Democrats Unveil $3.5 Trillion Budget Blueprint

 

Lots of legislative action on tap this week — trillions of dollars’ worth, in fact. Democrats on Monday unveiled their $3.5 trillion budget blueprint, setting in motion their plan to enact the most significant changes to the country’s social safety net in more than four decades. The Senate also looks set to pass a $1 trillion infrastructure package on Tuesday. And the clock is ticking toward a likely showdown over the nation’s debt limit. Here’s what you need to know.

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Democrats Release $3.5 Trillion Budget Blueprint

Senate Democrats on Monday released a budget blueprint totaling $3.5 trillion, pushing ahead with their plan for one of the largest increases in social spending since the Great Society legislation of the 1960s.

The 2022 budget resolution — which is nonbinding and includes general instructions for writing a more detailed budget plan, with spending stretching over as long as a decade — directs lawmakers to increase federal outlays in a wide variety of policy areas, including health care, green energy, child and elder care, education, job training and climate change.

Among its provisions, the Democratic plan is expected to introduce universal prekindergarten and two free years of community college and to expand Medicare coverage to include hearing, dental and vision care.

The memorandum to Democratic senators outlining the plan says the spending would be “fully offset by a combination of new tax revenues, health care savings, and long-term economic growth.” Democrats plan to increase taxes on wealthy households and corporations, and wring savings from federal programs by reducing the cost of prescription drugs.

But the resolution also allows for increases in deficit spending totaling as much as $1.75 trillion, indicating that the revenue increases may be expected to cover only half of the projected spending. The instructions include specific dollar figures and limits for each of the 12 Senate committees that write the budget. The largest allocation would go to the Health, Education, Labor, and Pensions Committee, which could increase deficit spending by $726 billion over 10 years.

Lawmakers are also instructed to reduce the deficit by at least $1 billion.

What comes next: The Senate is expected to vote on the budget resolution this week soon after passing the roughly $1 trillion bipartisan infrastructure bill currently under debate. Assuming the budget resolution passes — it needs only a simple majority — the Senate committees will have until September 15 to complete their detailed spending plans.

When the budget is ready, Democrats are expected to rely on the reconciliation process to bypass the filibuster and approve the legislation with a simple majority vote, eliminating the need for Republican support.

Then more battles ahead: Nailing down the spending details in the Senate may just be the beginning of the battle for Democrats. Not only do senators have to overcome resistance from moderates within their caucus — Sen. Kyrsten Sinema (D-AZ) has already declared that $3.5 trillion is too big — they also must reach an agreement with Democrats in the House, where both moderates and progressives will fight to influence the final shape of the bill.

It could take months for the whole process to play out, amid considerable pressure to reduce the final spending amount.

For more details on the immediate dynamics of the budget resolution, see Roll Call, The Washington Post and the Committee for a Responsible Federal Budget.

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Debt Ceiling Battle Looms as Yellen Calls on Lawmakers to Act

The debt ceiling needs to be raised or suspended in the coming weeks, and some lawmakers had hoped that the budget blueprint released Monday would do just that, with Democrats including a provision to address the issue before the Treasury has trouble paying its bills sometime this fall.

However, the budget resolution makes no mention of the pressing issue, setting the stage for a showdown between Democrats and Republicans that could have serious repercussions for the country’s credit rating, as well as the stability of international financial markets and the global economy.

On Monday, Treasury Secretary Janet Yellen called for bipartisan cooperation to raise the debt ceiling through regular order. “As I said in my letter to Congress on July 23rd, increasing or suspending the debt limit does not increase government spending, nor does it authorize spending for future budget proposals; it simply allows Treasury to pay for previously enacted expenditures,” Yellen said in a letter to Congress. “Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans.”

Republicans have made it clear that they oppose raising the debt limit in the absence of spending reforms. “We’ve seen that movie before, but we’ve never seen anything quite this dramatic,” Sen. John Cornyn (R-TX) said as he laid out his party’s stance on the issue. “They want to spend $3.5 trillion more; I don’t think it’s unreasonable to say they have to raise the debt ceiling themselves. And then bear the responsibility for it.”

Sen. Minority Leader Mitch McConnell (R-KY) made the same point while doubling down on the GOP position. “Here’s the comedy, they won’t let Republicans have any say in this monstrosity but they want our help raising their credit card to make it happen,” he said.

