Federal Budget (US)

More stories

  • 113 Shares99 Views

    in Economy

    Biden Huddles With Democrats as Divisions Threaten His Agenda

    by

    Democrats are nearing a make-or-break moment for President Biden’s agenda, with party divisions imperiling top-priority legislation and fiscal crises looming.WASHINGTON — President Biden huddled with congressional Democrats on Wednesday to try to break through a potentially devastating impasse over his multitrillion-dollar domestic agenda, toiling to bridge intraparty divisions over an ambitious social safety net bill and a major infrastructure measure as Congress raced to head off a fiscal calamity.Democrats on both ends of Pennsylvania Avenue are nearing a make-or-break moment in their bid to push through huge new policies, as an escalating fight between the progressive and moderate wings — and a multitude of other divisions within the party — threatens to sink their chances of doing so while they retain control in Washington.At the same time, even the basic functions of Congress — keeping the government from shutting down next week and from defaulting on its debt sometime next month — are in peril as Republicans refuse to support legislation that would both fund the government and increase the statutory cap on federal borrowing.The challenges are unfolding against a backdrop of mistrust and strife within Democratic ranks. Moderates are pressing for quick action on the $1 trillion bipartisan infrastructure bill; progressives are demanding approval first of a far-reaching, $3.5 trillion domestic policy plan including vast new investments in climate, education, health and social programs.Without consensus on both, Democrats, who have minuscule majorities in the House and Senate, will not have enough votes to send either to Mr. Biden’s desk. That prospect has sown alarm at the top echelons of the party.On Wednesday, John D. Podesta, who held key White House roles under Presidents Bill Clinton and Barack Obama, sent a memo to every Democrat on Capitol Hill imploring them to scale back the $3.5 trillion plan in the interest of compromise, warning that doing otherwise would risk sinking both bills and costing the party control of Congress in next year’s midterm elections.“You are either getting both bills or neither — and the prospect of neither is unconscionable,” he wrote. “It would signal a complete and utter failure of our democratic duty, and a reckless abdication of our responsibility. It would define our generation’s history and show that, when our time came, we failed, both for Americans now and in the years to come.”Mr. Biden’s long day of meetings with lawmakers reflected a recognition that “there needs to be a deeper engagement by the president” to bring Democrats together, said Jen Psaki, the White House press secretary.The president, she added, “sees his role as uniting and as working to bring together people over common agreement and on a path forward.”That path is exceedingly murky as Democrats careen toward a tangle of fiscal and political deadlines with no discernible public strategy in place, but party leaders remained publicly sanguine on Wednesday..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“We are on schedule — that’s all I will say,” Speaker Nancy Pelosi told reporters after meeting with Mr. Biden for more than an hour. “We’re calm, and everybody’s good, and our work’s almost done.”But Democrats conceded that the process was painful.“When you’ve got 50 votes and none to lose, and you’ve got three to spare in the House, there’s a lot of give and take — that’s just the way it is,” said Senator Bernie Sanders, the Vermont independent who is chairman of the Budget Committee. “It’s tough. But I think at the end of the day, we’re going to be fine.”At the crux of the stalemate is a leadership commitment to a group of moderate Democrats that the House would take up the Senate-passed bipartisan infrastructure bill by Monday. Liberal House Democrats say they will vote down the measure until their priority legislation first clears both the House and Senate.Those Democrats say the infrastructure bill, which omitted most of their top priorities including major provisions to combat climate change, cannot be separated from the $3.5 trillion package, which contains many of those elements, such as a shift to electric power. Beyond the climate portions, the social policy measure would, among many other things, extend child care and child tax credits, expand free prekindergarten and community college and fortify Medicare.But key centrists in the Senate have balked at that package, which Democrats plan to push through using a fast-track budget process known as reconciliation that shields it from a filibuster. Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona both voted to begin work on a $3.5 trillion measure, but have since warned they will not support spending that much.On Wednesday, Mr. Biden urged the holdouts to specify exactly what they would support, so Democrats could coalesce behind a plan that could pass.“Find a number you’re comfortable with, based on what you believe the needs that we still have, and how we deliver to the American people,” Mr. Manchin said, describing the president’s request. “He was very straightforward in what he asked us to do.”The internal disputes are escalating just as Congress is facing urgent deadlines. Without congressional action, at 12:01 a.m. next Friday, federal funding will lapse, shutting down the government. And at some point in October, the Treasury Department will reach its statutory borrowing limit, forcing it to halt some payments to international creditors, Social Security recipients and government contractors.Amid those looming crises, Republican leaders are practically taunting Democrats, refusing to back legislation coupling a debt-limit increase and a stopgap spending measure.“Don’t play Russian roulette with the economy; step up and raise the debt ceiling,” Senator Mitch McConnell of Kentucky, the Republican leader, said on Wednesday, even as he vowed not to give Democrats a single Republican vote.Senator Mitch McConnell of Kentucky, the Republican leaders, is encouraging Democrats to raise the debt ceiling even as he tells his own caucus to vote against it.Sarahbeth Maney/The New York TimesAnd House Republicans on Wednesday urged their rank-and-file members to oppose the bipartisan infrastructure bill that they said had been “inextricably linked” to the reconciliation package.“Republicans should not aid in this destructive process,” the office of Representative Steve Scalise of Louisiana, the No. 2 Republican, warned in a notice calling for “no” votes.On Wednesday, a bipartisan group of former Treasury secretaries wrote to congressional leaders in both parties to express a “deep sense of urgency” to raise the debt limit. Jerome H. Powell, the Federal Reserve chair, offered a similar plea in a news conference.“No one should assume that the Fed or anyone else can protect the markets and the economy, fully protect, in the event of a failure to make sure that we do pay those debts when they’re due,” he said..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Beyond that issue, Democrats must find a way to salvage Mr. Biden’s agenda. They had hoped to emerge from Wednesday’s meeting with public commitments from key moderates including Mr. Manchin and Ms. Sinema to support a reconciliation bill, but by evening they still had no such statement from the two senators.Offering “Covid-safe” individually wrapped chocolate chip cookies bearing the presidential seal, Mr. Biden spent much of the day on Wednesday hosting groups of lawmakers in the Oval Office, beginning with Ms. Pelosi and Senator Chuck Schumer of New York, the majority leader.He met with nearly two dozen senators and House members from across the ideological range of his party, including liberal leaders and some of the moderates who played key roles in negotiating the infrastructure bill.By Monday, leaders hope to reach agreement on a total price for the reconciliation measure, which will likely fall below the $3.5 trillion budget blueprint, and an ironclad agreement on some key provisions that must be in the final package.So far, neither side is budging. Representative Alexandria Ocasio-Cortez, Democrat of New York, accused more conservative Democrats of making “impulsive and arbitrary demands,” while setting unnecessary deadlines like the Monday infrastructure vote.“The package, the investments and the programs that we have in there are rather nonnegotiable. That’s why we are kind of at this impasse,” she said, adding, “We are at a moment, and a test of political will.”Representative Stephanie Murphy, a moderate from Florida, said it would be “really disappointing and embarrassing” if the infrastructure bill failed because of opposition from progressives.After her meeting with Mr. Biden, Representative Pramila Jayapal of Washington, the chairwoman of the Congressional Progressive Caucus, said that “there isn’t a lot of trust” among Democrats, reiterating that liberals would follow through on their promise to vote against the infrastructure measure on Monday.But the list of moderate objections is long and varied. Representative Kurt Schrader of Oregon wants a bill that spends less than $1 trillion over 10 years. Representative Ed Case of Hawaii has said he will not accept phasing in or phasing out of programs and tax measures to mask their true costs if made permanent. Representative Kathleen Rice of New York objects to the get-tough approach to curb prescription drug prices.And the disputes go beyond ideological differences. Representative Tom Suozzi of New York says he will not vote for any version that does not substantially reinstate the state and local tax deduction, a crucial issue for high-tax states. Representative Alma Adams of North Carolina says she will oppose the bill if it does not include tens of billions of dollars more for historically Black colleges and minority-serving institutions.Democrats across the ideological spectrum said forging consensus would be a tall order.“We’ve got a hectic few days ahead,” Representative Josh Gottheimer, a moderate from New Jersey, said after emerging from his negotiating session with Mr. Biden and other lawmakers.Catie Edmondson More

