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Will Biden's Agenda Survive the Senate Finance Committee?

Testing Ron Wyden's willingness to challenge the rich and powerful

 

Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee, takes
questions as he arrives for votes on amendments to the bipartisan
infrastructure bill, August 4, 2021, at the Capitol. (J. Scott
Applewhite/AP Photo)

 

****

**** With the $550 billion bipartisan infrastructure package
through the Senate, the chamber began work this week on a much bigger,
more ambitious package: the $3.5 trillion reconciliation bill, teed up
by the 2022 budget resolution, which the Senate wrapped early Wednesday.
According to recent reports
coming out of
the House, the former won't be moving any closer to Joe Biden's desk
until the latter is similarly passed.

In theory, negotiations could be relatively straightforward, given that
each bill depends on the other's survival. Anything that could
plausibly be called the "Biden agenda" is coming on track two of the
two-track approach, the bank-shot strategy that is supposedly going to
bring intransigent Democratic senators Kyrsten Sinema and Joe Manchin
and several deficit-conscious House Democrats on board to push through a
reconciliation package with only Democratic votes. But a lot can happen
as the different pieces of the budget resolution pass through their
various committees.

While much has been made of Bernie Sanders's position atop the Senate
Budget Committee, which designated the $3.5 trillion topline, the
committee that will have unique, outsized influence on the final outcome
is the Senate Finance Committee. It's not exactly the friendliest
roster for sweeping social spending and tax increases. Committee
Republicans are certain to be a chorus of unified opposition; its 14
Democrats, outside of recent addition Elizabeth Warren and holdover
Sherrod Brown, are among the most conservative members of the party,
including Tom Carper, Maggie Hassan, and Mark Warner. It's chaired by
Sen. Ron Wyden (D-OR), who has found himself in the national news more
than usual lately (more on that shortly).

Here's some of the social spending that the Finance Committee is
tasked with covering: paid family and medical leave; Obamacare subsidy
extension; filling the Medicaid coverage gap; expanding Medicare to
include dental, vision, and hearing benefits, and (potentially) lowering
the eligibility age; home and community-based care services under
Medicaid; addressing health care provider shortages (particularly in
graduate medical education); Child Tax Credit/Earned Income Tax
Credit/Child and Dependent Care Tax Credit extension; long-term care for
seniors and persons with disabilities; tax incentives for clean energy
and manufacturing and transportation; labor protections under the PRO
Act; a sweeping health equity commitment (maternal, behavioral, and
racial-justice health investments); housing incentives; and any other
investments within the jurisdiction of the committee (such as more
environmental spending that was slimmed from the bipartisan deal).

**Read all of our infrastructure coverage here**

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According to the official guidance
,
the package entrusts the Finance Committee with "$1.8 trillion in
investments for working families, the elderly and the environment," just
over 50 percent of the total spending in what is Biden's signature
legislation. That's more than the rest of the committees involved
combined.

But perhaps even more important than the new spending Wyden and his
colleagues will be in a position to shape are the package's spending
offsets, nearly all of which also find themselves under the remit of the
Finance Committee. All of the spending the committee comes up with on
its own must be offset, and an undefined (but likely substantial)
portion of every other committee's work, too. Biden has been adamant
that all new spending be "paid for," though the reconciliation
instructions indicate that some of it can be covered by long-term
economic growth. It's unlikely that Manchin and Sinema will go for too
much of that, however, so the Finance Committee will unquestionably be
responsible for finding multiple trillions of dollars in taxes and
savings.

Moreover, because this is a reconciliation bill, it cannot be like its
bipartisan stepsibling, where the pay-fors were never really produced,
the Congressional Budget Office scored it hundreds of billions of
dollars deficient, and Republican and Democratic senators alike shrugged
their shoulders and pushed it through regardless. In a reconciliation
package, where to be eligible everything has to directly impact the
budget by raising revenue or adding to the deficit, those pay-fors
actually have to be firm and producible as a rule, not simply hand-waved
away.

