Pelosi Plows Ahead With Plan to Break Dem Standoff

Pelosi Plows Ahead With Plan to Break Dem Standoff

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Plus, Biden backs a billionaire wealth tax
Friday, September 24, 2021
The Fisc

Pelosi Plows Ahead With Plan to Break Dem Stalemate

Speaker Nancy Pelosi and House Democrats are plowing ahead with plans to vote on both a $1 trillion bipartisan infrastructure bill and a broader, multitrillion-dollar package to expand the social safety net, rushing to show progress on President Joe Biden’s economic agenda even as key elements of it are still being negotiated.

The urgency is driven by Pelosi’s promise to a renegade group of centrist Democrats that she’d hold a vote by September 27 on the “hard infrastructure” legislation passed by the Senate six weeks ago — a deadline complicated by progressive demands that Congress act first on the still unfinished “reconciliation” package of social spending, climate programs and tax hikes on the wealthy and corporations.

Pelosi said Friday that she will indeed bring up the infrastructure package as promised. “It will come up on Monday," she told reporters.

Progressives aren’t backing down, though. “It cannot pass,” Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus, said Friday. “I don't bluff, I don't grandstand. We just don't have the votes for it.”

Pelosi is looking to change that and win over recalcitrant progressives by pressing to advance the reconciliation package. House Democrats on Friday released the full, 2,465-page legislative text of the package, which the Budget Committee is set to consider on Saturday. And Pelosi announced that she’s hoping to bring the legislation to the floor sometime next week. “Have a little patience. Follow it. See it unfold,” she said at a Friday press conference. “We’re very encouraged.”

Biden, though, acknowledged to reporters Friday that Democrats are at a “stalemate” on the bill, saying that while he still expects to sign both bills into law, they would take time to get done. "This is a process and it's going to be up and down," Biden said.

Biden says cost of his Build Back Better plan will be ‘zero’: Both Biden and Pelosi have sought to center discussion on the substance of that package rather than its price tag, trying to clarify which elements Democrats can unite behind and which will have to be cut to ensure the support of their more conservative members.

“Every element of my economic plan is overwhelmingly popular — overwhelmingly popular,” Biden told reporters Friday, adding that he’s urged lawmakers to forget the topline number and focus on the plans they think should be pursued.

He also emphasized that the new spending in the reconciliation bill would be fully paid for. “We’re going to pay for everything we spend,” he said, adding, “Every time I hear, ‘This is going to cost A, B, C, or D,’ the truth is, based on the commitment that I made, it’s going to cost nothing because we’re going to raise the revenue to pay for the things we’re talking about.”

But getting Democratic consensus on the substance of the bill may not be any easier than reaching agreement on a topline number. One example: Sen. Joe Manchin (D-WV) said Thursday that Democrats “need to stabilize” Medicare’s finances before they look to expand it.

“By 2026, you understand the trust fund is going to be insolvent,” Manchin said Thursday, according to The Hill. “I want to make sure we are stabilizing what we have before we start going down this expansion role.” That again puts Manchin at odds with Senate Budget Committee Chair Bernie Sanders (I-VT), who has pushed to add dental, vision and hearing coverage to the health care plan for older Americans.

While health care provisions in the budget package are a major area of disagreement for Democrats, they are far from the only sticking point. Those differences will be hard, if not impossible, to resolve before next week, meaning that any budget reconciliation package that’s brought to a vote in the House would still be subject to significant modifications. “As negotiations continue, there may be changes,” Pelosi told colleagues in a letter Friday.

That, in turn, will make progressives less likely to buy into the speaker’s plan. "It's not going to give us any comfort to pass a bill that then the Senate [defeats]," Jayapal said. "That doesn't satisfy our requirements." And moderates reportedly may not support a vote on the reconciliation bill until it’s clear what can get through the Senate.

The bottom line: Democrats, as Biden said, are still at a stalemate, and it’s far from clear if they can break it by next week.

Biden Says He Backs Tax on Billionaires’ Wealth

In what would be a major change in the U.S. tax code, which typically does not impose taxes on investment gains until the underlying assets are sold, President Biden said Friday that he supports a proposal to tax billionaires’ unrealized capital gains on an annual basis.

Asked about Senate Finance Committee Chairman Ron Wyden’s (D-OR) plan to levy a “billionaire’s income tax” on the wealthiest American households, Biden told reporters at the White House that he backs such a tax as part of his effort to offset the cost of his ambitious social spending plans. “I support a lot of these proposals,” Biden said. “We don’t need all of the things I support to pay for this, but I do support that.”

On Thursday, after the White House released an analysis showing that the wealthiest 400 households in the U.S. paid an effective federal income tax rate of about 8.2% if unrealized capital gains are treated as income, Wyden spoke in favor of his tax proposal.

“Instituting a Billionaire’s Income Tax would go a long way toward creating one fair tax code, rather than one that’s mandatory for working people and another that’s optional for the fortunate few,” Wyden said in a statement.

Wyden and other Democratic tax reformers point out that billions of dollars in capital wealth goes untaxed in the U.S. thanks to the absence of taxes on unrealized gains and the step-up in basis for inheritances, which eliminates capital gains as assets are transferred to heirs.

The wealth tax proposal is not currently part of the House tax plan, but it is on the “menu” of options Democrats are choosing from as they look for ways to pay for Biden’s social spending plan, which could amount to as much as $3.5 trillion over 10 years.

According to Bloomberg News Friday, the 100 richest Americans have gained $469 billion in wealth so far this year, and now have a total net worth of roughly $3 trillion.

Debt Limit ‘X-Date’ Could Be as Early as October 15: Analysis

Unless Congress raises or suspends the debt ceiling beforehand, the ‘X Date’ — the day on which the U.S. Treasury will be unable to meet all of its obligations — is expected to arrive between October 15 and November 4, according to the latest analysis from the Bipartisan Policy Center.

“No one can be certain of the X Date, but we know it’s coming within a matter of weeks,” Shai Akabas, BPC’s director of economic policy, said in a statement. “The U.S. government risks missing or delaying critical bills that will come due in mid- and late-October that millions of Americans rely on, from military paychecks and retirement benefits to advanced child tax credit payments.”

After the X Date, the Treasury would be unable to pay about 40% of its bills, BPC said, based on an analysis of daily cash flows. “Crossing the X Date would be unprecedented,” Akabas said. “At that point, Treasury would be left with an array of highly unattractive and risk-filled options.”

The BPC estimate aligns with the projections provided by Treasury Secretary Janet Yellen, who warned earlier this month that the Treasury would run out of sufficient funds at some point in October if Congress fails to act.

Chart of the Day

From The Washington Post:

Number of the Day: $425,000

The Republican-led recount of more than 2 million presidential votes in Arizona has cost taxpayers at least $425,000, according to Arizona Republic reporter Mary Jo Pitzl. The final cost is expected to be significantly higher once all the expenses are in, and some reports say the cost has already climbed over $3 million. The accounting is a little tricky though, since private groups aligned with former President Donald Trump have raised over $5 million to help pay for some of the recount process.

Whatever the final financial cost, the results are clear enough. Despite the best efforts of Trump’s supporters to bring the election into question, the recount shows that Joe Biden won Maricopa County, which includes Phoenix, by 45,469 votes which is 360 more votes than recorded during the first tally.

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