What will it cost to implement President Joe Biden’s massive expansion of social programs?
Congress has authorized spending of up to $3.5 trillion a decade, but Biden is pushing Democrats to fully cover the cost of the legislation — by raising taxes on corporations and the wealthy, negotiating the price of drugs and Dialing up other sources of federal revenue such as increased IRS funding.
The idea is that the whole package should pay for itself.
Defending a bill not yet fully drafted, Democrats are determined to avoid a deficit-financed spending spree. They are becoming frustrated with the focus on the proposed total spending of $3.5 trillion, arguing that the work they are doing to balance the books is getting too little attention. Biden said on Friday that he would prefer a price tag described as “zero.”
“We pay for what we spend,” Biden said at the White House. “It’s going to be zero. Zero.”
But the revenue side of the equation is troubling, and it has emerged as a main challenge for Democratic bargainers as they labor to build on one of the largest legislative efforts in a generation. His success or failure could help determine whether much of Biden’s agenda becomes law and could face political attacks to come.
Republicans are in opposition, not waiting for details. He has focused his attention on the $3.5 trillion spending limit set by Democrats, placing that amount in the worst-case scenario of fiscally reckless, misguided, big government.
“The radical left is pushing in all their chips – they want to use this terrible but temporary pandemic as a Trojan horse for sustainable socialism,” Senate Republican Leader Mitch McConnell of Kentucky said Thursday. “Trillion-plus in government spending when households are already facing inflation.”
Part of the problem for Democratic leaders is a lack of consensus on what programs to fund and for how long. House Speaker Nancy Pelosi, D-Cal., and Senate Majority Leader Chuck Schumer, D.N.Y., acknowledge that the price is likely to come down and say they have a “menu” of revenue-raisers to pay for it. . But without certainty about which initiatives will be covered, no final decision can be taken.
“It’s not about the price tag,” Pelosi said on Thursday. “It’s about what’s in the bill.”
Biden and administration officials insist the plan is about fairness as dollars and cents apiece. By taxing the wealthy and corporations, they hope to fund the paid family leave and child tax credits that help them reach the middle class, all while adopting environmental and economic policies that help America compete with China. help to do. But negotiating a final spending target is weighing heavily on the policy goals they are trying to achieve.
Washington Representative Pramila Jayapal, a key negotiator for the House Progressives, said on Friday that journalists should not paint the measure as costing trillions of dollars when the cost would be covered with the proposed tax hike.
“I believe it’s going to be a zero-dollar-bill — it’s going to be the No. 1 priority,” she said.
Sharon Parrott, president of the Center on Budget and Policy Priorities, a Washington-based liberal think tank, warned Democrats that pushing for the $3.5 trillion figure could detract from what they are trying to achieve.
“The debate so far has focused on a single number: $3.5 trillion in gross new investment over the next ten years – which includes both spending increases and tax cuts – that could be included in the package,” Parrot said on Aug. The post was written in the blog. “True fiscal leadership requires a focus on the net cost of the package, and even more fundamentally, on the merits of investment and offset proposals.”
What Joe Biden is really pushing are two goals that could easily come into conflict. He seeks to restore the middle class to the center of economic growth, but does so without worsening the national debt or raising taxes on those 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, meaning he is raising taxes for one group to cut those for another.
Democrats also have to contend with how the measures are assessed by the Congressional Budget Office, the final arbiter of how the law will affect the federal balance sheet.
Democrats’ expanded child loans and dependent care credits, enacted earlier this year, count as costs in the CBO score. Biden wants to expand these programs as part of the budget, which he argues is one of the largest middle class tax cuts in American history.
“It’s lowering taxes, not increasing taxes,” Biden said on Friday.
It’s not entirely clear whether Biden’s claim of a “zero” cost is possible under the 10-year approach used by the CBO to assess the economic impacts of the law. Earlier this year Biden’s own budget officials estimated his agenda would increase the national debt by about $1.4 trillion over the decade.
Biden on Friday called the multi-level talks with legislators an “stalemate”. More meetings are expected in the coming days.
In an evenly divided Senate, prominent Democratic senators such as West Virginia’s Joe Manchin and Arizona’s Kirsten Cinema complain about total spending. Democratic moderates are jockeying for profit against their liberal counterparts. With time running out, Biden is seeking more patience to correct the numbers so that votes can follow.
“It’s a process,” he said. “But it will take some time.”
Credit: www.independent.co.uk / Joe Biden