With negotiations on a major infrastructure package likely to stretch into June, the White House is poised to blow past its self-imposed Memorial Day deadline, which was meant to ensure significant progress on a bipartisan plan.
Senate Republicans led by Sen. Shelley Moore Capito (W.Va.) are preparing to make a $1 trillion offer as soon as Thursday. Another bipartisan group of six senators that includes Joe Manchin (D-W.Va.) and Susan Collins (R-Me.) are preparing another offer to President Joe Biden in case those talks stall.
Manchin is insisting on more time to secure a deal, saying on Tuesday “this is the long game, not a short game.” The White House want to approve a multi-trillion spending package to upgrade roads and bridges, in addition to setting up universal pre-K, tuition-free community college, and cash payments to families.
But some Democrats doubt Republicans’ genuine interest in giving Biden a bipartisan victory and are wary of the ongoing talks turning into a time-consuming dud. They cite huge differences that remain to be bridged on the size, scope, and basic definition of infrastructure. Democrats are anxious to shepherd along new economic programs using their thin majorities in the House and evenly divided Senate.
Their potential to drag into the summer is prompting comparisons to negotiations over a decade ago between President Barack Obama and Republicans on overhauling the healthcare system.
“When I read the comments from Sen. Manchin asking for more time, all of a sudden I had bad flashbacks to Obamacare where there was a push and pull between the desire for more time and the reality that Republicans were never going for it,” Jim Manley, a former aide to Senate Majority Leader Harry Reid (D-Nev.), told Insider.
Max Baucus, a former Democratic senator and one of the architects of Obamacare, said in an interview he was getting “somewhat” a case of déjà vu seeing the infrastructure discussions unfold.
“I’d keep pushing forward as hard as I could, but there’s not much time left. I’d give it a month or so and then tell Schumer to push reconciliation,” the former Montana lawmaker said, referring to a legislative tactic available to Senate Majority Leader Chuck Schumer to approve some bills with only a simple Senate majority.
“I doubt you’re going to see much bipartisanship in the end”
In 2009, the Obama administration chased support from a bloc of moderate GOP senators for the plan that became the Affordable Care Act. As chair of the Senate Finance Committee, Baucus spent five months trying to draw backing from Sen. Chuck Grassley (R-Iowa), the ranking Republican on the panel, for a more “durable” health law.
That effort collapsed amid sharp disagreements on tax increases and whether Americans should be obligated to buy health insurance. Republicans stepped up their attacks and cast the healthcare bill as federal overreach, with Grassley falsely warning of the government “pulling the plug on grandma” at an Iowa town hall that August.
Anger over how voters perceived Obamacare contributed to major Republican victories in the 2010 midterms, one that lost the House for Democrats and effectively crippled the next six years of Obama’s legislative agenda. Now, Baucus sees his experience as a cautionary tale as Democrats attempt to forge ahead with a massive two-part package to reconfigure the economy with new spending on physical infrastructure, healthcare, and education.
“I doubt you’re going to see much bipartisanship in the end. Frankly, a lot of Republicans would rather not see a bipartisan bill,” Baucus told Insider. “They say they would, but deep down they don’t.”
Baucus said he believes next year’s midterms are already factoring into the negotiations, in the sense that a party-line reconciliation bill from Democrats would almost surely include tax hikes on the wealthy and large firms, and a lot of Republicans “are going to run against those tax increases in 2022.”
Sen. Ron Wyden (D-Ore.) said in an interview he was “very concerned” about Senate Republican leader Mitch McConnell’s endgame on infrastructure, pointing to his recent comment about being “100% focused” on thwarting the Biden administration. The GOP leader also made similar remarks early on in the Obama administration.
“I’m always going to try and get a bipartisan approach, but it’s certainly a bigger lift after a statement like that,” he said.
Yet other Democrats like Sen. Tim Kaine (D-Va.) said they weren’t troubled by the state of the discussions. “I think we’re on the timeframe that I always thought we’d be on,” he told Insider. “Thus far, it’s soliciting their opinions.”
Kaine continued: “Even if we go reconciliation, we will put things in that bill that will be extremely attractive to Republican governors, to Republican mayors, to Republican interest groups.” He said he thought it was possible for Democrats to “pick up votes we weren’t expecting.”
The White House used reconciliation to approve a $1.9 trillion coronavirus relief bill in March. Biden met with Senate Republicans once in early February in a bid to broker a deal. But he ultimately abandoned those talks by the end of the month after they only put $618 billion on the table. No GOP lawmakers voted for the Biden stimulus law.
There are signs that Democratic leaders are loathe to avoid watering down bills for the veneer of bipartisanship. “Look at 200 where we spent a year and a half trying to get something good done, ACA, Obamacare, and we didn’t do all the other things that had to be done,” Schumer said on MSNBC in late January. “We will not repeat that mistake.”
Schumer told reporters on Tuesday that Democrats will move ahead with a “big bold plan” in July, suggesting reconciliation looms in the near future. Still, Capito said her GOP group would “not walk away” from the negotiating table anytime soon.