What happens next: Democrats could still amend their budget resolution to include a provision raising the debt ceiling. Alternatively, they could include a provision in a must-pass piece of legislation such as a bill to provide short-term funding to keep the government open in the new fiscal year, which starts on October 1.

Whatever path Democrats choose, the battle over the debt ceiling could grow quite tense in the coming weeks. “Democrats and Republicans are now headed for a classic political game of chicken, knowing that the nation will default on its $28 trillion in loans without quick action — a calamitous outcome that has never before occurred in U.S. history,” Politico’s Caitlin Emma and Jennifer Scholtes wrote last week.

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Bipartisan Infrastructure Bill Chugs Along Toward Final Senate Passage

The $1 trillion bipartisan infrastructure bill is on track toward final passage this week after the Senate voted 68-29 Sunday night to end debate on the package.

“It may have taken all weekend, but the Senate is now finally on the precipice of passing major bipartisan infrastructure legislation,” Schumer said on the Senate floor Monday morning, adding that Sunday night’s vote “put the bill on a glide path for passage tomorrow morning.”

The final vote on the Infrastructure Investment and Jobs Act could come in the wee hours of Tuesday morning, after 30 hours of required debate.

Some Republicans raise deficit concerns: Sen. Bill Hagerty (R-TN) has refused to agree to speed the process largely because of objections to how the new spending is — or rather isn’t — paid for.

The Congressional Budget Office said last week that the legislation would add $256 billion to deficits over the coming decade, though negotiators had argued that the costs would be fully covered. (The Committee for a Responsible Federal Budget says that the legislation could ultimately add nearly $400 billion to deficits.) The negotiators have said that some of their financing measures, including repurposing Covid-19 relief funds, wouldn’t count the same in CBO’s official scoring.

Other Republicans who had supported the bipartisan bill cited the CBO score in announcing that they would vote against final passage. "As I've said many times, while I'm eager for a bill that makes these investments, I'm also committed to doing so in a fiscally responsible way," Sen. Todd Young of Indiana said in a statement. “Having reviewed the Congressional Budget Office’s (CBO) estimated fiscal impact of this legislation as currently constructed, and frankly still not being comfortable with a number of the Democratic priorities contained in this version, I will vote ‘no.’”

Sen. Jerry Moran of Kansas also said the CBO score — and Democrats’ plans for their own spending bill — made him a ‘no’ on the bipartisan bill. “My top priority was the bill must be paid for and, therefore, not raise the national debt,” he said Monday.

Other lawmakers have shrugged off the CBO score, and the bill is expected to pass rather easily. Those developments, Jonathan Weisman and Alan Rappeport write in The New York Times, “marked a new moment in the post-Trump era, one that highlighted how deficits matter only situationally to Republicans and inflation fears ebb and flow, depending on the politics of the issue.”

Crypto deal blocked: Senators reportedly still hope to secure an agreement on a more acceptable vote time and, potentially, on additional amendments to the package. But a bipartisan agreement on changes to the cryptocurrency reporting requirements in the bill — a key revenue-raiser that was the subject of some late disagreements and dueling amendments — was blocked on Monday. “The upshot is the Senate is likely to approve infrastructure legislation with the original cryptocurrency provisions intact, despite the compromise winning support from across the political spectrum,” Politico’s Brian Faler reports.

What’s ahead: Once it’s passed by the Senate, the infrastructure bill will head to the House, where its outlook is clouded by differences among Democratic moderates and progressives over the $3.5 trillion budget reconciliation package.

House Speaker Nancy Pelosi (D-CA) has insisted that she won’t bring up the bipartisan bill for consideration until Senate Democrats pass the reconciliation package, and House progressives have said that they won’t back the bipartisan bill without the larger, partisan one. Some moderate Democrats, meanwhile, continue to call for Pelosi to allow a vote on the bipartisan deal.

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Number of the Day: 10.1 Million

The U.S. had a record 10.1 million job openings at the end of June, the Labor Department said Monday. The number of jobs available has reached new highs for four straight months. The number of new hires rose to 6.7 million, up about 700,000 over May, while the number of employees who voluntarily quit their jobs rose to 3.9 million, close to a record. Layoffs and firings fell below 1.3 million, a record low since the government began collecting such data at the end of 2000.

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