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Senate Democrats Pass $3.5T Plan for Biden’s Agenda

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What You Need to Know

  • Democrats are pitching tax cuts in the plan as the largest in history for the middle class, including an extension of the temporary pandemic child tax credit.
  • Part of the cost would be paid by rolling back the Trump-era tax cuts for corporations and wealthy households.
  • The resolution also supports expanding the state and local tax deduction, a key priority for lawmakers representing high-tax areas.

Senate Democrats took a major step toward the biggest expansion in decades of federal efforts to reduce poverty, care for the elderly and protect the environment, passing a $3.5 trillion budget framework that opens the way for President Joe Biden’s economic agenda.

The party-line 50-49 vote marks an abrupt reversal from the tax-cutting philosophy of Republicans when they controlled the government. It provides a path for enactment of a long list of cherished Democratic priorities — if the party’s fractious progressives and moderates can agree among themselves in the coming months.

Democrats are pitching tax cuts in the plan as the largest in history for the middle class, including an extension of the temporary pandemic child tax credit. Part of the cost would be paid by rolling back the tax cuts for corporations and wealthy households that were former President Donald Trump’s signature legislative achievement.

The Democratic budget plan includes calls for universal pre-K for 3- and 4-year-olds, paid family leave, two years of tuition-free community college, and new dental, vision and hearing benefits for Medicare beneficiaries.

The resolution also calls for a series of measures to combat climate change. Among them are a “polluter fee” on imports for products’ greenhouse gas emissions, plans to electrify the federal vehicle fleet and incentives for electricity suppliers to achieve Biden’s goal of 80% clean power by 2030, up from approximately 40% currently.

Senate Budget Chairman Bernie Sanders said the package would address “the long-neglected needs of working families and not just the 1% and wealthy campaign contributors.” That, he said, will ”restore the faith of the American people in the belief that we can have a government that works for all of us and not just a few.”

Mitch McConnell, the Senate’s Republican leader, said the GOP wouldn’t assist the Democrats in playing “Russian roulette” with the economy.

“If this historically reckless taxing and spending spree is how the modern Democratic Party wants to define itself, if they want inflation and tax hikes to be their legacy, then Republicans do not currently have the votes to spare the American families this nightmare,” the Kentucky Republican said.

The details still must be filled in through actual legislation. Getting that through the Senate will require unified support from all 50 senators who caucus with Democrats, even with the advantage of a Senate rule that prevents Republicans from using a filibuster to block it. Moderate Democrats such as Senators Joe Manchin and Kyrsten Sinema already have expressed qualms.

Senate committees are supposed to complete the bill as soon as Sept. 15, though negotiating the mammoth package and passing it in both chambers could take much longer as the party’s factions wrangle over the size of the plan and how to handle hot-button issues like climate provisions, a path to citizenship for millions of immigrants, and taxes.

Highlighting Divisions

Republicans aimed to stoke some of those differences by proposing non-binding amendments during a Senate session that lasted into the night, forcing politically fraught votes and highlighting Democrats’ intra-party divisions.

An amendment sponsored by North Dakota Republican Kevin Cramer instructing the government not to issue any regulations restricting hydraulic fracking passed 57-42, gaining support from eight Democrats.

One Republican senator, Mike Rounds of South Dakota, was absent for the votes so he could be with his wife, who is undergoing cancer treatment. He said in a statement he opposes the resolution.

Even as the Democratic budget outline calls for tax increases on households earning more than $400,000 per year, it instructs committees to cut taxes for those making less.

Among the provisions is an extension of the child tax credit, which gives parents up to $300 per child per month. That tax break is currently scheduled to be scaled back at the end of the year.

The cuts for middle-class families would be offset by large tax increases on corporations, including raising the corporate tax rate and imposing a minimum tax on offshore business profits. Biden has proposed raising the corporate tax rate from 21% to 28%, though some moderate Democrats, including Manchin, say they don’t support an increase that big.

The resolution also specifically references expanding the state and local tax deduction, a key priority for lawmakers representing high-tax areas, including those in New York and New Jersey. Increasing the $10,000 cap on the SALT deduction is of particular importance in the House, where more than 20 Democrats have said they would sink Biden’s economic agenda unless the tax break, which was limited under Trump, is made more generous.

Infrastructure Win

The budget win followed another major victory for Biden in the Senate, a bipartisan 69-30 vote Tuesday approving legislation with $550 billion in new infrastructure spending that is another pillar of the president’s economic agenda. It was a breakthrough compromise that has eluded Congress and multiple presidents for years even though both parties deemed infrastructure a high priority.

Nineteen Republicans voted in favor of the infrastructure package, including McConnell, who under Barack Obama bestowed on himself the nickname “Grim Reaper” for his record of obstructing Democratic presidential priorities.

Yet that, too, is enmeshed in Democratic jockeying, with some House progressives threatening to vote against the infrastructure bill unless the Senate first sends over a measure delivering on the budget framework’s promises.

House Speaker Nancy Pelosi, who cannot afford to lose more than three Democrats on a party-line vote, said she would delay consideration of the infrastructure package until the Senate passes legislation following through on the budget.

The House will interrupt its summer recess on Aug. 23 to vote on the budget resolution, Majority Leader Steny Hoyer announced Tuesday, and approval in the Democratic-controlled chamber is expected. House members weren’t scheduled to return to Washington until Sept. 20.

The budget plan also sets up a potentially disruptive political sideshow some time in the fall. The blueprint doesn’t include an increase or suspension in the statutory debt ceiling, which is needed to avert a U.S. default later this year.

That means action on the debt limit has to follow normal Senate procedure, under which it can be blocked unless 10 Republicans join Democrats in limiting debate. GOP leaders say the party won’t support an increase.

(Image: Lev Radin/Shutterstock)

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