After weeks of talking past each other, Democrats are finally negotiating in earnest on their budget reconciliation bill, the centerpiece of President Joe Biden’s economic agenda.
The discussions come after weeks of infighting between moderates and progressives, who’ve disagreed on the path forward. Moderates have pushed for a standalone vote on the bipartisan infrastructure plan, which they support, while progressives want concrete commitments from the moderates on a reconciliation bill, too. By tying the two bills together, progressives hope to guarantee that moderates won’t simply abandon the budget measure once their priorities pass.
At stake is a massive social spending bill that includes dramatic expansions to Medicare, funding for free community college and universal child care, and huge investments in clean energy.
Progressives on Thursday made it clear they wouldn’t be backing down, putting pressure on moderate Democrats to provide a concrete sense of where they stand on the reconciliation bill’s expansive social spending measures.
Now, with neither side giving in, lawmakers in both camps need to figure out what concessions they can tolerate.
Moderate Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have said a lot about what they won’t support, arguing they can’t get on board with a bill that spends $3.5 trillion over 10 years, a top-line figure agreed on by Democratic senators on the budget committee and the White House earlier this year. Because no Republicans support the bill, all 50 Democratic senators will need to vote for it, so Manchin and Sinema have outsize sway in determining what the package will include.
Neither has offered much in the way of specifics yet. Manchin has said he’d be open to a $1.5 trillion measure, with few other details, while Sinema hasn’t publicly said where she stands. Pelosi has pushed both senators to accept a $2.1 trillion figure while progressives would like to stick as close to the original $3.5 trillion proposal as possible.
Given the ongoing negotiations, it’s unclear what the reconciliation bill will include, what its total spending will be, or how long it will take for a deal to come together. That talks are happening at all, though, marks some kind of progress.
“We have been waiting for an offer to counter the $3.5 trillion that is on the table, and we understand that we’re going to have to get everybody on board in order to be able to close this deal,” Congressional Progressive Caucus chair Pramila Jayapal told reporters on Friday. “Until we get that, we don’t have anything to say about numbers.”
What Manchin, Sinema, and progressives want
As negotiations continue, White House aides, congressional lawmakers, and President Biden are working to figure out what Manchin and Sinema will accept.
Manchin offered a few red lines in a memo he presented to Senate Majority Leader Chuck Schumer in July, in which he said he wanted a budget bill no higher than $1.5 trillion along with a list of other demands:
- Means-testing new social spending, an approach that would limit access based on income to new programs like paid leave and child care. He offered no details on what the cutoffs would be, but broadly emphasized that he’d like more targeting on these efforts.
- A guarantee that the Energy and Natural Resources Committee, which he chairs, would oversee the implementation of a clean energy standard.
- Keeping corporate tax rates at 25 percent or below and the capital gains tax rate at 28 percent or below, both thresholds lower than the 28 percent corporate tax rate and 39.6 percent capital gains tax rate that Biden proposed, though they’re more in line with House proposals.
Sinema, meanwhile, has said she can’t sign on to spending $3.5 trillion but hasn’t publicly offered a number of her own. In a statement released on Thursday afternoon, she noted that she’s outlined her position to the White House but won’t be sharing it more broadly. As Axios reported on Friday, she’s signaled where she stands on some areas: Like Manchin, she appears to support lower tax rates compared to Biden, favoring a 24 percent corporate tax rate and a capital gains rate in the mid-20s.
Progressives, on the other hand, have stood by a bill totaling $3.5 trillion and outlined five key priorities they want the bill to include: lowering prescription drug prices; investments in affordable housing; investments in climate jobs; funding for child care subsidies and paid leave; and a pathway to citizenship for immigrants, including DACA recipients.
What a compromise might look like
Pelosi, who’s been involved in the latest discussions with both senators, has sought to push the total amount of spending in the bill to $2.1 trillion, according to Politico.
Additionally, Pelosi has asked for detailed agreements on paid family leave and child care, climate change, and health care in any reconciliation framework, the publication reported. It’s an indication that these areas are priorities for the speaker, and ones less likely to be cut as Democrats weigh what to keep and what to pare back.
What actual cuts could look like is still uncertain, though the New York Times examined a couple different scenarios:
As the Times reported, Sen. Bernie Sanders (I-VT) had already limited the duration of certain programs to reduce the bill’s costs. Democrats could try to do that again, for instance by expanding the child tax credit only through 2024 instead of 2025. Other programs like the expansion of Medicare coverage for vision, hearing, and dental care could be implemented more slowly to spread out the cost as well. (This bill’s spending is already spread out across 10 years, in part, to reduce the annual price tag.)
Certain programs like free community college could be stripped out altogether as well, a scenario Education Secretary Miguel Cardona has said he feared would take place if Democrats had to roll back their spending.
Some moderates have argued that progressives should accept the $1.5 trillion number given that spending such a sum on social programs would have been unimaginable a decade ago and would still represent a significant expansion of the safety net. In 2009, President Barack Obama secured $840 billion for the Recovery Act, and in 2010 estimates put the cost of the Affordable Care Act at $940 billion. Earlier this year, Congress approved the $1.9 trillion American Rescue Plan as well.
Progressives, meanwhile, say that Democrats have a rare opportunity to capitalize on their trifecta in Congress and the White House and that they need to deliver benefits in order to win in the midterms. They note, too, that $3.5 trillion over 10 years amounts to $350 billion a year, a figure that’s roughly half of what the US spends annually on its defense budget, and that they have already come down from a proposed $6 trillion spending package.
Many lawmakers, including members of the Senate, have also already bristled at the $1.5 trillion figure that Manchin put forth, an indication that any deal with that figure will face significant pushback. “I could see myself coming below $3.5 trillion but we shall see how far $1.5 trillion goes,” Sen. Mazie Hirono (D-HI) told Politico. “He’s confirmed that’s as far as he’ll go, which is pretty sad if you ask me.”
But since the different groups of Democrats have genuine incentives to work things out — including looming midterms and the fact both pieces of legislation are central to the White House’s agenda — political experts think an agreement is more likely than a complete implosion of the process.
“It’s very much in the interest of all members of the Democratic Party to pass both bills,” said Laura Blessing, a senior fellow at Georgetown’s Government Affairs Institute.
Exactly what that agreement will look like, though, is still very much up in the air. And working out the actual policy details could take weeks or more. Any consensus on a framework would be significant, however, even if it means there’s still quite a long way to go.
“It doesn’t matter if it’s in six minutes, six days, or six weeks. We’re gonna get it done,” Biden said after a meeting with lawmakers on Friday.