  • 113 Shares189 Views

    in Economy

    Biden's Presidential Agenda Rests on $3.5 Trillion Spending Bill

    by

    A plan for the economy, education, immigration, climate and more binds disparate Democratic lawmakers, but the proposal risks sinking under its own weight.WASHINGTON — No president has ever packed as much of his agenda, domestic and foreign, into a single piece of legislation as President Biden has with the $3.5 trillion spending plan that Democrats are trying to wrangle through Congress over the next six weeks.The bill combines major initiatives on the economy, education, social welfare, climate change and foreign policy, funded in large part by an extensive rewrite of the tax code, which aims to bring in trillions from corporations and the rich. That stacking of priorities has raised the stakes for a president resting his ambitions on a bill that could fail over the smallest of intraparty disputes.If successful, Mr. Biden’s far-reaching attempt could result in a presidency-defining victory that delivers on a decades-long campaign by Democrats to expand the federal government to combat social problems and spread the gains of a growing economy to workers, striking a fatal blow to the government-limiting philosophy of President Ronald Reagan that has largely defined American politics since the 1980s.But as Democrats are increasingly seeing, the sheer weight of Mr. Biden’s progressive push could cause it to collapse, leaving the party empty-handed, with the president’s top priorities going unfulfilled. Some progressives fear a watered-down version of the bill could fail to deliver on the party’s promises and undermine its case for a more activist government. Some moderates worry that spending too much could cost Democrats, particularly those in more conservative districts, their seats in the 2022 midterm elections, erasing the party’s control of Congress.The legislation, which Democrats are trying to pass along party lines and without Republican support, contains the bulk of Mr. Biden’s vision to overhaul the rules of the economy in hopes of reducing inequality and building a more vibrant middle class. But its provisions go beyond economics.Democrats hope the package will create a pathway to citizenship for as many as eight million undocumented immigrants, make it easier for workers to form unions, and lower prescription drug costs for seniors. They want to guarantee prekindergarten and community college for every American, bolster the nation’s strategic competitiveness with China and stake an aggressive leadership role in global efforts to fight climate change and corporate tax evasion.The plan includes a large tax cut for the poor and middle class, efforts to reduce the cost of child care and expand access to home health care for older and disabled Americans and create the first federally guaranteed paid leave for American workers.Democrats hope the package will create a pathway to citizenship for immigrants brought to the United States as children.Carlo Allegri/ReutersIt is almost as if President Franklin D. Roosevelt had stuffed his entire New Deal into one piece of legislation, or if President Lyndon B. Johnson had done the same with his Great Society, instead of pushing through individual components over several years.“The president is on the cusp of achieving a major expansion in public education, one of the largest expansions of the social safety net, the largest investment in climate change mitigation” and overhauls in labor law and drug pricing, said Patrick Gaspard, a former Obama administration official who is now the president of the liberal Center for American Progress in Washington..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Each one of these things is significant in its individual constituent parts,” he said, “but taken as a whole, it, I think, speaks to the remarkable opportunity that we have — these once-in-a-generation opportunities to set a course that creates growth for all, including and especially those who have been most vulnerable in this economy.”If the effort succeeds, Mr. Biden will have accomplished much of what he campaigned on in one fell swoop. Observers say he will carry a strengthened hand into global summits in October and November that are meant to galvanize the world around transitioning from planet-warming fossil fuels and ending the use of offshore havens that companies have long used to avoid taxation.White House officials say that the breadth of programs in the package form a unified vision for the United States’ domestic economy and its place in the world, and that the planks serve as a sort of coalition glue — a something-for-everyone approach that makes it difficult to jettison pieces of the plan in negotiations, even if they prove contentious.But the sheer scope of its contents has opened divisions among Democrats on multiple fronts, when Mr. Biden cannot afford to lose a single vote in the Senate and no more than three votes in the House.Centrists and progressives have clashed over the size of the spending in the legislation and the scale and details of the tax increases that Mr. Biden wants to use to help offset its cost. They are divided over prescription drug pricing, the generosity of tax credits for the poor, the aggressiveness of key measures to speed the transition to a lower-emission energy sector and much more.Even items that are not top priorities for Mr. Biden have opened rifts. On Friday, one of the party’s most outspoken progressives, Representative Alexandria Ocasio-Cortez of New York, took aim at a crucial priority of several top Democrats, including Senator Chuck Schumer, saying she would resist attempts to fully repeal a cap on deductions for state and local property taxes that would aid high earners in high-tax areas.If Mr. Biden’s party cannot find consensus on those issues and the bill dies, the president will have little immediate recourse to advance almost any of those priorities. Outside of a hard-fought victory on a bipartisan infrastructure package — which has passed the Senate but not yet cleared the House — Mr. Biden has found almost no reception from Republicans for his proposals. His economic, education and climate agendas, and perhaps even additional efforts to rebuild domestic supply chains and counter China, could be blocked by Republicans under current Senate rules for most legislation.Democrats hope to stake an aggressive American leadership role in global efforts to fight climate change.Kathleen Flynn/ReutersRepublicans say the breadth of the bill shows that Democrats are trying to drastically shift national policy without full debate on individual proposals.Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, complained repeatedly this week that Republicans and conservatives “believe that our government is wasting so much to kill so many American jobs.”Mr. Biden’s plan would “hook a whole new generation of the poor on government dependency,” he said.Biden administration officials say the bill’s contents are neither secret nor socialist. They say the plan tracks with the proposals Mr. Biden laid out in the 2020 campaign, in his first budget request and in an address to a joint session of Congress.“There is a through line to everything that we are advancing,” Brian Deese, who heads the White House National Economic Council, said in an interview, “from investments in education, to winning the clean energy economy of the future to restoring fairness in the tax code, that connects to how we make ourselves globally competitive in this next quarter of the 21st century.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Ted Kaufman, a longtime aide to Mr. Biden who helped lead his presidential transition team, said the core of the bill went back much further: to a set of newsprint brochures that campaign volunteers delivered across Delaware in 1972, when Mr. Biden won an upset victory for a Senate seat.“He ran because he wanted to do all these things,” Mr. Kaufman said, both during his 1972 race and during his presidential campaign last year. But tackling so many things at once has exposed divisions among congressional Democrats, including this week, when Mr. Biden’s attempt to reduce prescription drug costs failed a House committee vote after three Democrats joined Republicans in disapproval.Party leaders are trying to balance the demands of liberals who already see a $3.5 trillion bill as insufficient for the nation’s problems and moderates, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, who have balked at its overall cost and some of its tax and spending provisions.Many polls show the bill’s pieces largely fare well with voters, including independents and some Republicans. Margie Omero, a principal at the Democratic polling firm GBAO, which has polled on the bill for progressive groups, said the ambition of the package was a selling point that Democrats should press as a contrast with Republicans in midterm elections.“People feel like the country is going through a lot of crises, and that we need to take action,” she said.As they scuffle over the bill’s final cost and levels of taxation, Democrats have tried to find savings without discarding entire programs — by reducing spending on home health care, for example, instead of dropping it or another provision entirely.Progressive groups say that is a reason for lawmakers to not further reduce the size of the effort, worrying that scaled-back programs could undermine the case for broad government intervention to solve problems.The bill calls for expanding access to child care.Kathleen Flynn/Reuters“If the bill passes as is right now and we get a major sea change in the progressivity of the tax code, we build a serious infrastructure for, like, universal child care in this country, and we really, really sort of start to make progress toward a green economy, this is going to be a historic piece of legislation,” said Lindsay Owens, the executive director of the Groundwork Collaborative, which has pushed the administration to focus on shared prosperity that advances racial equity.If the bill is whittled down, she said, Mr. Biden risks “a situation in which we didn’t spend enough money on any piece to do it well.”“You don’t want half a child care system and a little bit of a greening of the economy in two sectors,” she added. “You really don’t want to do a lot of things poorly.”Administration officials insist that even if the bill fails entirely, other efforts by Mr. Biden — including executive actions and bipartisan measures now awaiting House approval after clearing the Senate — have reasserted the United States’ leadership on climate, competitiveness and confronting China. In some areas, though, Mr. Biden has little other recourse, like opening the pathway to citizenship for immigrants brought to the country as children.For now, the president continues to publicly set high expectations for a bill that aides say he sees as fundamental to demonstrating that democratic governments can deliver clear and tangible benefits for their people.“This is our moment to prove to the American people that their government works for them, not just for the big corporations and those at the very top,” Mr. Biden said on Thursday. He added, “This is an opportunity to be the nation we know we can be.” More

