Democrats at Odds to Cut Infrastructure Package Spending

by Wall Street Rebel | Michael London | 10/05/2021 10:49 AM
Democrats at Odds to Cut Infrastructure Package Spending

A Democratic schism between progressives and Senators Manchin and Sinema sparked a clash that will most likely result in significant cutbacks to Biden's infrastructure spending before a vote is held.

 

Democrats will have to make difficult decisions in scaling down their extensive social spending plan, a task that will be necessary if they are to win the support of key centrists.

The top-line number of $3.5 trillion in extra spending and tax cuts has drawn the attention of lawmakers, including Senator Joe Manchin (D-WV) and Representative Kyrsten Sinema (D-AZ). They have slammed the amount as excessive.

Even the progressives are now conceding that the ultimate agreement will most likely be less than $3.5 trillion in value.

Democrats could reduce the scope of their proposal in several ways. They could reduce the length of spending programs and eliminate others, limit the availability of certain objectives and make others less generous, among other things.

Each approach, on the other hand, has its own set of drawbacks for the people involved.

According to economic policy experts, Democrats will most likely use various strategies to reduce the size of their spending package's overall budget.

"At, "I think a combination is likely what we see at the end of the day," said Zach Moller, director of the economic program at the center-left think tank Third Way. "I believe we will see a combination."

President Biden's economic strategy is being implemented in part via the budget reconciliation process, which allows legislation to pass the Senate with a simple majority vote and avoid a filibuster by the Republican-led Senate majority.

Children's daycare, education, housing, health care, and climate change are just a few of the problems that lawmakers would want to see addressed in the bill.

Because it is expected that no Republicans will vote in favor of the plan, it will require the support of every Democratic senator and nearly every Democratic member of the House to reach Biden's desk.

In August, Democrats introduced a budget resolution to enable the passage of a package including an extra $3.5 trillion in expenditures, which was ultimately enacted.

Manchin and Sinema, on the other hand, have said that they want the final package to cost less than $3.5 trillion, with Manchin offering a top-line number of $1.5 trillion as an example.

Progressives had hoped for legislation that would be closer to $6 trillion in value. Still, they have yet to agree with Manchin and Sinema on the exact amount of the legislation.

However, proponents of the $3.5 trillion figure have said that the ultimate amount would compromise what they want and what centrists wish to.

During a meeting with House Democrats on Friday, President Biden suggested that lawmakers look into a range of $1.9 trillion to $2.3 trillion in spending.

According to Rep. Pramila Jayapal (D-Wash.), chairwoman of the Congressional Progressive Caucus (CPC), the proposed number of $1.5 trillion is "too low to get our goals in." Still, the final package will be between $1.5 trillion and $3.5 trillion, according to CNN's "State of the Union."

The question then becomes how to get the $3.5 trillion figure down to a more manageable level.

As Speaker Nancy Pelosi (D-CA) noted in a letter to her colleagues earlier this week, since President Joe Biden has indicated that the top-line number would need to be lowered, "decisions regarding the size and scope of the reconciliation package must be taken."

Among the approaches often suggested by progressives is to include as many expenditure priorities as possible while also shortening their duration in some cases to benefit people in a variety of ways.

During an appearance on CBS News' "Face the Nation" on Sunday, Rep. Alexandria Ocasio-Cortez (D-NY) stated that "One of the ideas that are out there is fully funding what we can fully fund, but maybe instead of doing it for 10 years, you fully fund it for five years."

Using time modifications to reduce the total amount of the spending package, on the other hand, may upset moderates, who may argue that the scheduling alterations are intended to conceal the actual cost of the legislation.

Representative Ed Case (D-HI) told The Hill on Monday that "the idea that we would install a whole bunch of programs and then sunset them after two, three, or four years is just financial gimmickry."

In my opinion, this is dishonest budgeting, deceitful public policy, and misleading public policy."

In addition, it is primarily designed to prevent the tough decisions that we are presently confronted with, which is to choose from among a multitude of excellent initiatives those that would help those who are in most need of assistance."

The West Virginia senator cautioned reporters on Thursday that a $3.5 trillion stimulus plan may end up costing considerably more than that since the spending programs will be maintained in perpetuity.

"Once you get into anything, it becomes ingrained in you, and you never want to quit," he said.

The fact that Democrats' plans for a $3.5 trillion spending and the tax-cutting package included specific short-term measures means that at least some of the projects included in the final spending bill are likely to be transitory or postponed for many years.

Last month, according to the House Ways and Means Committee, a part of the enhanced child tax credit would only be available until 2025, and Medicare dental benefits would not be available until 2028.

Another method by which Democrats may reduce the size of the package is to remove some of their spending and tax agenda items.

CNN reports that the CPC is looking at a number of the smaller items now under consideration to see if they may be removed or funded instead via the annual budget process and looking into ways to shorten the length of expenditure programs.

Jayapal acknowledged that some of those issues might be of more importance to other members of Congress.

In addition, Democrats may seek to reduce the expenses of some social programs by tightening eligibility requirements or decreasing payments.

Manchin has said on many occasions that he intends to focus programs toward lower-income households.

The president said in a statement released on Wednesday that "during September, I made it clear to everyone who would listen that any new social programs must be means-tested to ensure that we are assisting those who need it the most, rather than spending simply for the sake of spending."

Opponents of the means-testing claim that more targeted programs are more difficult for federal agencies to execute than more general ones.

"In the end, means-tested programs are more bureaucratic, result in complicated eligibility criteria, and require recipients to jump through unnecessary hoops, making it difficult for those who need it the most to receive benefits," said Lindsay Owens, executive director of the progressive economic policy organization Groundwork Collaborative. "In the end, means-tested programs are more bureaucratic, result in complicated eligibility criteria, and force recipients to jump through unnecessary hoops," she added.

Using means-testing, according to Jayapal, is "not something I want to do," and she thinks it is poor public policy.

She did acknowledge that the discussions are still in their infancy stage.

Members of Congress and the White House are still discussing the specifics of the financing package, and they have a long way to go before they are finished.

 

                     Biden hits the road to tout infrastructure proposal as Democrats remain divided

 

 

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