Shortening programs won't help Democrats build back better

Shortening programs won't help Democrats build back better
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The Build Back Better Framework released by the White House on Oct. 28 would make some potentially transformative investments in American society. But those investments are severely weakened because most are scheduled to expire after only a few years to make the 10-year cost of the bill seem smaller than it really is. Advocates of this tactic hope that these temporary programs will prove so popular that a future Congress will extend them. But this risky bet would make it easier for a Republican-controlled Congress to kill the Democrats’ accomplishments without actually addressing the concerns of their fiscally pragmatic members.

While today’s lawmakers may like their own proposals, they cannot be sure that a future Congress will continue funding programs that are scheduled to expire. Making the Democratic agenda temporary empowers Republicans who want to repeal it.

For example, if the Affordable Care Act had been set to expire in 2017, Republicans could have bypassed the decisive objections of three GOP senators who refused to vote in favor of repeal by simply declining to hold a vote on continuing the law’s provisions. Democrats should not endanger transformative ideas such as the expanded child tax credit to make room for lower priorities, such as giving affluent seniors new Medicare benefits they never paid into.

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Moreover, shortening the duration of programs does not address the concerns expressed by pragmatic lawmakers who have said they want the bill to be less expensive because they believe it should be fully paid-for with tax increases they can support. Many of the initiatives in the Build Back Better Framework are advertised as “long-term programs, with funding for six years” or fewer, yet the new revenue sources that would pay for them are permanent and measured over 10 years. Since new spending would initially exceed new revenues, the government would have to borrow money to cover the upfront cost. And if temporary programs are eventually made permanent, the government would have to increase borrowing in perpetuity even though the initial bill was ostensibly paid for.  

A particularly egregious example of this gimmick is a recent proposal to “pay for” a repeal of the cap on the regressive deduction for state and local taxes in 2023 and 2024 by keeping the cap in place for two more years after it is scheduled to expire in 2025. The policy will officially score as being roughly deficit neutral. But in practice, it is likely to cost more each year than most of the other programs included in Build Back Better because opponents of the SALT cap intend to continue playing this game indefinitely.

It’s essential that lawmakers reject these gimmicks, which would break promises by Sen. Joe Manchin (D-W.Va.), other moderate Democrats and President Biden to fully pay for their agenda. Prices have already risen more than 5 percent this year, in part because of an excess of stimulus spending earlier this year that went beyond pandemic-related needs and led Americans to demand more goods than producers and the supply chain can accommodate. Democrats must avoid making the problem worse by ensuring new revenues are raised concurrent with the spending being offset in each year.

On top of short-term inflation concerns, lawmakers must contend with long-term debt challenges. Borrowing from future generations can make sense when done to pay for investments that will help those generations, especially when interest rates are low. But the federal government is already on track to spend roughly $8 trillion more on non-investment programs (such as Social Security, Medicare, national defense, and interest payments) than it raises in taxes over the next 10 years, and that figure could grow even higher if interest rates rise. Even if lawmakers are comfortable borrowing $2 trillion for public investment, they should reduce borrowing for non-investment programs by an equal amount in the process to avoid worsening our unsustainable fiscal situation.

Failure to heed these warnings could have catastrophic consequences for Democrats in the midterms. In a recent poll commissioned by the Progressive Policy Institute, 88 percent of voters in battleground states and districts said they believe deficits and debt are a serious problem, while over 70 percent said they are concerned about inflation or that Democrats “want to spend too much without paying for it.”

To secure their legacy and avoid these political pitfalls, Democrats should choose a few priorities they can fully fund and make them permanent. PPI recently proposed a reconciliation framework that would spend $975 billion to support working families, $600 billion to combat climate change and $425 billion to strengthen the Affordable Care Act over the next 10 years. In conjunction with $550 billion in new spending from the bipartisan infrastructure deal, this roughly $2 trillion plan would be a permanently transformative investment in the nation’s future.

Dropping some cherished programs from the current package will no doubt be difficult for lawmakers who see this as a once-in-a-generation chance to enact their sweeping social agenda. But passing a myriad of half-baked, half-funded initiatives that disappear after a few years could squander this unique opportunity to permanently boost public investment. Executing a few key priorities well is more likely to convince voters that Democrats should be returned to power so they can continue building back better.

Ben Ritz is the director of the Progressive Policy Institute’s Center for Funding America’s Future. Brendan McDermott is a fiscal policy analyst at the Center for Funding America’s Future.