  • 150 Shares149 Views

    in Economy

    How House Democrats Plan to Raise $2.9 Trillion for a Safety Net

    by

    Details of the legislation show higher taxes for companies and the wealthy, but key elements differ from the Senate and White House proposals.WASHINGTON — Top Democrats on Monday released legislation that would raise as much as $2.9 trillion to finance President Biden’s social safety net package through a series of tax changes, including increasing the amount that the wealthiest Americans and corporations pay in taxes.The legislation, released by the House Ways and Means Committee, amounts to an opening offer as Democrats in both the House and Senate try to cobble together pieces of Mr. Biden’s $3.5 trillion economic package, which would fund climate provisions, paid family leave and public education.The House bill proposes tax increases on wealthy corporations as well as individuals. But elements of the proposal are markedly different from what Mr. Biden initially proposed and what Senate Democrats have floated.Moderate and conservative Democrats have balked at the $3.5 trillion price tag and certain proposed revenue provisions, even as their liberal counterparts warn that they have already compromised on the package’s scope.Given that the Democrats plan to pass the bill along party lines, those differences will need to be worked out in the coming days. Party leaders have said they hope to reconcile the competing interests in the two chambers as much as possible before the legislation reaches the House floor.Here is what the House Ways and Means Committee, led by Representative Richard E. Neal of Massachusetts, proposed, and how it compares with other proposals from the White House and the Senate.The wealthiest would see their taxes go up.House Democrats proposed raising the top tax rate on wealthy individuals to 39.6 percent from the current 37 percent. The new rate would kick in for married couples who have taxable income over $450,000 and single people who make more than $400,000.The increase, which mirrors what Mr. Biden proposed in May, would take effect at the end of December and revert the top tax rate to what it was before Republicans passed their 2017 tax cuts. The House plan would also increase the top capital gains rate to 25 percent from 20 percent, a far smaller increase than the near doubling Mr. Biden has suggested.The wealthiest — those with an adjusted gross income of than $5 million — would also face a new surtax of 3 percent under the House plan. While Mr. Biden has not proposed such a levy, Senate Democrats have suggested an even broader wealth tax than the House, proposing a one-time surtax on billionaires’ fortunes, followed by annual levies on the gains in value of billionaires’ assets.The House plan is less aggressive than those of the White House and the Senate in other ways, including when it comes to taxing inheritances. Some top Senate Democrats want to tax inherited assets based on the gain in value from when those assets were initially acquired, rather than what they are worth at the time of death. Moderate Democrats have complained that would unfairly affect smaller family farms and businesses, and the House bill does not include such a plan.Senator Joe Manchin III of West Virginia, a key moderate Democrat, on Sunday reiterated that he would support raising the corporate tax rate to 25 percent from 21 percent now.Stefani Reynolds for The New York TimesCorporate taxes would rise.Mr. Biden has suggested raising the corporate tax rate to 28 percent, a significant increase from its current level of 21 percent but still lower than the 35 percent rate that was in effect before the 2017 tax cuts. House Democrats instead proposed a graduated rate structure, with an increase to 26.5 percent for companies with taxable income of more than $5 million.The tax rate would remain at 21 percent for companies with income of more than $400,000, and drop to 18 percent for the smallest businesses, those with income of less than $400,000. For vulnerable moderate Democrats facing political backlash for supporting tax increases, that decrease could be a crucial distinction for whom they want to target with those provisions..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The fate of the proposal is unclear in the Senate. Senator Joe Manchin III of West Virginia, a key moderate Democrat, on Sunday reiterated that he supported raising the corporate tax rate to 25 percent, and other Democrats have expressed concerns about hurting American businesses.“The number would be what’s going to be competitive in our tax code,” Mr. Manchin said, speaking on CNN’s “State of the Union.” Other moderate Democrats have concerns about the increase for businesses.Senate Democrats, led by Ron Wyden of Oregon, the chairman of the Finance Committee, have championed plans that would impose another set of taxes on big companies, including one on corporations that buy back their stocks to boost share prices.A weakened international tax overhaul.The Biden administration has led a global effort to crack down on profit shifting by companies that locate their headquarters in countries with low rates to reduce their tax bills. The measure unveiled by House Democrats on Monday waters down some of what the White House has been pushing for, including the rate that companies would pay on their overseas profits.The legislation calls for a tax rate of 16.6 percent on corporate foreign earnings. That would be an increase from the current rate of about 10.5 percent, which Republicans enacted as part of their 2017 tax legislation, but less than the 21 percent that the Biden administration proposed. The tax would be calculated on a country-by-country basis.The House proposal also offers more generous exclusions than what the White House envisioned. Companies could exclude 5 percent of their foreign tangible assets, such as property and equipment, from the minimum tax. While that is less than the current 10 percent, the Biden administration wanted to cut that benefit entirely.Still, the House proposal would put the United States more closely in line with the rest of the world, which has been coalescing around an agreement that would set a global minimum tax rate of at least 15 percent. Critics have argued that a rate of 21 percent in the United States would put American companies at a competitive disadvantage.The Committee for a Responsible Federal Budget, a fiscal watchdog, called the Ways and Means Committee international tax proposal “less aggressive” than what the White House proposed and projected it would raise about $360 billion in revenue compared with the $1 trillion that the White House plan would raise..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Tobacco and nicotine could face new taxes.House Democrats included legislative language that would double the existing excise tax on cigarettes, small cigars and roll-your-own tobacco, as well as imposing taxes on any non-tobacco nicotine products, like e-cigarettes.That proposal could run afoul of Mr. Biden’s pledge to not raise taxes on families making less than $400,000. In negotiations over the $1 trillion bipartisan infrastructure package, Mr. Biden and his main deputies refused to consider raising the gas tax to help pay for the plan, largely because such a tax would affect anyone who buys gas, regardless of income level. That same problem would accompany an increased tax on tobacco and nicotine as well.A White House official, speaking on condition of anonymity, characterized the provision as a new idea from Capitol Hill and argued that because smoking is not a required cost, as gas or other household items are, it did not violate the pledge.Representative Tom Suozzi, Democrat of New York, issued a statement expressing confidence that a change to the cap on state and local tax, or SALT, deductions would ultimately be included in the package. He has stood behind a mantra of “No SALT, no deal.” Stefani Reynolds for The New York TimesThe SALT cap has yet to be addressed.Democrats from high-tax cities and states have agitated for months to address a limit on how much taxpayers can deduct in state and local taxes, after the 2017 Republican tax changes imposed a cap of $10,000.None of the tax proposals so far have formally addressed a partial or full repeal of that limit, although it has support in both chambers and Senator Bernie Sanders, the Vermont independent in charge of the Budget Committee, has signaled openness to a partial repeal of the cap.And while it was left out of the legislation released on Monday, Mr. Neal and two Democratic advocates for the proposal, Representatives Bill Pascrell of New Jersey and Tom Suozzi of New York, issued a statement pledging that “we are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities.”Mr. Suozzi, who has stood behind a mantra of “No SALT, no deal,” issued his own statement expressing confidence that a change to the limit would ultimately be included in the package. Some liberal Democrats, however, have pushed back against its inclusion because of its cost and because it could counter some of their tax increases on the wealthy.The I.R.S. would get more money but little new power.House Democrats are prepared to spend billions of dollars to beef up the enforcement capacity of the Internal Revenue Service. The legislation adopts the Biden administration’s plan to spend $80 billion to invest in the agency, allowing it to hire more agents and to overhaul its creaky technology.The plan would also bulk up the I.R.S. budget to engage in complex and expensive legal disputes with taxpayers who are not paying what they owe.One big omission from the proposal, however, is the Biden administration’s plan to adopt a new information reporting system that would let the I.R.S. have greater visibility into the finances of taxpayers. Critics have called this an invasion of privacy.But without that new system, the plan to narrow the so-called tax gap becomes much less bold. The Biden administration estimated that it could raise $700 billion in revenue by empowering the I.R.S., but by merely bolstering enforcement, the plan would raise about $200 billion over that time, the Congressional Budget Office said. More

