Democrats Push a Budget to Fulfill Biden’s Aggressive Economic Ambitions

The $3.5 trillion blueprint under consideration in the Senate would deliver, at least temporarily, on the economic promise of a unified Washington run by Democrats.

Advertisement

Continue reading the main story

Supported by

Continue reading the main story

WASHINGTON — The $3.5 trillion budget outline that Democrats unveiled in the Senate this week promises to reshape the government’s role in the economy, in ways President Biden and his party have called essential to rebuilding the American middle class, lifting people out of poverty and tackling the threat of climate change.

Its passage in Congress remains far from assured, with a series of difficult hurdles in the coming months, including filling in key details on taxes and spending and holding together a fragile Democratic coalition. But if its central components become law, it would be the capstone achievement Democrats had promised when they won a pair of Senate elections in January to gain narrow control of Congress — and come with a reach that could exceed its cost.

The blueprint could pave the way for legislation that fundamentally overhauls Americans’ relationship with work, with school and with the federal government. It would put in place much of Mr. Biden’s vision to add years of guaranteed public education to fight inequality, lift more women into the work force with subsidized child care and paid leave and send monthly checks to parents to alleviate poverty — a provision that Mr. Biden championed on Thursday at the White House.

It would expand Medicare in ways that go beyond Mr. Biden’s own health care proposals this year, to include dental and vision coverage, and it would impose large taxes on corporations, high earners and the greenhouse gas emissions that drive climate change.

And all of those changes could fade quickly — or never even make it to Mr. Biden’s desk — if Democrats’ political calculus is off and they cannot muster the 50 votes they need. The blueprint reflects a deliberate choice by the president and his party to advance as many new spending programs and tax cuts as possible, but also allow some of them to expire in a few years to conform to the limited tax and spending limits appetites of moderate senators. The hope — and gamble — is that the programs will prove so popular a future Congress will keep them alive.

The rewards and risks of that strategy were on display on Thursday at the White House, where Mr. Biden and Vice President Kamala Harris welcomed several families to celebrate the first round of monthly payments to parents under the expanded child tax credit that Mr. Biden signed into law in a separate $1.9 trillion aid bill aimed at helping people and businesses stay afloat through the pandemic.

The credit delivers payments of up to $300 per month for children younger than six, and $250 per month for children ages 6 to 17, for families earning up to $150,000 a year, at which point the benefit begins to phase out gradually. The White House has promised the payments will cut child poverty in half, though the Treasury Department is struggling to reach some of the lowest-income families in the country — who often do not earn enough to pay income taxes and file a return with the Internal Revenue Service — with the payments they are eligible to receive.

Mr. Biden cast it as a legacy-defining move, saying “it’s our effort to make another giant step toward ending child poverty in America,” and “one of the things that the vice president and I will be most proud of when our terms are up.”

Yet the expanded credit is set to expire after this year. Democrats have aggressively pitched its benefits to voters this week, not only in hopes of winning points for future elections, but also as a sort of bid to make the credit a permanent fixture in the tax code. The budget blueprint would advance that cause — it includes the renewal of the expanded tax credit for an undetermined period of time.

Given the more than $100 billion-per-year cost of the benefit, Democrats appear unlikely to make it permanent. A fact sheet Senate leaders distributed this week said the duration of the credit, along with many other tax benefits and spending programs, would be determined based on its budgetary effect and what amounts to a game of prioritization among Democrats operating under cost constraints imposed by their most centrist members. That could result in only a few years of extension, if that, leaving future members of Congress to decide whether to maintain the benefit.

Image

Mr. Biden and Vice President Kamala Harris welcomed several families to celebrate the first round of monthly payments to parents under the expanded child tax credit that Mr. Biden signed into law.Credit…Doug Mills/The New York Times

Champions of the child tax credit acknowledged the risks of that approach.

“I hope this will be the moment where we would decide that we’re going to make it permanent. If it’s not, we have an extra long extension and then, you know, we’ve got the chance to do it later,” Senator Michael Bennet, Democrat of Colorado and an early sponsor of the expansion, said in an interview.

Asked whether the extension could shrink to as little as a year in a final package, he replied, “I am worried about that.”

Biden’s 2022 Budget

A new year, a new budget: The 2022 fiscal year for the federal government begins on October 1, and President Biden has revealed what he’d like to spend, starting then. But any spending requires approval from both chambers of Congress.Ambitious total spending: President Biden would like the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. That would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion through the next decade.Infrastructure plan: The budget outlines the president’s desired first year of investment in his American Jobs Plan, which seeks to fund improvements to roads, bridges, public transit and more with a total of $2.3 billion over eight years.Families plan: The budget also addresses the other major spending proposal Biden has already rolled out, his American Families Plan, aimed at bolstering the United States’ social safety net by expanding access to education, reducing the cost of child care and supporting women in the work force.Mandatory programs: As usual, mandatory spending on programs like Social Security, Medicaid and Medicare make up a significant portion of the proposed budget. They are growing as America’s population ages.Discretionary spending: Funding for the individual budgets of the agencies and programs under the executive branch would reach around $1.5 trillion in 2022, a 16 percent increase from the previous budget.How Biden would pay for it: The president would largely fund his agenda by raising taxes on corporations and high earners, which would begin to shrink budget deficits in the 2030s. Administration officials have said tax increases would fully offset the jobs and families plans over the course of 15 years, which the budget request backs up. In the meantime, the budget deficit would remain above $1.3 trillion each year.

The balancing act is a direct product of Mr. Biden’s narrow hold on Congress and his approach to advancing his economic vision.

Mr. Biden is trying to push his $4 trillion economic agenda through Congress in pieces. He has reached agreement with centrist senators, including several Republicans, to spend nearly $600 billion to upgrade roads, bridges, water pipes, broadband and other physical infrastructure. At the same time, he and Democratic leaders are collaborating on a larger bill jammed with as many of his remaining priorities as possible, which would advance on a party-line vote through a process called reconciliation that bypasses a Senate filibuster.

The budget blueprint is the first step toward that larger legislation. It includes new spending programs and tax incentives, though it is still light on details. Among them: an extension of Medicaid coverage to bring health insurance to some low-income residents of states that have refused to join the program’s expansion and an extension of Medicare benefits to include dental, vision and hearing coverage. It is also filled with efforts to reduce greenhouse gas emissions, including the creation of a “civilian climate corps” employed by the government. The blueprint calls for four additional years of guaranteed public education and a host of supports for workers, including paid leave and subsidized child care.

In nearly all of those cases, Democratic leaders noted in a background document for reporters this week, the “duration of each program’s enactment will be determined based on scoring and committee input.”

In other words, lawmakers are saying, We want it, but we’re not sure how long we can fund it.

Leave a Reply