Democrats are now warring among themselves, as Republicans step aside, happy the other party is a mounting a circus, for once.
President Biden’s big plans now look endangered, as Dems demonstrate that they lack the votes to bridge the wafer-thin majorities they have in both houses of Congress. Several liberal Democrats in the House refuse to vote for a $1 trillion infrastructure bill Biden desperately wants, unless every Senate Democrat commits to a much larger, $3.5 trillion spending bill that will lavishly fund social-welfare and green-energy programs. But at least two conservative Senate Democrats say that bill would be too expensive. Since neither wing of the party will give the other what it wants, the entire Biden agenda has hit a roadblock.
It’s an embarrassment for Biden and his Congressional lieutenants, House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer. But it’s not surprising. Conservative Democratic Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have signaled all year they think the $3.5 trillion spending program is far too rich. Manchin this week indicated what he’d be willing to support instead: $1.5 trillion in new spending.
Liberal Democrats are outraged at Manchin’s gall, but Biden was never going to get $3.5 trillion in new programs, and everybody in Washington knows it. So while Democrats are at an impasse, it’s a necessary impasse, because it begins a fight that was going to happen anyway. It also brings us closer to what a final version of Biden’s “Build Back Better” legislative package might actually look like.
Even though Democrats are bickering over it, there’s not even a bill yet that puts all elements of a $3.5 trillion spending package in one place. Democrats are fighting over scale as much as they’re fighting over actual legislation. But even a Biden-lite package with $1.5 trillion in spending on social-welfare and green-energy programs over a decade would be a giant boost for Biden’s priorities. It might sound small compared with $3.5 trillion, but aha, that’s the point of starting at an improbably large number: You make tradeoffs that get to a smaller-sounding number that in reality is nearly unprecedented in itself.
Here are some of the biggest items on Biden’s wish list:
Health care subsidies: $600 billion
Permanently extending a major increase in the child tax credit: $500 billion
Green-energy and efficiency investments: $550 billion
Universal preschool and new subsidies for childcare: $425 billion
Paid family leave: $225 billion
Electric vehicle incentives: $174 billion
Education subsidies: $125 billion
There’s a lot more, but consider what those programs might look like if Biden only gets half of everything he wants and the topline cost drops from $3.5 trillion to $1.75 trillion. That’s only slightly more than Manchin’s floor, so it’s a number he might compromise on.
So instead of $600 billion in new health care subsidies, say Congress only passes $300 billion. Sounds small, but it would still be one-third the 10-year cost of the Affordable Care Act, which was President Obama’s single-biggest legislative accomplishment. And it’s just one small part of everything Biden is aiming for.
If Biden got $112 billion for paid leave instead of $225 billion, he might have to scale back the benefit from 12 weeks to 6. But there’s currently no federal paid leave benefit, so Biden would be launching a revolutionary new entitlement all the same. Same would go for universal pre-K and other programs politicians have promoted for years but never put into effect.
The Obama White House bragged that $90 billion in green-energy spending during the Obama administration was the most ever, by far. If Biden got half of his ask for green energy and electric vehicles, it would total around $350 billion, more than four times the Obama total.
Biden-lite, it turns out, wouldn’t be light at all. But starting at $3.5 trillion puts Biden in the position of claiming he’s making major concessions to get spending programs that would still be gigantic.
Less spending also means fewer new taxes, and that’s a plus for financial markets. Biden, for instance, wants to raise the corporate tax rate from 21% to 28% to help fund his $3.5 trillion in new spending. But House legislators have already placed a ceiling at 26.5% and Manchin wants it no higher than 25%. As Congressional Democrats churn out bits of legislation meant to enact the Biden agenda, they’re falling short of other Biden tax hikes as well. Liberals might think rich Americans are getting off the hook, but it sure wouldn’t hurt Democrats if a stock market expecting higher levels of taxation than actually materialize remains buoyant throughout 2022, into the midterm elections.
A reasonable expectation is that when the dust settles, Biden will get maybe $2 trillion in new spending, plus the $1 trillion infrastructure bill Congress is struggling with now. That’s in addition to the $1.9 trillion American Rescue Plan Democrats passed in March. All told, that would be roughly $5 trillion worth of government action in Biden’s first year as president. Obama’s tally during his first year? A measly $900 billion or so. Back then, it even seemed like a lot.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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