  • 163 Shares169 Views

    in Economy

    Democrats and Lobbyists to Battle Over Tax Increases for Biden’s Social Policy Bill

    by

    Congressional committees this week begin drafting tax increases on the wealthy and corporations to pay for a $3.5 trillion social policy bill, but the targets are putting up a fight.WASHINGTON — Congressional Democrats always knew their battle plan for raising taxes on corporations, large inheritances and the superwealthy would not survive initial contact with the enemy.They just didn’t realize that enemy would be North Dakota-nice Heidi Heitkamp.The Democratic former senator has emerged as the smiling face of a well-financed effort to defeat a proposed tax increase that is crucial to funding the $3.5 trillion social spending bill at the heart of President Biden’s agenda. Her effort is indicative of the difficult slog ahead as the business lobby mobilizes to chip away at Democrats’ tax-raising ambitions, which some lawmakers say will have to be scaled back to maintain party unity, an assessment the White House has disputed.On Thursday, the House Ways and Means Committee is set to begin formally drafting its voluminous piece of the 10-year measure to combat climate change and reweave the nation’s social safety net, with paid family and medical leave, expanded public education, new Medicare benefits and more. The committee’s purview includes much of that social policy, but also the tax increases needed to pay for it.Democrats had hoped that the tax side would be more than notations on an accounting ledger. They regard it as an opportunity to fundamentally change policies to address growing income inequality, reduce incentives for corporations to move jobs and profits overseas, and slow the amassing of huge fortunes that pass through generations untaxed.But corporate interests, led by the U.S. Chamber of Commerce, the Business Roundtable and Americans for Tax Reform, have mobilized a multifaceted lobbying and advertising blitz to stop the tax increases — or at least mitigate them.“They’re lobbying to try to escape their obligation to pay the taxes they owe, leaving working families to pay a larger share of the burden,” Mr. Biden said at the White House on Friday. “Somebody has got to pay.”The $3.5 trillion social spending bill would help fund expanded public education.Clara Mokri for The New York TimesMembers of the Senate Finance Committee will meet this week to go over more than two dozen tax proposals. Some of them are well on their way toward inclusion in the measure, which under a complex budget process known as reconciliation would be able to pass Congress without a single Republican vote.Lobbyists expect the top individual income tax rate to return to 39.6 percent from the 37 percent rate that President Donald J. Trump’s tax cuts created in 2017. The corporate income tax rate will also rise from the 21 percent in the Trump tax cuts, though not to the 35 percent rate of the Obama years. Lawmakers say a 25 percent rate is more likely.Many Democrats are determined to tax the wealth of America’s fabulously rich, much of which goes untaxed for decades before being passed along to heirs. Currently, for instance, when large estates are passed on at death, heirs are allowed to value the stocks, real estate and other assets at the price they would fetch at the time of the original owner’s death. They pay taxes only on the gain in value from that point once the assets are sold. If the assets are not sold, they are not taxed at all..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Mr. Biden wants to have heirs to large fortunes pay taxes when the original owner dies. Those taxes would be levied on inherited assets based on the gain in value from when those assets were initially purchased.Ms. Heitkamp, who said she was recruited to the opposition campaign by the Democratic former senator-turned-superlobbyist John Breaux, is adamant that taxation upon death, regardless of wealth, is deadly politics. Ms. Heitkamp said she was finding a receptive audience among potential swing voters in rural areas, especially owners of family farms, even though Democrats say such voters would never be affected by the changes under consideration. Lobbyists already expect this piece of the estate tax changes to wash out in the lobbying deluge.“This is very consistent with my concern about revitalizing the Democratic Party in rural America,” Ms. Heitkamp said. “You may want to do this,” she said she had counseled her former colleagues, “but understand there will be risk, and risk is the entire agenda.”Even more significantly, the Finance Committee is looking at taxing the accumulated wealth of billionaires, regardless of whether it is sold. Extremely wealthy Americans like the Amazon founder Jeff Bezos would have a decade to pay a one-time tax on the value of assets like stocks that have been accruing value for years. They would then pay taxes each year on the annual gain in value of their stocks, bonds and other assets, much like many Americans pay property taxes on the annually assessed value of their homes.Another key component is the international tax code. The Biden administration has called for doubling the tax that companies pay on foreign earnings to 21 percent, so the United States complies with an international tax deal that the administration is brokering, which would usher in a global corporate minimum tax of at least 15 percent.The Organization for Economic Cooperation and Development announced in July that more than 130 countries had agreed to the new framework, which aims to eliminate tax havens and end a race to the bottom on corporate tax rates. Officials have been rushing to confirm the details before the Group of 20 leaders meet in Rome in October.Extremely wealthy Americans like the Amazon founder Jeff Bezos would have a decade to pay a one-time tax on the value of assets such as stocks that have been accruing value for years.Mandel Ngan/Agence France-Presse — Getty ImagesBut countries such as France are concerned that the United States will not be able to live up to its end of the bargain if Congress cannot raise the minimum tax.The moment of truth is approaching. Representative Lloyd Doggett of Texas, a senior Democrat on the Ways and Means Committee, and 40 other members of his party on Tuesday backed the White House. Yet some Democratic lawmakers have expressed concern that U.S. companies would still be at a competitive disadvantage if other countries enacted minimum tax rates as low as 15 percent and the United States had a higher rate.Treasury Secretary Janet L. Yellen addressed those concerns in a Twitter post on Friday.“As Congress begins to finalize their legislation, I urge them to remember the historic opportunity that we have to end the race to the bottom and finally have a foreign policy and a tax code that works for the middle class,” she wrote.Republicans are already on the attack. After the disappointing monthly jobs report on Friday, Representative Kevin Brady of Texas, the ranking Republican on the Ways and Means Committee, said the slowing economy would “only get worse if the Democrats’ trillions in tax hikes and welfare spending is rammed through Congress in September.”Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said he understood that business groups and Republicans would howl that the tax increases would kill jobs, stifle the economy and hurt ordinary, struggling Americans.“The big lobbies are going to attack you under any circumstance,” he said, “and half the time they’re just making it up.”But he insisted that the politics had changed. Americans who struggled during the coronavirus pandemic can see how rich others have become. New revelations from a trove of tax records leaked to ProPublica showed that household names like Mr. Bezos and Elon Musk paid virtually no federal taxes.Other lawmakers are not so sure, especially in the House, where midterm campaigns loom and a razor-thin Democratic majority is clearly at risk. Among the most vulnerable members are those from conservative-leaning districts where tax increases are particularly unpopular.“No one wants to throw the House away,” said Representative Donald S. Beyer Jr., Democrat of Virginia, a member of the Ways and Means Committee. “We’re all mindful of our frontline candidates.”Estate and capital gains tax changes proposed by the president and embraced by Mr. Wyden are aimed at the superrich, but the campaign against them frames the issue around family farms and small businesses. Ms. Heitkamp rebuffed Mr. Wyden’s assurance that he could structure the changes to affect only the very wealthy and the gain in value of their assets without taxation.“People don’t believe that, because they believe that rich people always have the lane to get into Congress,” she said. “I get that you’re trying to deal with a huge disparity in wealth in this country, and I get that you are concerned about that for the future of America. I share the concern. Taxing unrealized capital gains is not the path forward.”Some lawmakers and tax lobbyists are already circulating a document handicapping which measures are likely to survive — and which are not. A corporate tax rate increase at home and abroad is likely to pass, though it may not be as high as some Democrats would like. So is a higher top income tax rate on individuals. Capital gains tax rates are expected to rise somewhat, though not to the ordinary income tax rate of 39.6 percent for the very rich, as Mr. Biden has proposed.A measure to increase tax law enforcement, which fell out of a separate bipartisan infrastructure bill, is likely to reappear in the reconciliation bill.But lobbyists expect the proposal to make heirs pay immediate taxes on inheritances based on asset purchase prices to fall out of the plan.They also see a straight, 15 percent minimum tax on overseas income as imperiled. Even some measures that looked like slam dunks may still be rejected because of the back-room lobbying campaign that has just begun.“They’re lobbying to try to escape their obligation to pay the taxes they owe, leaving working families to pay a larger share of the burden,” Mr. Biden said of corporate interests on Friday at the White House.Stefani Reynolds for The New York TimesThat includes closing the so-called carried interest loophole, which allows richly compensated private equity and hedge fund managers to claim the fees they charge clients as investment income, subject to low capital gains tax rates, not income tax rates. Every president since Barack Obama has denounced the provision and demanded its closure, only to lose to influential lobbyists.The U.S. Chamber of Commerce on Tuesday started a campaign to stop the loophole from being closed, saying doing so “would reduce investment, lead to widespread job losses and decrease tax revenues.” Mr. Wyden called the assertions “insulting to the intelligence of every American.”Administration officials insisted that taxing the rich and corporations would help sell the bill.“Should we let millions of children grow up in poverty in order to protect offshore tax loopholes?” Kate Bedingfield, the White House communications director, wrote to House Democrats in a memo on Tuesday. “Should we let middle-class families bear crushing costs for child care and elder care rather than asking the very richest among us to pay their fair share? Those are the questions before us.” More

  • 163 Shares169 Views

    in Economy

    Social Security is projected to be insolvent a year earlier than previously forecast.

