Democrats Close In on a Deal

Democrats Close In on a Deal

U.S. President Biden visits New Jersey
By Yuval Rosenberg and Michael Rainey
Monday, October 25, 2021
Make or Break Time for Democrats' Spending Bill

This is it. This is the week Democrats finally agree on a framework for their nearly $2 trillion package of social spending programs and tax changes, allowing them to also move ahead on a bipartisan infrastructure bill.

Or it could be the week. Maybe. Or maybe not. But Sen. Joe Manchin (D-WV), the centrist holdout who has been playing a large role in shaping a final package that can win his support, told reporters Monday that Democrats "really should" be able to reach a deal this week. House Speaker Nancy Pelosi (D-CA) reiterated on Sunday that the bill is nearly done. "We have 90% of the bill agreed to and written, we just have some of the last decisions to be made," Pelosi said on CNN. And Senate Majority Leader Chuck Schumer (D-NY) said Monday that just three or four issues are left to resolve.

They’re major issues, though — questions about Medicare coverage, new taxes and more. But Democrats are getting closer and closer after President Joe Biden huddled this weekend in Wilmington, Delaware, with both Manchin and Schumer. Biden is pressing to have an agreement in place before he heads off to Europe on Thursday ahead of the United Nations Climate Change Conference in Glasgow, Scotland, which starts on Sunday.

Manchin said Monday that it may be doable. "Having it finished with all the T's and the I's and everything, you know, crossed and dotted, that will be difficult from the Senate side because we have an awful lot of text to go through, but as far as conceptually we should, I really believe," Manchin said. He added, though, that he still has concerns about "a lot of different things."

Here are the key details and big questions lingering over what could be or should be the last stage of the talks.

What will be left of Democrats’ health care plans? Progressives led by Sen. Bernie Sanders (I-VT) have pushed for a plan to add dental, vision and hearing benefits to Medicare at a cost of about $350 billion over 10 years. But Manchin opposes the idea, warning that Medicare’s finances should be shored up before lawmakers start talking about expanding the program.

"Medicare and Social Security is a lifeline to people back in West Virginia, most people around the country," he told reporters. "You've got to stabilize that first before you look at basically expansion so if you're not being fiscally responsible that's really concerning."

Biden last week acknowledged that adding all three benefits to Medicare would be a "reach" and has floated offering $800 annual vouchers for dental care, the costliest part of the expansion proposal. (House lawmakers had set dental benefits to start in 2028 as a way to lower the official cost of their legislation.)

Democrats are reportedly also narrowing a proposal to allow Medicare to negotiate drug prices, with the White House and congressional leaders offering to scale back the number of medications that would be affected in an effort to win over some lawmakers who opposed giving Medicare broad negotiating powers.

There’s still more! Manchin also has objected to plans to expand Medicaid coverage in states that have not done so under the Affordable Care Act. He has expressed concern that the proposal would unfairly reward states that have so far resisted expanding Medicaid by having the federal government cover the entire cost, compared to 90% for those that already expanded the program.

"Manchin told reporters on Monday that he's worried about creating inequity between states that have already expanded Medicaid — which include his home state of West Virginia — and those that have not," Poltico reports. "Expansion states pay 10 percent of the cost of the expansion, and 12 states have not yet expanded Medicaid coverage."

How will Democrats bolster climate provisions? Manchin, who founded coal companies in the 1980s and reportedly earned half a million dollars last year from coal production, rejected a proposed $150 program to promote clean energy and reduce emissions. The White House has said that Biden can take some action without Congress, but Democrats are reportedly also looking at other possible ways to use the $150 billion to cut emissions, including grants to encourage states to advance clean energy programs. Manchin told reporters Monday that talks were still ongoing about tax credits and other clean energy incentives.

Will Democrats’ new billionaires tax work? Democrats have scrapped their plan to raise marginal tax rates on corporations, capital gains and high-earning individuals in the face of opposition from Sen. Kyrsten Sinema (D-AZ). Instead, to help pay for their proposed sending, they’re likely to include a new annual tax on the unrealized capital gains of billionaires. The plan, expected to target only people with $1 billion in assets or $100 million in income for three straight years, is also expected to include a one-time tax on billionaires’ gains to date. Pelosi said Sunday that the new tax is expected to raise between $200 billion and $250 billion in revenue over 10 years.

