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August 09, 2021 at 12:42 PM
What You Need to Know
- The blueprint let Democrats bypass Republicans to expand the social safety net, for instance, by raising taxes on the wealthy and corporations.
- Democrats opted not to include an increase in the federal debt limit, which will have to be passed soon after Congress returns to work next month.
- The plan also explicitly tells lawmakers to make the state and local tax, or SALT, deduction more generous.
Senate Democrats released the text of their budget resolution that sets up President Joe Biden’s $3.5 trillion economic agenda, as well as a showdown with Republicans over the debt limit in September.
The budget blueprint is expected to be voted on this week in the Senate soon after final passage of Biden’s bipartisan $550 billion infrastructure package. It allows Democrats to bypass Republicans to expand the social safety net and address climate change, paid for by raising taxes on the wealthy and corporations.
The blueprint would be followed as soon as September with text implementing a broad array of new education, health and climate programs as well as an extension of tax cuts for the middle class. All 50 senators who caucus with Democrats will have to unite behind it for it to prevail.
“By making education, health care, child care, and housing more affordable, we can give tens of millions of families a leg up,” Senate Majority Leader Chuck Schumer said in a letter to Senate Democrats on the budget. “This legislation will provide the largest tax cut for American families in a generation, while making the wealthy pay their fair share.”
Debt Limit Issues
Democrats opted not to include an increase in the federal debt limit, which will have to be passed soon after Congress returns to work next month, along with a stop-gap spending bill to keep the government open after the end of the fiscal year on Sept. 30.
Senate Republican leader Mitch McConnell has vowed that Republicans won’t cooperate in lifting the federal borrowing limit — potentially setting up a fiscal cliff with the risk of both a government shutdown and a default on its debts — because Democrats are moving forward on their own with a massive tax and spending program.
“They want Republicans to give them political cover for the partisan debt bomb that they’ll go right on to detonate with zero input from us,” McConnell said last week.
The budget blueprint, while teeing up a $3.5 trillion plan, would allow about half of it to be financed with debt.
The Democratic plan gives the Senate Finance Committee wide latitude to draft policies that would increase taxes on corporations and those making more than $400,000 a year, and instructs lawmakers to provide tax cuts for those making less.
In addition the resolution asks the committee to find additional revenue to pay for the $3.5 trillion in spending from health care savings and a new fee on carbon polluters.