    by

    The financial outlook for Social Security is eroding more quickly than previously expected, as the coronavirus pandemic has drained government revenues and put additional strain on one of the nation’s most important social safety net programs. The overall finances for Medicare, however, are expected to hold steady, though the health program is still forecast to face financial pressure in the coming years.Annual government reports released on Tuesday on the solvency of the programs underscored the questions about their long-term viability at a time when a wave of baby boomers are retiring and the economy faces ongoing uncertainty as variants of the coronavirus surge. The United States economy already faces soaring federal debt levels in the coming decades, but both Democrats and Republicans have been wary of making significant structural reforms to the popular programs.“Having strong Social Security and Medicare programs is essential in order to ensure a secure retirement for all Americans, especially for our most vulnerable populations,” Treasury Secretary Janet L. Yellen said in a statement. “The Biden-Harris administration is committed to safeguarding these programs and ensuring they continue to deliver economic security and health care to older Americans.”Senior administration officials said that the long-term effects of the pandemic on the programs are unclear. The actuaries were forced to make assumptions about how long Covid would continue to cause unusual patterns of hospitalizations and deaths and whether it would contribute to long-term disabilities among survivors.The Social Security Old-Age and Survivors Insurance Trust Fund will now be depleted in 2033, a year earlier than previously projected, according to the report. At that time, the trust fund will run out of reserves and the program will be insolvent, with new tax revenues failing to cover scheduled payments. The report estimated that 76 percent of scheduled benefits will be able to be paid out unless Congress changes the rules to allow full payouts..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The Disability Insurance Trust Fund is now expected to be depleted by 2057, which is eight years earlier than previously thought, at which time 91 percent of benefits will be paid.Medicare’s finances are effectively holding steady. While tax revenue for the Medicare program did decline as a result of the Covid-related recession, Medicare also ended up spending less money than usual last year, as people avoided elective care.Medicare’s hospital trust fund is projected to be unable to pay all of its bills beginning in 2026. This estimate is similar to those from Medicare’s trustees in recent years. Fixing that gap now could be achieved by increasing the Medicare payroll tax rate from 2.9 percent to 3.67 percent or by reducing Medicare spending by 16 percent each year, the report notes.But the report highlighted that the official estimate may be unrealistically optimistic. If certain policies set to expire in the next 10 years are extended, or if other expected policy changes occur, the projections would look substantially more worrying.Long term, the actuaries said they did not think Covid-19 itself would have substantial influence on Medicare spending on hospital care. On the one hand, the death of many vulnerable, older Americans from the virus may reduce future spending they would otherwise have received. On the other, the actuaries expect that some people may have additional health care needs from the syndrome known as long Covid..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The actuaries declined to make any estimates on the effect of Aduhelm, a very expensive Alzheimer’s treatment that was recently approved by the Food and Drug Administration. The report said that officials were waiting for Medicare to issue guidance on how the drug will be covered before making any calculations. The drug could represent tens of billions of dollars in spending each year.Democrats in Congress are considering a host of changes to the Medicare program, such as adding new benefits, including coverage for dental, hearing and vision care. While these changes are expected to influence Medicare’s overall finances, none of them are likely to have major effects on the trust fund, which covers only hospital care.“Medicare trust fund solvency is an incredibly important, longstanding issue, and we are committed to working with Congress to continue building a vibrant, equitable, and sustainable Medicare program,” said Chiquita Brooks-LaSure, the administrator for the Centers for Medicare and Medicaid Services. More

  • 125 Shares189 Views

    in Economy

    As Infrastructure Bill Nears Key Vote, Deficit Takes Back Seat

    by

    Many Republicans are disregarding the deficit impact for the sprawling infrastructure bill, but intend to change course for looming battles on social spending and the debt ceiling.WASHINGTON — The bipartisan shrug that greeted the news that the Senate’s infrastructure bill contains $256 billion worth of deficit spending marked a new moment in the post-Trump era, one that highlighted how deficits matter only situationally to Republicans and inflation fears ebb and flow, depending on the politics of the issue.With a key test vote on the infrastructure measure expected around noon on Saturday, the Republican Party’s blasé attitude toward deficits will last only a matter of days.By early next week, with the bill likely passed, Democratic leaders will have to decide how to deal with a looming crisis: the approaching statutory limit on how much the Treasury can borrow to finance the government’s debt.They will also be pressing for Senate passage of a budget resolution intended to speed approval of $3.5 trillion in spending on health care, education, child care, immigration and other social policies, much of which would be paid for by tax increases on corporations and the wealthy.And the muffled murmurs from Republicans over infrastructure costs will give way to howls of outrage.“That will be an extraordinary debate of enormous dimension,” Senator Mitch McConnell of Kentucky, the Republican leader, predicted. “I can’t think of a single issue that underscores the difference between the two parties more than the reckless tax-and-spending spree that we’ll be dealing with here in the next week or two.”In the past, the Congressional Budget Office has loomed like the sword of Damocles over delicate legislative compromises, a nonpartisan scorekeeper whose rulings on the nation’s finances and fortunes could sink or propel hard-fought policy measures. The budget office’s prediction that successive Republican measures to replace the Affordable Care Act would cost tens of millions of Americans their health insurance effectively doomed those efforts.But the 10-year price tag the budget office put out this week for the bipartisan infrastructure bill changed no minds, even though it reported that the measure would tack a quarter trillion dollars to an already swollen sea of federal red ink. Many Republicans are beginning to regard spending on