Democrats Weigh Size of Reconciliation, Programs to Cut
October 12, 2021
With the debt limit crisis delayed, Democrats have two months to come together on the specifics of President Biden’s ambitious social spending plan, the Build Back Better Act (BBB). These negotiations continue behind closed doors, and budget estimates and legislative language will take weeks to prepare.
There are three signature initiatives in the BBB plan:
- An expanded child tax credit,
- Paid family medical leave, and
- Subsidies for childcare.
Centrist Senator Joe Manchin (D-WV) wants the overall size of BBB reduced to $1.5 trillion. While Machin wants $1.5 trillion and Senator Kyrsten Sinema (D-AZ) has been opposed to a $3.5 trillion number, where the final BBB will land is still far from clear. Senate moderates and progressives are very far apart and negotiations plus time may soften stances on both sides. A final number is hard to predict, but the greater than $1.5 trillion and less than $3.5 trillion is a good bet. Biden mused that a $1.9 to $2.3 trillion bill may be in play. Even with firm stances from Manchin and Sinema, a BBB is still more likely than no action at all.
Policymakers are now weighing which initiatives to include in BBB and how long each initiative will be funded. For example, extending the expanded $3,600-per-child tax credit for another four years would cost $450 billion. But the credit could be extended for a shorter amount of time.
Climate change provisions are another critical component of the negotiations for both domestic and geopolitical reasons. As
ABC News outlines, progressives insist that climate remain a key part of BBB, and the upcoming UN Climate Change Conference (COP26) in Glasgow, Scotland at the beginning of November puts additional import on the need for President Biden’s signature policy initiative to demonstrate American leadership to address climate issues.
Housing is also a key sticking point. Both the White House and Democratic leaders in Congress are contemplating whether to cut $300 billion in down payment assistance, affordable home construction, and a number of other housing programs,
according to Politico. House Financial Services Chair Maxine Waters (D-CA) organized a
letter signed by every Democratic member of her committee last week to President Biden, House Speaker Nancy Pelosi, and Senate Leader Chuck Schumer urging they include the Committee-passed housing provisions in BBB.
The Washington Post reports, “…inside the West Wing, debate is focused on whether to keep the full range of ambitious proposals but spend less on each of them or abandon some completely.” If constrained to $1.5 trillion, Democrats could fully fund only a handful of their most important policy priorities. “For instance, Democrats would already come close to reaching that number in spending if, hypothetically, their plans consisted of just three top priorities — tackling climate change, creating a national paid leave program, and extending a tax benefit that alleviates child poverty.”
After President Biden suggested last month that Democrats should pare their spending plans closer to $1.9-$2.3 trillion to compromise with moderate Senators’ desires, Congressional Progressive Caucus Chair Pramila Jayapal (D-WA) told
The Associated Press that she
continues to resist the President’s call for a compromise that is, “too low, and I said that I would really like to be closer to three [trillion].”
For context around just how much spending Biden’s proposed $3.5 trillion legislation would be, the Washington Post published two helpful charts. One compares Biden’s proposed social programs (and infrastructure and already-spent pandemic relief) to Roosevelt’s New Deal, Johnson’s Great Society, and Obama’s financial crisis and healthcare programs.
A second chart shows the percentage of social spending as a share of GDP.
Contact
JUSTIN AILES
Managing Director, Government Relations
202.448.0853
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