Will taxes on the ultra-rich be enough to fund Dems' $3.5T bill?
Democrats say President Biden鈥檚 $3.5 trillion social program package will pay for itself through 鈥嬧媡ax hikes on corporations and the wealthy and other revenue sources. Although Republicans are wary, Mr. Biden promises a price聽tag of 鈥渮ero.鈥
Democrats say President Biden鈥檚 $3.5 trillion social program package will pay for itself through 鈥嬧媡ax hikes on corporations and the wealthy and other revenue sources. Although Republicans are wary, Mr. Biden promises a price聽tag of 鈥渮ero.鈥
What will it cost to enact President Joe Biden鈥檚 massive expansion of social programs?
Congress has authorized spending up to $3.5 trillion over a decade, but Mr. Biden is prodding Democrats to fully cover the cost of the legislation 鈥 by raising taxes on corporations and the wealthy, negotiating the price of prescription drugs, and dialing up other sources of federal revenue such as increased IRS funding.
The idea is that entire package should pay for itself.
Defending a bill not yet fully drafted, Democrats are determined to avoid a deficit financed spending spree. They are growing frustrated by the focus on the proposed $3.5 trillion spending total, arguing far too little attention is being paid to the work they are doing to balance the books. Mr. Biden on Friday said he would prefer the price tag described as 鈥渮ero.鈥
鈥淲e pay for everything we spend,鈥 Mr. Biden said at the White House. 鈥淚t鈥檚 going to be zero. Zero.鈥
But the revenue side of the equation is vexing, and it鈥檚 emerged as a core challenge for Democratic bargainers as they labor to construct one of the largest legislative efforts in a generation. Their success or failure could help determine whether the bulk of Mr. Biden鈥檚 agenda becomes law and can withstand the political attacks to come.
Republicans, lockstep in opposition, aren鈥檛 waiting for the details. They鈥檝e trained their focus on the $3.5 trillion spending ceiling set by Democrats, pillorying that sum as fiscally reckless, misguided, big government at its worst.
鈥淭he radical left is pushing in all their chips 鈥 they want to use this terrible but temporary pandemic as a Trojan horse for permanent socialism,鈥 Senate Republican leader Mitch McConnell of Kentucky said Thursday. 鈥淭rillions upon trillions more in government spending when families are already facing inflation.鈥
Part of the problem for Democratic leaders is the lack of a consensus about which programs to fund and for how long. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., acknowledge the price will likely come down and say they have a 鈥渕enu鈥 of revenue raisers to pay for it. But without certainty on what initiatives will be included, no final decisions can be made.
鈥淭his is not about price tag,鈥 Ms. Pelosi said Thursday. 鈥淭his is about what鈥檚 in the bill.鈥
Mr. Biden and administration officials stress the plan is as much about fairness as dollars and cents. By taxing the wealthy and corporations, they hope to fund paid family leave and child tax credits that help those reaching for the middle class, all while adopting environmental and economic policies that help the United States compete with China. But the haggling over a final spending target is overshadowing the policy goals they are trying achieve.
Washington Rep. Pramila Jayapal, a lead negotiator for House progressives, said Friday that reporters should not depict the measure as costing trillions of dollars when the accompanying proposed tax increases would cover the cost.
鈥淚 just believe that this is going to be a zero-dollar-bill 鈥 that鈥檚 the No. 1 priority,鈥 she said.
Sharron Parrott, president of the Center on Budget and Policy Priorities, a liberal think tank based in Washington, warned Democrats that emphasizing the $3.5 trillion figure could detract from what they are trying to achieve.
鈥淭he debate so far has been overly focused on a single number: the $3.5 trillion in gross new investments over the next ten years 鈥 including both spending increases and tax cuts 鈥 that may be included in the package,鈥 Ms. Parrott wrote in an August blog post. 鈥淭rue fiscal stewardship requires a focus on the net cost of the package and, even more fundamentally, a focus on the merits of the investment and offset proposals themselves.鈥
What Mr. Biden is really pushing are two goals that can easily come into conflict. He wants to restore the middle class to the epicenter of economic growth, but do so without worsening the national debt or raising taxes on people earning less than $400,000 a year.
Further complicating things is that many of his spending policies are actually tax cuts for the poor and middle class, which means he is raising taxes for one group in order to cut them for another.
Democrats also have to contend with how the measures are assessed by the Congressional Budget Office (CBO), the final arbiter of how the legislation will affect the federal balance sheet.
The Democrats鈥 expanded child credit and dependent care credits, enacted earlier this year, are counted as costs in a CBO score. Mr. Biden wants to extend these programs as part of the budget, which he is now arguing amounts to one of the largest middle-class tax cuts in U.S. history.
鈥淚t鈥檚 reducing taxes, not increasing taxes,鈥 Mr. Biden said Friday.
It鈥檚 not entirely clear whether Mr. Biden鈥檚 claim of 鈥渮ero鈥 cost is feasible under the 10-year outlook used by the CBO to assess the economic impacts of legislation. Mr. Biden鈥檚 own budget officials earlier this year estimated that his agenda would increase the national debt by nearly $1.4 trillion over the decade.
Mr. Biden on Friday described the multi-tiered talks with legislators as at a 鈥渟talemate.鈥 More meetings are expected in coming days.
In the evenly split Senate, key Democratic senators such as West Virginia鈥檚 Joe Manchin and Arizona鈥檚 Kyrsten Sinema have qualms about the total spending. Democratic moderates are jockeying for advantage against their liberal counterparts. With time running short, Mr. Biden is asking for more patience to get the numbers right so that the votes will follow.
鈥淭his is a process,鈥 he said. 鈥淏ut it鈥檚 just gonna take some time.鈥
This story was reported by The Associated Press.聽