Dems' Massive $3.5 Trillion Spending Deal

By Yuval Rosenberg

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."

Obamacare and Medicaid Enrollment Reach Record Highs

More than 2 million Americans have signed up for health coverage
via the Obamacare marketplaces during a special enrollment period
that started in February, the Biden administration said Wednesday.
The ongoing enrollment increases have lifted the total number of
Americans covered by Obamacare plans to a record high, Chiquita
Brooks-LaSure, the Centers for Medicare and Medicaid Services
administrator,
told reporters. The final numbers are not yet
available, but the previous high, set in 2016, was 12.7 million
people.

Health officials said that since February, 1.5 million Americans
have signed up for Obamacare plans on HealthCare.gov and another
600,000 enrolled in coverage through the 15 state-based
marketplaces. The special enrollment period runs through August
15.

Enrollment in Medicaid and the Children’s Health Insurance
Program also reached a new high in February, with 81 million
Americans covered by those programs. Nearly 10.4 million people
enrolled between February 2020 and February 2021, a 14.7%
increase.

Why it matters: The surge in enrollment reflects both the
impact of the coronavirus pandemic, which cost millions of
Americans their jobs and employer-based coverage, and legislative
changes made this year that sharply lowered the price of insurance
for the vast majority of people signing up on the exchanges.

The Centers for Medicare and Medicaid Services said that, after
the Rescue Plan’s more generous subsidies were introduced in April,
the average premium for people selecting new plans fell by 25%.
People returning to the Obamacare marketplace since April have
lowered their net monthly premiums by an average 40%. "The American
Rescue Plan has made health coverage more affordable and accessible
than ever – and people are signing up," Brooks-LaSure said.

Health Costs of Gun Violence Top $1 Billion a Year: GAO

The cost of initial hospital treatment of gun-related injuries
tops $1 billion a year, with Medicaid and other public health
coverage accounting for more than 60% of the total, according to a
report
released Wednesday by the Government Accountability Office.
Physician costs not captured in the data could add around 20% to
the $1 billion total, the report said.

"While not receiving needed services may minimize costs
initially, the consequences of unmet health needs for firearm
injury survivors may ultimately result in greater costs," the
report adds.

A 2017
study in the journal Health Affairs estimated the total
annual cost of inpatient and emergency department treatment of
firearm injuries at about $2.8 billion.

As of 2016 and 2017, the most recent data available, there were
about 30,000 hospital inpatient stays and about 50,000 emergency
room visits a year to treat firearm injuries, according to the
GAO.

House Oversight and Reform Committee Chairwoman Carolyn Maloney
(D-NY), one of the House and Senate Democrats who requested the GAO
report last year, said that it "provides shocking new
evidence of how gun violence strains our health care system and
disproportionately harms historically marginalized communities."
She called for Congress to fund better gun violence research
and said it is "appalling" that data on long-term health costs of
gun violence is more than two decades old.

The report’s release comes as the Biden administration is urging
cities to spend unused Covid relief money to address gun
violence.


Read more about the report at Politico.

Send your feedback to yrosenberg@thefiscaltimes.com.
Follow us on Twitter:
@yuvalrosenberg,
@mdrainey and
@TheFiscalTimes. And please tell your
friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis