Democrats Unveil $3.5 Trillion Budget Blueprint

DC: U.S. Capitol, Supreme Court
Graeme Sloan
By Yuval Rosenberg

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.

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.

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.

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.

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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