a framework that key Republicans agreed to last month.
That timeline, and the demands of the reconciliation process, prompted a flurry of meetings on Capitol Hill last week with key White House officials, including top Biden advisers Brian Deese, Steve Ricchetti and Louisa Terrell. According to attendees of several of those meetings, much of the discussion surrounded the fiscal outlines that will have to be written into a budget resolution.
“Everyone understands the seriousness of this moment,” said Rep. Pramila Jayapal, D-Wash., the chairwoman of the Congressional Progressive Caucus. “We’ve been preparing for this over many months.”
While not every detail in the final bill must be quickly resolved, a general framework will have to be in place for the budget resolution. The final legislation must comport with “reconciliation instructions” set out in the budget resolution that direct individual congressional committees to write legislation with a defined budgetary impact. Bills that can be ruled out of order in the Senate and lose their eligibility to be passed with 51 votes.
“They have to pretty well figure it out right now,” said G. William Hoagland, senior vice president of the Bipartisan Policy Center and a former top Republican aide at the Senate Budget Committee. “All this tells me, this is not going to be a slam dunk. This is going to take some real coordination on the part of the leadership.”
House Budget Committee Chairman John Yarmuth, D-Ky., told reporters last week that an initial outline could be sketched out even before lawmakers return to Washington from the holiday break. But he said Thursday that major decisions about what pieces ought to be in and what pieces ought to be out had yet to be made.
That game of budgetary Tetris has been made even more difficult, he said, by the fact that congressional fiscal estimators had not yet come up with final projections for many of the key revenues and expenditures that are in play.
“We don’t know what anything costs,” Yarmuth said Wednesday.
Yarmuth’s counterpart across the Capitol, Senate Budget Committee Chairman Bernie Sanders, I-Vt., circulated a draft budget framework last month that envisioned as much as $6 trillion in spending, going beyond Biden’s proposals – including a landmark expansion of Medicare that would lower the eligibility age from 65 to 60 and include dental, hearing and vision coverage for the first time.
The framework also included controversial provisions to slash prescription drug prices and to overhaul the immigration system – both of which could produce budget savings that could offset new expenditures. Other major initiatives that remain under discussion include a variety of climate-related provisions as well as at least partially restoring the federal income tax deduction for state and local taxes that was curtailed in the 2017 GOP tax law. And it remains unresolved what level of appetite congressional Democrats will have for raising taxes on corporations and wealthy Americans – which Biden is relying on to fund his agenda.
The tax questions, for instance, are crucial, because the reconciliation rules do not allow a bill to incur a deficit beyond the 10th year. That means making social programs permanent – such as the new monthly child tax rebate checks – will require sufficient new revenue to perpetually offset their costs.
The need to quickly balance all of those concerns, according to those familiar with the process, means that the debate is almost certain to sidestep many of the hallmarks of the legislative process. For instance, while the House and Senate budget committees typically produce their own budget resolutions, that is unlikely to happen this year.
Instead, according to lawmakers and aides, the budget resolution is more likely to be the product of backroom bargaining overseen by Schumer and House Speaker Nancy Pelosi, D-Calif., in consultation with Sanders and Yarmuth, before being sent directly to the Senate floor. There it will be subject to a grueling amendment process before it is sent to the House for final approval.
Already, political pressures are coming to bear behind the scenes. A push to close a key gap in the Affordable Care Act by securing coverage for millions who live in states that have refused to expand their Medicaid programs is now under strong consideration due to pressure from lawmakers in the affected states – such as Rep. Lloyd Doggett, D-Texas, a liberal House Budget Committee member, who said that many such disputes are being waged largely out of public view.
“I realize we have to get this passed,” Doggett said. “That doesn’t mean there won’t be a lot of arguments about what’s in and out.”
Setting the fiscal parameters for a reconciliation bill can require bridging vast ideological divides, even within the same party. When Republicans moved forward with the last major reconciliation effort, to pass their sweeping tax overhaul in 2017, it first required bridging the divide between deficit hawks such as Sen. Bob Corker, R-Tenn., who wanted any rate cuts offset with loophole eliminations, and supply-side adherents such as Sen. Patrick Toomey, R-Pa., who believed that approach wouldn’t generate enough economic growth.
That dispute was settled in a private meeting inside the office of GOP Leader Mitch McConnell of Kentucky, where Corker, Toomey and the other Republicans on the Senate Budget Committee agreed to incur a $1.5 trillion deficit. The bill ultimately passed three months later.
The Democrats have an even tighter majority and a bigger gap between the stated views of their most liberal and most conservative members. Sanders and allies on the left have proposed $6 trillion in spending, while centrists have called for a bill that spends $2 trillion or less – with most or all of it offset with new revenue or savings.
In a demonstration of the leverage even one lawmaker can have, passage of the first reconciliation bill signed by Biden – the $2 trillion American Rescue Plan – was held up for hours in the Senate in March as Sen. Joe Manchin III, D-W.Va., pushed to scale back an extension of federal unemployment benefits.
Now Manchin is among those who have made clear that they intend to serve as a check on the left’s ambitions – suggesting, for instance, that he wants to see every expenditure in the plan offset while also expressing skepticism about some of Biden’s proposed tax increases. Numerous other Democrats, meanwhile, have made a push – publicly and privately – that some level of further deficit spending is appropriate – particularly when it comes to building physical assets.
“The caucus is going to have to decide, what does the country need?” said Van Hollen, who is among those arguing for targeted borrowing. “And there are lots of urgent demands out there.”
While Hoagland and some Republicans believe that Democrats will have a hard time forging unanimity on such a vast piece of legislation, others said that they have a compelling interest in not squandering the present alignment of circumstances.
“You have a president who has lifted up this agenda, you have the aftermath and the ongoing effects of the pandemic that have really highlighted and crystallized a lot of the problems that need to be addressed, and you have a narrow majority for the president’s party,” said Joel Friedman, a vice president at the Center on Budget and Policy Priorities and a former congressional and White House budget official. “That is creating this sort of opportunity that I think members want to seize.”
As the White House officials and the two budget chairmen convened meeting after meeting last week, Democrats who had previously been eager to put their stamp on the bill mostly refrained from issuing ultimatums – acknowledging that the talks had entered a critical phase in which a wide variety of interests would need to be delicately balanced.
Jayapal, for instance, declined last week to say what minimum level of spending her liberal faction would accept, while Rep. Stephanie Murphy, D-Fla., a leader of the centrist Blue Dog Coalition, said moderate Democrats would “come to the table open-minded.”
“No one can afford to be picky today, when we have a zero-vote margin in the Senate and four votes in the House,” said Rep. Jim Cooper, D-Tenn., perhaps the most fiscally conservative Democrat on the House Budget Committee. “Nobody gets their way.”
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