highways, bridges, rail lines and broadband the way Democrats have for years — as a long-term investment in the nation’s economic future that need not cause short-term deficit heartburn, especially when borrowing costs are at rock-bottom rates.The federal budget deficit has reached staggering proportions, driven by successive pandemic rescue packages, an economic collapse and the huge 2017 tax cut signed by President Donald J. Trump. Without counting the costs of the infrastructure or social policy bills, the C.B.O. had projected the deficit for the fiscal year that ends Sept. 30 would reach $3 trillion; the federal debt held by the public will exceed the size of the entire economy. Within 10 years, that debt is poised to equal 106 percent of the economy, the highest level in the nation’s history.Despite a resurgent coronavirus, the economy appears to be recovering. Employers added 943,000 jobs in July, the Labor Department reported Friday, and Jerome H. Powell, the Federal Reserve chair, acknowledged in late July that inflation remained a real risk in the near term“We think that some of it will fall away naturally as the process of reopening the economy moves through,” Mr. Powell said of inflation, before adding, “It could take some time.”But the federal spending of the Trump era appears to have given his party permission to put austerity in the rearview mirror, at least for some measures.In a statement on Thursday in response to the C.B.O. price tag, Senators Rob Portman, Republican of Ohio, and Kyrsten Sinema, Democrat of Arizona, the two lead negotiators on the infrastructure deal, defended the bipartisan legislation as “a historic investment in our nation’s core infrastructure needs.”That rationale reflected longstanding arguments from liberals, which Mr. Portman and Ms. Sinema decidedly are not.“Almost every state, county and private-sector organization pays for ongoing operating expenses with ongoing revenue, and pays for physical infrastructure with debt financing,” Senator Brian Schatz, Democrat of Hawaii, said on Friday. “Anything that provides value over a long period of time should be paid for over a long period of time. This isn’t some wacky new political philosophy; it’s just smart money management.”And because Democrats have vowed to pay for their social policy spending with tax increases and other measures, such as allowing Medicare to bargain for lower drug prices, that legislation will not increase the deficit, said Senator Chris Van Hollen, Democrat of Maryland and a member of the Senate Budget Committee.“We are going to be paying for the American Family Plan; we are going to offset those investments, and yet you’re going to have Republicans again shedding crocodile tears over the deficit,” he said.“There is a good faith discussion about how much spending is too much,” Treasury Secretary Janet L. Yellen said this week.Stefani Reynolds for The New York TimesTreasury Secretary Janet L. Yellen is undergoing her own reappraisal of deficit spending. In recent years, she expressed concern about the nation’s fiscal situation, even suggesting that raising taxes and cutting retirement spending would be wise. But since becoming the Treasury chief, she has espoused the view that, with interest rates at historic lows, now is the time for big spending.“There is a good faith discussion about how much spending is too much,” Ms. Yellen said during a speech in Atlanta this week. “But if we are going to make these investments, now is fiscally the most strategic time to make them.”Those arguments are hurtling toward a separate but politically connected issue: the government’s statutory borrowing limit. The official deadline to raise the debt limit came and went at the beginning of the month, forcing Ms. Yellen to employ “extraordinary measures” to keep the nation from defaulting on its debt and provoking a global economic crisis..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}In a letter to Congress on Monday, Ms. Yellen warned lawmakers that they needed to take action to protect the “full faith and credit of the United States” and said she was already taking steps to stave off a default.Most analysts expect that the drop-dead deadline is sometime before November.Ms. Yellen has been reminding lawmakers who are reluctant to lift the debt limit that doing so does not authorize future spending; it merely allows the government to pay for expenditures that Congress has already enacted. That includes Mr. Trump’s $1.5 trillion tax cut.Mr. McConnell has threatened to withhold all Republican votes from a debt ceiling increase, a stance that Mr. Hollen called “part of a pattern of hypocrisy.” Republicans repeatedly raised the debt ceiling during the Trump years, even after their tax cut. But they have provoked a series of crises when a Democrat is in the White House.Even some conservatives say Republican inconsistency is undermining the party’s case for fiscal rectitude.“Republicans would have much more credibility on the debt ceiling argument if they weren’t about to vote to add hundreds of billions of dollars to the deficit” on the infrastructure bill, said Brian Riedl, a senior fellow at the conservative Manhattan Institute and a former economic aide to Mr. Portman.Democrats have a decision to make in the next few days. They could add an increase in the debt ceiling to their upcoming budget resolution, ensuring that the borrowing limit could be raised without the need for any Republican votes this fall. But that option would come with political costs: to do it, Senate rules require that the provision includes a hard number for the debt ceiling increase, like $10 trillion, which Republicans would say, inaccurately, is the true cost of the social policy bill.That is very much what Republicans want.“I think the majority has to solve this — they control the House and the Senate and the White House,” Senator Roy Blunt of Missouri, a member of Republican leadership, told reporters this week.If the debt ceiling is instead raised through a separate measure, the bill could simply set a date for the next debt ceiling increase, without a dollar number. But that would take Republican votes in the Senate to break a filibuster, votes Mr. McConnell has said he will not supply.Republicans have argued that debt ceiling showdowns have long been used to force a reluctant Congress to examine the structural issues that drive up debt. The debt ceiling crisis of 2011 forced both parties to accept the Budget Control Act, which reined in spending for nearly a decade, until it lapsed under Mr. Trump.“You can’t keep increasing the debt limit over and over again without some kind of reform that starts to address the fundamental issue, and that is deficit spending that goes out as far as we can see,” Senator Steve Daines, Republican of Montana, told Punchbowl News.That argument has Democrats livid, because the debt increase they must address was largely incurred through spending by Republicans.“This is Trump tax cut debt and Covid debt,” Senator Elizabeth Warren, Democrat of Massachusetts, said. “The United States will pay its bills.”Jeanna Smialek More