But the legislative text of the proposal, which Senate Finance Committee Chairman Ron Wyden (D-OR) and his staff have reportedly been developing for two years, has yet to be released and the plan — whatever its final shape — is certain to be met with a host of practical and policy questions and could well face legal challenges, too, over whether it meets the 16th Amendment’s definition of an income tax.

What about the SALT cap? "A group of House Democrats from New Jersey have insisted that the package must include a change to the state and local tax deduction, known as SALT, which Republicans capped at $10,000 per taxpayer in order to help pay for their 2017 tax cut package," The New York Times reports. "Negotiators have not yet reached agreement on a SALT provision. A big factor is the price of any potential change to the cap. It could cost hundreds of billions of dollars, which would put further pressure on Democrats to cut other spending programs in a bill that is shrinking dramatically from the president’s initial proposals."

Will Sanders and progressives swallow all these changes? Politico’s Playbook notes that the Democratic bill "is gradually shifting from a Sanders product that encapsulates the policy thinking of the modern progressive movement to a much more business-friendly and targeted package of programs reminiscent of 1990s Clintonism." Progressives have made their priorities known, but they’ve been willing to compromise thus far. Will any late changes cross their red lines? "So far, Bernie and his allies seem OK with all of this — or at least quiet. But as the Democrats prepare to unveil the final agreement, we would be surprised if there isn’t one more rebellion from the left to protest how much progressives have lost in the sausage-making so far."

Read more about what’s in and what’s out of the Democratic package at Politico or The Wall Street Journal.

Billions in Rental Aid Goes Unused

Congress has authorized $46.5 billion to help renters avoid eviction during the Covid-19 crisis, but according to the U.S. Treasury Monday, just $10.7 billion has been disbursed so far.

While the Biden administration has pushed state and local officials to pick up the pace of disbursements, under threat of losing their allotments if they fail to pay out at least 65% of their funds, the expected surge in demand for assistance has yet to be seen.

"Widespread warnings about a tsunami of evictions once the ban lapsed have so far not come true," says Politico’s Katy O’Donnell. "Eviction rates are below historical averages. The filing rate for eviction proceedings in September was about half the pre-pandemic rate for the month, according to data collected by Princeton’s Eviction Lab in over 30 cities."

One reason for the lack of demand for assistance is that some larger states, including New York and California, have passed their own protections for their millions of renters.

Still, about 8.4 million people are currently behind on rent, according to government data, and nearly half of them could face eviction in the next few months.

Map of the Day: How the US Lags on Paid Family Leave

Paid family leave is a basic benefit for workers in all but six countries in the world, and this map from The New York Times Monday shows just how much of an outlier the U.S. is in failing to provide it.

President Biden proposed providing 12 weeks of paid family and medical leave as part of his "human infrastructure" bill, but negotiators looking to trim the cost have reportedly cut the duration by two-thirds. "It is down to four weeks," Biden said last week. "And the reason it's down to four weeks is I can't get 12 weeks."

Biden’s proposal for 12 weeks of paid leave to all U.S. workers was estimated to cost about $500 billion over 10 years. In addition to reducing the number of weeks to four, the version of the program currently under discussion limits the program to low-wage workers and ends it entirely after three or four years, cutting the cost to about $100 billion.

As the Times notes, the U.S. will still be something of an outlier if it provides just four weeks of paid leave. "Of the 185 countries that offer paid leave for new mothers, only one, Eswatini (once called Swaziland), offers fewer than four weeks," says the Times’ Claire Cain Miller. "Of the 174 countries that offer paid leave for a personal health problem, just 26 offer four weeks or fewer."

The global average for paid maternity leave is 29 weeks, Cain Miller says, citing data from the World Policy Analysis Center at the University of California, Los Angeles.

Still, a federal law requiring any sort of paid leave will mark a major change in the U.S., especially for lower-paid workers. "It's really important to understand that four weeks would still be transformational," Kathleen Romig, a senior policy analyst at the Center on Budget and Policy Priorities, told CNBC. "It's really important to lay the foundation, and this would be a good base," she added. "And then the idea would be either that states could top it off or that at the federal level eventually the program could be expanded."

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