President Joe Biden, on the verge of the 100-day mark, will soon lay out the final piece of a sweeping, $4 trillion spending proposal — one that would invest hundreds of billions into key Democratic priorities on education, child care and paid leave — in a bid to reshape the social infrastructure of the US economy.
The proposal has been the subject of intense lobbying from allies, and it has shifted several times in just the last week. Now, it’s nearly ready for its prime-time moment.
Bottom line
Long telegraphed, but still no less consequential, White House officials are keenly aware Biden’s next, roughly $1.5 trillion legislative proposal will be poorly received by Republicans on Capitol Hill. But its scope and scale underscore the view Biden and his team have about what’s not only possible, but also necessary given the fragility of the US economy laid the coronavirus pandemic.
Those views don’t change the intensity of the legislative battle ahead, one where the barest of majorities make passing spending proposals, the scale of which haven’t been seen in a generation, far from a certainty.
Where Biden’s legislative agenda stands
Gone is the quick-strike success of Biden’s push to pass his $1.9 trillion Covid relief package. In its place, aides on both sides of Pennsylvania Avenue make clear, is the months-long drudgery of hashing out the details of a legislative package that touches on priorities — both personal and political — held by every single member of Congress.
That, to put it bluntly, makes for an exceedingly difficult process.
The introduction of another massive element into the mix isn’t likely to make the process easier, Democratic aides acknowledge. But given it has long been expected, most of its pieces have already been factored into the party’s plans for the way forward.
Even as bipartisan efforts continue, senior Democrats on Capitol Hill have long planned to have to move the “human infrastructure” piece of Biden’s plans through reconciliation — the budget mechanism that allows for a simple majority vote in the US Senate.
When, and how much, of Biden’s priorities make it into such a package is still at the very earliest stages, aides in both chambers told CNN.
What to watch
The proposal is being teed up for prime time, with Biden planning to use his remarks to the joint session of Congress — and the nation — on Wednesday night to highlight its key components.
That’s by design, administration officials say. While key elements of the proposal have been tweaked, removed or added in just the last several days, Biden’s joint session speech has long been viewed as the platform to unveil the proposal and its key elements, several of which Biden’s top advisers consistently point out poll quite well with the public.
Biden will then hit the road on his first sales pitch for the plan later this week.
But it’s also coming second for another reason, officials acknowledged to CNN: the recognition that this is a far heavier lift politically, with limited chance for any GOP buy-in. The two pieces were spaced out intentionally in part to give space for Biden’s infrastructure plan to attract bipartisan support.
Those efforts are still in their early stages. A similar push will be made for the second piece of the package, but there is, officials say, a recognition that the likely only path for it is through a partisan process — something that makes the pitch to the public all the more integral in the days ahead.
What’s (currently) in the plan:
The total cost of the plan has seemingly fluctuated by the day, according to people briefed on its structure. In total, it is expected to range somewhere between $1.5 and $1.8 trillion, the people say. That number has been a floating target over the course of the last several weeks, as fierce lobbying from outside the White House — and some from inside — has reshaped parts of the package.
Among the key elements, which White House officials stress have been very fluid over the last week:
- Child care funding
- Free community college
- Universal pre-K
- Paid family and medical leave
- Extend the expanded child tax credit to 2025
- Extend the expanded Earned Income Tax Credit
- Extension of expanded Affordable Care Act subsidies
What’s (currently) financing the plan
The financing for the plan rattled markets last week, which struck White House officials as odd given each of the elements were in Biden’s campaign tax plan. Nonetheless, the proposals would target wealthy individuals to make up a bulk of the spending, the people said.
Among the key pieces:
- Raise the top marginal rate to 39.6% from 37% (back to the top rate prior to the 2017 tax cuts.)
- Enhanced Internal Revenue Service enforcement
- Raise capital gains rate for people making more than $1 million to 39.6%, from 20%. (The 3.8% Affordable Care Act surtax would still apply, which would push the number north of 43%)
People briefed on the proposal say several other elements are under discussion, including increasing a tax on assets when transferred after death.
About the taxes
Republicans threw up a brick wall of opposition to Biden’s proposed increase to the corporate rate to finance his physical infrastructure proposal. Changes to individual rates, and in particular the fairly dramatic proposed shift on capital gains, will make that opposition look minor.
White House officials say they welcome that fight. They circulate poll after poll showing significant support for increasing taxes on the wealthy to fund government programs. They also note just how small the universe is of individuals that would get hit by the increase.
But just as some Democrats have wavered on the full scale of Biden’s corporate rate increase, the individual side increases also have some in Biden’s own party wary of the path forward. In short, this is an opening bid — one that’s scope and scale will, according to congressional Democratic aides, shift through the legislative process.
The overall strategy
Go big. It’s been a moniker Biden and his top advisers have been repeating publicly, and privately, since before they even took office. They went big on Biden’s Covid relief package and never really considered coming off their sweeping topline.
This two-pronged package is different in the sense, administration officials say, that the White House knows a lengthy, complex and — likely, at times — ugly negotiation is coming.