  • 163 Shares169 Views

    in Economy

    As Infrastructure Bill Inches Forth, a Rocky, Slow Path Awaits in the House

    by

    Progressives have not ruled out reopening the deal that senators are painstakingly putting together, and they do not intend to take it up for months, until after their other priorities are addressed.WASHINGTON — As senators grind through votes this week on a $1 trillion bipartisan infrastructure bill, discontent about the legislation is building among progressive Democrats, signaling a potentially bitter and prolonged intraparty fight to come over the package in the House.Liberals who have bristled at seeing their top priorities jettisoned from the infrastructure talks as President Biden and Democrats sought an elusive deal with Republicans have warned that they may seek to change the bill substantially when they have the chance. At minimum, House Democrats have made clear that they do not intend to take up the bill until a second, far more expansive package to provide trillions more in spending on health care, education, child care and climate change programs is approved, something not expected until the fall.The result is that, even as senators carefully navigate their sprawling infrastructure compromise toward final passage that could come within days — pausing every few hours to congratulate themselves for finding bipartisan consensus in a time of deep division — the legislation still faces a rocky and potentially slow path beyond the Senate.Democrats hold a slim enough majority in the House that even a few defections could sink legislation, and progressives have been open in recent days about their reluctance to support the infrastructure legislation without an ironclad guarantee that the budget package, expected to cost about $3.5 trillion, will become law.“The Progressive Caucus has had moral clarity, and a clarion call for three months, that we need to deliver the entirety of these two packages together, so that’s going to continue to be our approach,” said Representative Pramila Jayapal of Washington, the chairwoman of the group. “While there may be a couple of senators that are saying that they’re going to vote ‘no’ if certain things don’t happen, that is also true of any number of members in the House.”In order to deliver on Mr. Biden’s $4 trillion economic agenda, Democratic leaders have remained adamant that they will approve two expansive bills this year, beginning with Senate passage of the $1 trillion bipartisan compromise, which would pour $550 billion in new federal funds into the nation’s aging roads, bridges and highways, and into climate resiliency and broadband expansion programs.The remainder of Mr. Biden’s plans to address climate change, expand health care and provide free education will be stuffed into a budget package that Democrats plan to pass using a maneuver known as reconciliation. That process allows them to bypass a filibuster, meaning that if all 50 of their senators supported the bill, it could be approved over unified Republican opposition.Senator Chuck Schumer, Democrat of New York and the majority leader, has said he plans to bring up a budget blueprint that would pave the way for that bill as soon as the infrastructure bill passes — and will not allow senators to leave Washington for their summer break, scheduled to begin on Friday, until both are done.Speaker Nancy Pelosi of California has repeatedly said that the House will not take up the bipartisan infrastructure bill until the Senate passes the reconciliation package, which will take weeks to hammer out in order to clear an evenly divided Senate. But some moderate Democrats want to vote on it immediately, sending it quickly to Mr. Biden for his signature.“We should bring this once-in-a-century bipartisan legislation to the floor for a stand-alone vote as quickly as possible,” said Representative Josh Gottheimer, Democrat of New Jersey and a leader of the centrist Problem Solvers Caucus.Republicans have moved quickly to try to exploit the divisions among Democrats. While more than a dozen Republicans are expected to support the final bipartisan infrastructure bill, they have branded the budget package as a “reckless tax-and-spending spree” that will drive up inflation. Senator Mitch McConnell of Kentucky, the minority leader, led a half-dozen Republicans on Wednesday in a barrage of criticism for what he described as “the absolute worst possible thing we could be doing to our country.”Some centrist Democrats, too, have expressed concern about the size of the $3.5 trillion plan being championed by progressives. Most notably, Senator Kyrsten Sinema of Arizona has said she will not support a reconciliation bill of that size, which would doom the measure in the Senate, where Democrats need every member aligned with them to vote yes. (She has agreed to advance a budget blueprint, a crucial step for the process.)That infuriated liberal Democrats who are primed to wield their influence on the pair of economic bills. They have been emboldened in recent days by a successful campaign led by one of their own, Representative Cori Bush of Missouri, to pressure Mr. Biden into extending an eviction moratorium for renters affected by the pandemic.“Today is important because it marks, I hope, a turning point in the way that this White House views progressives,” Representative Mondaire Jones, Democrat of New York, said at a news conference after the moratorium extension was announced. “We are prepared to leverage our energy and our activism in close coordination with grass-roots activists and people all across this country.”Representative Cori Bush, Democrat of Missouri, right, led a successful campaign to pressure President Biden into extending an eviction moratorium for renters affected by the pandemic.Stefani Reynolds for The New York TimesThe House set its own marker for infrastructure legislation in early July with the nearly party-line passage of a five-year, $715 billion transportation and drinking water bill. But the White House instead focused on talks with a bipartisan group of senators aimed at finding a compromise that could win enough Republican support to draw 60 votes in the Senate and overcome a filibuster. As part of the resulting deal, Mr. Biden made a number of concessions, accepting less funding for clean energy projects, lead pipe replacement and transit, among other areas.The situation has rankled Representative Peter A. DeFazio of Oregon, the chairman of the Transportation and Infrastructure Committee. Mr. DeFazio spent months shepherding the House infrastructure bill, which includes more substantial climate policy and more than 1,400 home-district projects, known as earmarks, from lawmakers in both parties.“The bill in the Senate was written behind closed doors, and you know, that’s probably not going to be the best product,” Mr. DeFazio said on CNN on Monday. “Most of the people who wrote the bill are not senior people on the committees of jurisdiction who know a lot about transportation, or perhaps a number of them are resistant to the idea that we should deal with climate change.”Pressed on whether he would ultimately block passage of the final product, Mr. DeFazio conceded that the $3.5 trillion reconciliation package “could fix a lot of the problems in this bill.”“I’ve had that conversation with the White House — that’s possible,” he said. “So if we see major changes and things that are mitigated by the reconciliation bill, OK, then maybe we could move this.”White House officials said they have remained in touch with House Democrats’ tensions. Mr. Biden has dispatched cabinet officials to meet with several of them, including Pete Buttigieg, the transportation secretary, who traveled to Oregon to laud Mr. DeFazio’s work on infrastructure.“We’re in close touch with the president’s colleagues in the House, who he deeply respects and values as core partners in delivering on generational infrastructure progress,” said Andrew Bates, a White House spokesman. In recent days, the White House has pointedly shared polls and articles that show widespread support for the bipartisan plan and highlight substantial funding for climate resilience.Senate Democrats, for their part, have vowed to remain united as they trudge through a marathon of votes to finish both the bipartisan infrastructure bill and the budget blueprint before leaving Washington for their August recess.“We’re moving together as Democrats,” Senator Elizabeth Warren of Massachusetts told reporters this week. “No one’s going to get everything they want. But no one’s going to get shut out, either.”Lisa Friedman More