“I think you go as far as you can, but then there comes a time where the other side is just not seemingly negotiating in good faith, so you gotta stop and pass your own bill,” said Baucus.
President Joe Biden is aiming to unleash a flood of new federal spending to cut into inequality and realign the role of the federal government to better assist families.
The second plan is different from the first measure, which was largely focused on physical infrastructure such as roads and bridges, although it also included other provisions like major funding for in-home elder care and broadband expansion.
This plan from the White House includes around $1 trillion in new spending and $800 billion set aside as tax credits. It’s likely to undergo some changes, however, as Congress takes it up and writes the legislation in the coming months.
Here are the four key takeaways from the administration’s latest plan.
(1) Flooding new money into education and childcare
The plan would parcel out money for childcare, education, and healthcare initiatives. Experts say many parts of the plan are geared toward assisting middle and low-income families, especially those with kids.
“Almost everything in the plan would directly benefit people, particularly children, particularly lower-income children,” Jason Furman, a former top economist to President Barack Obama, wrote on Twitter. “You can’t go very wrong with these policies.”
It essentially guarantees an additional four years of education for Americans with a universal pre-K and two years of tuition-free community college. Those two measures come out to around $309 billion, largely contingent on a partnership between the federal government and states.
It also tackles the rising costs of childcare, which is often beyond the reach of many families. Most have to pay the majority of those care expenses on their own. The Biden plan aims to keep a family’s childcare spending at no more than 7% of monthly income.
(2) Biden wants the wealthiest Americans to pay up with tax hikes
The package includes tax hikes on the richest Americans. A central element in the administration’s revenue plans appears to be $80 billion set aside for the IRS to crack down on tax evasion. The White House projects raising $700 billion from the agency over a decade.
Biden also wants to raise the top marginal income-tax rate to 39.6% from 37% and hit investors earning above $1 million with a new tax on capital gains, among other things.
(3) Permanently maintaining some emergency stimulus programs
The plan includes a permanent extension of subsidies for people to buy health insurance from exchanges set up under the Affordable Care Act. It would also make permanent the Earned Income Tax Credit, a step to benefit essential workers like
The administration is likely to face pressure from Democrats to keep the boosted child tax credit. It was enlarged to $3,600-per-child under age 6 and $3,000 per kid between 6 and 17. Starting in July, parents will be able to get a monthly payment.
The current plan only extends the elevated levels until 2025, while leaving untouched the monthly payment component. Rep. Rosa DeLauro, a lead architect of the expansion and chair of the House Appropriations Committee, said in a statement to Insider that lawmakers would take up the Biden blueprint and advocate for changes.
“I look forward to turning the framework of the American Families Plan into legislation and working with Chairman Neal to enact our shared desire to include a permanent extension of the expanded Child Tax Credit in the final bill,” she said, referring to Rep. Richard Neal, chair of the House Ways and Means panel.
(4) The ‘families plan’ is unlikely to attract GOP support
Republicans were largely opposed to Biden’s first infrastructure plan, arguing it went beyond the scope of physical infrastructure spending that they could back. Some lawmakers, however, favor a slimmed-down spending plan, and negotiations are ongoing.
The GOP appears likely to resist the newest plan on the basis of its tax hikes and spending priorities.
“Even if the spending’s popular -a lot of it probably will be – the tax increases I think are going to be a hard sell, not just with people in the country or with Republicans, but I think for some Democrats too,” Sen. John Thune told reporters on Wednesday.
Former President Donald Trump significantly reduced spending on enrollment efforts in the Affordable Care Act, leaving President Joe Biden with around $1 billion in unused funds to spend on healthcare, according to the Kaiser Family Foundation.
In a new report released on Monday, the Kaiser Family Foundation found that over fiscal years 2018-2020, the Trump administration reduced funding on key activities that support healthcare enrollment, including marketing and outreach, the Healthcare.gov website, and the federal marketplace call center. The unused funds over those years accumulated to over $1 billion, and Biden will likely use those funds to revamp enrollment efforts in upcoming executive actions.
“It appears that more than $1 billion in unspent federal user fee revenue has accumulated and could be used to invest in changes that would make it easier for consumers to enroll in health coverage,” the report states.
According to sources familiar with the plan, Biden on Thursday will take actions to strengthen Medicaid and start an open enrollment period under the ACA, and as indicated in the report, Biden can use the leftover funds to further those goals. This comes in response to his predecessor’s weakening of Medicaid, which Biden consistently pledged to reverse.
Although some of Biden’s healthcare proposals will require congressional action, like expanding ACA subsidies, reforming the enrollment process can be done by executive action, according to the report, which is made easier by the leftover unspent funds.
“The availability of unspent, carryover user fee revenue could make possible immediate investments in marketing and outreach, support for enrollment assistance, and other improvements,” the report said.
According to the U.S. Census Bureau, 2.3 million more people became uninsured between 2016 and 2019, and with Trump declining to provide a special enrollment period for those who became uninsured during the pandemic, Biden said he would favor doing so.