Democrats Kick Off Massive Spending Effort With $3.5 Trillion Budget Blueprint

Democrats Kick Off Massive Spending Effort With $3.5 Trillion Budget Blueprint

Democrats on the Senate Budget Committee have agreed to a topline figure of $3.5 trillion for the budget resolution they hope to pass through the Senate and House in the coming weeks. Now President Joe Biden and Democratic leaders will have to sell it to their own party.

Announced Thursday evening, the budget blueprint lays the groundwork for what could be “a massive expansion in the size and power of the government,” as The Washington Post’s Jeff Stein and Tony Room said, paving the way for Democrats to enact trillions of dollars in new spending on a wide variety of programs over the next 10 years.

While the details still need to be ironed out — and there are plenty of thorny details to be resolved — Democrats are expected to address a host of priorities in the eventual spending package, including an expansion of Medicare benefits, a major increase in the size and generosity of the social safety net, more money for public education and child care, and a big boost for efforts to address climate change.

Passage of the final package is far from a done deal, however, and critics are already expressing doubt that Democrats will be able to agree on such a large spending plan — or ways to finance it. In a research note, Goldman Sachs analysts said the blueprint is basically an “opening bid” that we should expect to see change in the coming days as Democrats debate the details, with a bias toward reducing the size of the plan.

Unlocking reconciliation: The budget resolution is not a law but instead functions as an overview of how much the government expects to spend and bring in during the next fiscal year, with a timeline that extends over a decade.

As long as both houses of Congress agree, the resolution can include special reconciliation instructions that empower lawmakers to make substantial changes to both spending and tax revenues over a 10-year period, without the threat of a filibuster in the Senate. Democrats plan to use that process to pass their spending package, which could become law with simple majorities in Congress. (See this overview of how budget resolutions work at Georgetown University’s Government Affairs Institute for more details.)

Centrist Democrats – and tax revenues – are key: Some Democratic lawmakers have indicated that they will wait to see the details before making their decisions on the blueprint. Sens. Joe Manchin (WV) and Jon Tester (MT) said they want the plan to be fully paid for with new revenues.

The bill is expected to include numerous tax increases focused on corporations and the rich while sticking to Biden’s pledge to avoid any tax hikes for those earning less than $400,000 a year. Biden has proposed raising the corporate tax rate to 28% and increasing the capital gains tax rate, and those provisions are expected to be included, as well, though perhaps in altered form. And the plan is expected to include funds for a major expansion of the IRS, in an effort to collect billions in unpaid taxes.

But those tax provisions could be a stumbling block that ultimately results in a smaller package, as tax increases are reduced or the Congressional Budget Office determines that revenues will fall short of estimates. “I make no illusions of how challenging this is going to be,” Sen. Mark Warner (D-VA) said Tuesday.

The resolution appears “to allow for no deficit expansion,” Goldman Sachs said, which could limit the size of the eventual spending bill to whatever revenues can be generated — a figure Goldman’s analysts put at roughly $1.5 trillion, once the concerns of centrist Democrats are taken into account.

Republicans will oppose: The reconciliation package is not expected to win any Republican support. Sen. Lindsey Graham (R-SC), the ranking member on the Budget Committee, released a statement expressing his opposition in fairly dramatic terms: “The $3.5 trillion tax and spend package being proposed by Senator Schumer and other Democrats is using infrastructure as an excuse to raise taxes and expand government. ... It’s about expanding the role of government in our lives from cradle to grave. ... Horrible, bad idea. Count me in for real infrastructure. Count me out for a tax and spend plan from Hell.”

Biden pushes plan: “We’re going to get this done,” Biden told reporters Wednesday as he made his way to meet with Senate Democrats to discuss the spending plan. During the closed-door lunch, the president reportedly encouraged the lawmakers to be ambitious in their efforts to enact both the reconciliation package and the roughly $1 trillion bipartisan infrastructure plan that Democrats expect to pass at about the same time.

But with Senate Majority Leader Chuck Schumer (D-NY) pushing to hammer out the details of both the budget resolution and the bipartisan infrastructure package before Congress leaves town for summer recess in August, there are plenty of potential pitfalls ahead.

“The key is, we’ve just got to get to a place where we know we got all 50 Dems,” said Sen. Tim Kaine (D-VA). “We’re getting close, but as you know, there’s multiple steps to getting close on kind of a general agreement ... that’s not the same as then getting close on the bill itself.”