But while Biden has made clear he’s open to a bipartisan compromise — and nascent talks with a Senate GOP group are expected to launch in earnest this week, officials told CNN — any expectation Biden is preparing to significantly pare back his ambitions “simply misreads the moment,” one adviser told CNN. “The American people want to see action. They know the problems, they are long standing. They want to see the government take action to finally address them.”
Biden’s approach, which officials see as a through-line from his campaign to now, is that government can be a force for good, and one that solves problems. It’s at the core of his proposals — an expansion of federal aid to a degree the country hasn’t seen in decades.
Biden’s advisers have been bolstered in their approach by polling that, up to this point, has shown support for their strategy.
Whether that holds, particularly as Republicans gear up for full scale attacks on the second tier of Biden’s plan, is — as one senior Democratic aide put it — “the big unanswered question right now.”
The legislative strategy
Anyone who tells you they know the legislative sequencing and strategy for the next several months is most likely lying.
White House officials have been engaged with Democratic leadership in both chambers. Biden is in regular touch with Senate Majority Leader Chuck Schumer, a New York Democrat, and House Speaker Nancy Pelosi, a California Democrat. There are ideas sketched out, but as one administration official put it, “there are simply a lot of variables right now — too many to know exactly how this will all come together.”
The reality, aides and administration officials acknowledge, is that pieces of Biden’s proposals may move in several parts — something the White House is open to at this point, officials told CNN.
Democratic committee chairs in both chambers are working on several pieces of the overall package now, and the final landing place of the elements remains up in the air.
Between surface transportation reauthorization, legislation to bolster the economic and national security related to China, the American Jobs Plan and the American Families plan, there are multiple bills and potential pathways. The White House has also signaled to lawmakers a separate health care package may be a route they’d like to go, people briefed on the matter said.
Looming over it all, of course, is the likelihood that anything not passed on a standalone basis will be packaged together in a single measure moved through the budget reconciliation process. But even passing a budget will be a lift, aides acknowledge. The process of what would go into a single package is still far from set.
It’s all a long way of saying: it’s still very early in this process. The White House has made clear it wants to see progress by the end of May. Most on Capitol Hill view that as the unofficial clock for bipartisan talks. “If nothing has come together by then, it’s going to be pretty clear which way we have to take this,” one senior Senate Democratic aide told CNN.
The warning signs
The forthcoming Biden proposal underscores just how complicated things will be in the months ahead. White House policy teams have considered an array of progressive priorities pushed by allies on Capitol Hill. Many, at least as of now, aren’t likely to make the cut. That has drawn significant pushback — so much so that a tentative decision not to include and extension of expanded subsidies for the Affordable Care Act appears to have been reversed, according to two people briefed on the matter. The Washington Post first reported the reversal.
That reversal, if it holds, comes after Pelosi made quite clear health care would be a priority for House Democrats. Similar pushback looking to make an expansion of the Child Tax Credit permanent has not been successful, people briefed on the plan said. Instead, the current one-year expansion would be extended until 2025.
On Sunday morning, after it had become clear health care elements were dropping out of the White House proposal, Sen. Bernie Sanders, a Vermont independent, led a group of 17 Democratic senators in a letter to Biden requesting he include a significant expansion of Medicare in his proposal.
Democrats have also spent the last week vacillating between actively lobbying the White House and passively fretting about various priorities being left out of the proposal, including prescription drug reforms.
As one Democratic aide put it to CNN: “We know this isn’t the end-all be-all, but it’s a lot better to have your priority in at the start than try and get it in later.”
But White House officials have made clear, beyond things remaining fluid on the plan itself, that there will legislative pushes to come.
“The American Families Plan and the speech on Wednesday will not represent the totality of every priority item for him and every item on his agenda that he wants to move forward as president,” White House press secretary Jen Psaki told reporters last week.
Some real talk
There are simply a lot of moving parts here. The first piece of Biden’s transportation and jobs package comes in at about $2.25 trillion. Republicans rejected it out of hand. GOP aides make clear the vast majority of the second plank of Biden’s proposal is a nonstarter as well.
Late last week, a group of GOP senators sent a proposal to the White House, which, while far short in scope and scale of Biden’s proposal, White House officials are legitimately considering as an opening bid for actual negotiations, officials tell CNN. Conversations are expected to launch between the two sides this week, officials said.
To some degree, they don’t have a choice. Sen. Joe Manchin has made clear anything less than a fulsome attempt at bipartisanship will cost Biden his vote. And he made clear he prefers breaking off the “traditional” infrastructure parts of Biden’s plan — something several congressional Democrats have been quietly eying.
“I do think they should be separated,” Manchin told Dana Bash on CNN’s “State of the Union” on Sunday. “Because when you start putting so much into one bill — which we call an omnibus — it makes it very, very difficult for the public to understand.”
Manchin gets all of the attention because he’s public about his views. But several Democratic sources make clear he’s not alone in his concerns about the path forward — and about unease about moving a sweeping package along purely partisan lines. It doesn’t mean one won’t come together, but as one Democratic senator put it: “We’ve got a bit of a high wire act on this one.” Noting the incredibly slim Democratic majority in the Senate, the senator added, “And it’s not like we have a net here.”