According to the plan, those offsets will come from corporate and
international tax reform, increased taxes on high-income individuals
(branded as "tax fairness"), closure of the carried interest loophole,
beefed-up IRS tax enforcement, health care savings in the form of
prescription drug pricing reform, and a carbon polluter import fee.
Working against those offsets is a substantial tax cut for rich people:
the repeal of the cap on the state and local tax (SALT) deduction, which
the Democrats are insisting on as a "historic tax cut for Americans."

This bill will literally have to do it all.

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To be sure, any proposal this critical will make room for substantial
input from every Senate Democrat (since all of them need to buy in), as
well as the White House. But details matter, and the Finance Committee
will be responsible for a staggering number of them. And there's a
reasonable concern that so many moderate Democrats there will whittle
the bill down drastically before it gets anywhere near passage.

Where might the trouble begin? Robert Menendez, a senior committee
member, is likely to be the lead antagonist to prescription drug pricing
reform, given his position as the senior senator from New Jersey, a hub
for the drug industry. Carper, Hassan, and Warner, of course, were three
of the infamous Democrats who intervened to prevent the $15 minimum wage
from getting into the American Rescue Plan Act. All are on the committee
and could bristle at any number of those aforementioned tax increases or
social welfare programs.

But Warner also sits on the Budget Committee, and in theory already
extracted his cuts to the program during the round of deliberations that
led the initial Sanders-introduced budget resolution to drop from $6
trillion to the $3.5 trillion we're currently talking about. Rather,
it's the pay-fors that look like the biggest challenge, and Finance
chair Wyden, one of the committee's relatively progressive members,
could pose a surprising obstacle to the process.

In the bipartisan infrastructure package (again, not paid for), the only
real industry that was facing down new taxes was the cryptocurrency
industry. Crypto is not, it should be said, a major lobbying force in
Washington. But when the industry and famous investors like Twitter
founder Jack Dorsey pushed back on the proposed tightening of reporting
standards, which would have enabled taxation of groups like Bitcoin
brokers and miners, and raised an estimated $28 billion, Wyden teamed up
with Republicans
on
an amendment

that would undercut the existing language and exempt cryptocurrency
miners from tax reporting.

That maneuver was surprising for many; Wyden has been an advocate for
higher taxes on the wealthy, and vocal on environmental issues as well.
Given cryptocurrency's well-known energy consumption, any chance to
rein in the sector would have been expected to be a positive for a
senator representing a state like Oregon. Instead, he lashed out against
it, and by Monday, a compromise

had been proposed that was celebrated by lobbyists, senators including
Republicans Pat Toomey and Cynthia Lummis, and even Treasury Secretary
Janet Yellen alike as a positive step. Wyden, conspicuously, didn't
even endorse it.

The industries and interest groups targeted to pay for the $3.5 trillion
spending package are much more organized, powerful, and fearsome than
the Winklevoss twins and their crypto mining cohorts. In many senses,
crypto was the smallest ox that needed to be gored. It does not portend
good things that Wyden is now tasked with raising taxes on large
corporations, major financial firms, hedge funds, and millionaires and
billionaires. Collectively, these targets control an astonishing amount
of money, power, and influence in Washington. Wyden bombed the dress
rehearsal, and the main event has far more riding on it.

There are plenty of proposals in the package that Democratic Finance
Committee members are expected to fight hard for. Bob Casey's home and
community-based services (HCBS) proposal is in there, as is Debbie
Stabenow's Advanced Energy Manufacturing Tax Credit. Elizabeth Warren
recently introduced a minimum corporate tax, which would hit 1,300
public companies with over $100 million in annual profits and raise $700
billion over a decade. For his part, Wyden's big tax proposal in
recent years is a "mark to market" tax

that would levy capital gains every year, eliminating the benefit of
"buy and hold" but adding significant complexity to the system.

But so far, while Democrats in the Biden era have managed to find plenty
of courage to spend big, they haven't found any courage

to take on the country's biggest corporations and most monopolized
industries, despite popular support. If Democrats fail at this, and
Biden and the moderates demand dollar-for-dollar offsets to the spending
bonanza, the whole thing will screech to a halt. If they can't find
the gumption to tax, their breakthrough on embracing tax-and-spend
policy will be dragged down, the latter by the former.

Getting Republicans to agree to a bipartisan package was in some ways
the easy part. Now, the real challenge begins.

 

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