5 sticking points holding back Democrats’ spending package
Democrats say they’re in striking distance of reaching a long-sought deal on expanding social safety net programs, but still need to resolve a handful of key sticking points.
Progressives and key centrist holdouts remain at odds over some top liberal priorities, such as ending America’s status as the only wealthy nation without a national paid parental leave policy and expanding Medicare coverage.
Senate Majority Leader Charles Schumer (D-N.Y.) said Monday that “a lot of the bill is written” but that a handful of items remained unsettled and they “first have to get some kind of agreement on those.”
Asked if Democrats will be able to unveil their plan before President Biden leaves for an international climate summit on Thursday, Schumer said: “That’s our goal.”
Here are five of the biggest issues Democrats would need to address between now and then:
Medicare and Medicaid expansions
Sen. Bernie Sanders (I-Vt.), the progressive Senate Budget Committee chairman, held firm over the weekend that his proposal to expand Medicare would be part of the final package.
“The expansion of Medicare to cover dental, hearing and vision is one of the most popular and important provisions in the entire reconciliation bill. It’s what the American people want. It’s not coming out,” Sanders tweeted on Saturday.
But on Monday, Sen. Joe Manchin (D-W.Va.) shut down that push and argued it wasn’t financially feasible given that Medicare’s board of trustees has warned that its hospital insurance trust fund is estimated to be depleted in 2026.
“My big concern right now is the 2026 deadline [for] Medicare insolvency and if no one’s concerned about that, I’ve got people — that’s a lifeline. Medicare and Social Security is a lifeline for people back in West Virginia, most people around the country,” Manchin said. “You’ve got to stabilize that first before you look at basically expansion.”
Manchin also expressed reservations about a proposal from Georgia Democratic Sens. Raphael Warnock and Jon Ossoff to extend health insurance benefits to low-income people in states that didn’t expand Medicaid under the 2010 health care law. He argued it wasn’t fair for states that previously expanded Medicaid to pay more to prop up states that didn’t.
“I’m trying to understand that better,” Manchin said.
Paid family leave
Democrats’ original proposal would have ensured workers had up to 12 weeks of paid family and medical leave with their usual wages replaced on a sliding scale.
That’s in line with the 12 weeks of paid family leave granted to federal employees, as well as the amount of time allotted for unpaid leave under the Family and Medical Leave Act for certain workers.
But then Biden said last week that the paid leave plan would likely be cut down to just four weeks. And now, as Democrats try to whittle down the size of their overall package, it’s possible the proposal could be axed altogether.
Manchin declined to specify his concerns about paid family leave on Monday but said broadly that he was concerned about how various programs in the package would be paid for.
Speaker Nancy Pelosi (D-Calif.) isn’t making an ironclad guarantee about paid leave making the cut. Asked on CNN’s “State of the Union” on Sunday if it would make the final bill, Pelosi said: “That’s our hope, yes.”
If the paid leave proposal does survive the negotiations, there’s also the question of how long it would last. Paid leave advocates argue that a temporary program that would need to be renewed by lawmakers three to five years from now is insufficient. But leaving the task of extending it to future sessions of Congress could help bring down the price tag of the overall package.
Taxes on the wealthy and corporations
Democrats appear to be coalescing around a tax plan to pay for their sweeping social spending and climate package, but Senate negotiators were still huddling Monday to hammer out the fine print.
The two centrist Senate holdouts, Sen. Kyrsten Sinema (D-Ariz.) and Manchin, have signaled they’re open to a tax targeting billionaires, which would affect about 700 of the wealthiest Americans and raise hundreds of billions of dollars in revenue.
The Senate proposal would impose an annual tax on the unrealized capital gains for people with $1 billion in assets or who earn $100 million or more for three consecutive years.
Another big tax question is whether Biden and the Democrats use the reconciliation package to lift a cap that would allow wealthier families in high-taxing states like New York and New Jersey to deduct more of their state and local taxes, or SALT.
Rep. Josh Gottheimer (D-N.J.), who met with Biden on Monday as the president touted his infrastructure and social spending packages in New Jersey, has said he’s bullish that changes to SALT will be included.
Child tax credit
Manchin successfully pressured the White House and fellow Democrats to whittle down expanded child tax credits to just a one-year extension.
Now the fiscally conservative West Virginian is trying to require means testing and work requirements to further cut costs.
Manchin’s demands are infuriating Sanders and his liberal allies on the Hill given that they originally wanted to make the child tax credit permanent, with few restrictions, to help defray the high costs of raising children and help reduce child poverty.
A Democratic aide predicted Manchin would not get his way on mandating work requirements, as it would spark “massive opposition” from progressive lawmakers.
But tweaking means testing for the tax credit is a real possibility. Means testing is already in place for the tax credits that were expanded through Biden’s $1.9 trillion COVID-19 relief package earlier this year. The full child tax credit is available to couples who make $150,000 or less a year or individuals who make $112,500 or less.
Manchin has proposed limiting the child tax credit extension to families making under $60,000, something The Washington Post pointed out would cause tens of thousands of West Virginia households to be dropped from the program.
Biden’s upcoming climate summit is helping inject urgency into the negotiations that have dragged for months. But Democrats are still struggling to finalize the specific climate change mitigation proposals that Biden can tout in Scotland.
Manchin last week dealt a blow to a $150 billion clean electricity program that was meant to be a centerpiece of Biden’s climate agenda. Democrats are now looking for other ways to still deliver on their campaign promises to address climate change.
A spokesperson for Senate Environment and Public Works Committee Chairman Tom Carper (D-Del.) pushed back on a Reuters report on Monday that a proposal to tax oil and gas producers for methane emissions likely wouldn’t make it into the final bill.
Carper “is working to get robust as possible climate provisions in the reconciliation bill and is in active negotiations trying to ensure that the bill meaningfully reduces greenhouse gas emissions, including with a methane fee,” the spokesperson said.
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