  • 150 Shares119 Views

    in Economy

    Inflation Is New Battle Line as Republicans and Biden Spar Over Spending

    by

    Republicans say President Biden’s spending plans will keep inflation rising, but the White House says the proposals could help tame costs.WASHINGTON — Republicans have made Americans’ concerns over rising prices their primary line of attack on President Biden’s economic agenda, seeking to derail trillions of dollars in spending programs and tax cuts by warning that they will produce rocketing 1970s-style inflation.They have seized on the increasing costs of gasoline, used cars, and other goods and services to accuse the president of stoking “Bidenflation,” first with the $1.9 trillion stimulus bill he signed in March and now with a proposed $3.5 trillion economic bill that Democrats have begun to draft in the Senate.There are unusually large amounts of uncertainty over the path of inflation in the coming months, given the vagaries around restarting a pandemic-stricken economy. Yet even many economists who worry that high prices will linger longer than analysts initially expected say there is little reason to believe the problem will worsen if Mr. Biden succeeds in his attempts to bolster child care, education, paid leave, low-emission energy and more.“There’s been a lot of fear-mongering concerning inflation,” Joseph E. Stiglitz, a liberal economist at Columbia University, said on Tuesday during a conference call to support Mr. Biden’s economic plans. But the president’s spending proposals, he said, “are almost entirely paid for.”“If they are passed as proposed,” he added, “there is no conceivable way that they would have any significant effect on inflation.”The debate over the effects of the proposals “has nothing to do with the current angst over inflation,” said Mark Zandi, a Moody’s Analytics economist who has modeled Mr. Biden’s plans.Still, rising inflation fears have forced the president and his aides to shift their economic sales pitch to voters. The officials have stressed the potential for his efforts to lower the cost of health care, housing, college and raising children, even as they insist the current bout of inflation is a temporary artifact of the pandemic recession.The administration’s defense has at times jumbled rapid price increases with inflation-dampening efforts that could take years to bear fruit. And officials concede that the president recently overstated his case on a national stage by claiming incorrectly that Mr. Zandi had found his policies would “reduce inflation.”The economics of the inflation situation are muddled: The United States has little precedent for the crimped supply chains and padded consumer savings that have emerged from the recession and its aftermath, when large parts of the economy shut down or pulled back temporarily and the federal government sent $5 trillion to people, businesses and local governments to help weather the storm. The economy remains seven million jobs short of its prepandemic total, but employers are struggling to attract workers at the wages they are used to paying.But the political danger for Mr. Biden, and opportunity for Republicans who have sought to derail his plans, is clear.The price index that the Federal Reserve uses to track inflation was up nearly 4 percent in May from the previous year, its fastest increase since 2008. Republicans say it is self-evident that more spending would further inflame those increases — a new rationale for a longstanding conservative attack on the vast expansion of government programs that Mr. Biden is proposing.Nine out of 10 respondents to a new national poll for The New York Times by the online research firm Momentive, which was previously known as SurveyMonkey, say they have noticed prices going up recently. Seven in 10 worry those increases will persist “for an extended period.” Half of respondents say that if the increases linger, they will pull back on household spending to compensate.Administration officials acknowledge that inflation worries are softening consumer confidence, including in the University of Michigan’s survey of consumer sentiment, even as the economy rebounds from recession with its strongest annual growth rate in decades.The issue has given Mr. Biden’s opponents their clearest and most consistent message to attack an agenda that remains popular in public opinion polls.“There’s no question we have serious inflation right now,” Senator Patrick J. Toomey, Republican of Pennsylvania, told CNN’s “State of the Union” on Sunday. “There is a question about how long it lasts. And I’m just worried that the risk is high that this is going to be with us for a while. And the Fed has put itself in a position where it’s going to be behind the curve. You combine that with massively excess spending, and it is a recipe for serious problems.”Some Republicans say a portion of Mr. Biden’s spending plans would not drive up prices — particularly the bipartisan agreement he and senators are negotiating to invest nearly $600 billion in roads, water pipes, broadband and other physical infrastructure. But the party is unified in criticizing the rest of the president’s proposals in a way that many economists say ignores how they would actually affect the economy.“There’s no question we have serious inflation right now,” Senator Patrick Toomey, Republican of Pennsylvania, said.Stefani Reynolds for The New York TimesSome of the proposals would distribute money directly and quickly to American consumers and workers — by raising wages for home health care workers, for example, and continuing an expanded tax credit that effectively functions as a monthly stipend to all but the highest-earning parents. But they would also raise taxes on high earners, and much of the spending would create programs that would take time to find their way into the economy, like paid leave, universal prekindergarten and free community college.Some conservative economists worry that the relatively small slice of immediate payments would risk further heating an already hot economy, driving up prices. The direct payments in the proposals “would exacerbate pre-existing inflationary pressures, put additional pressure on the Fed to withdrawal monetary policy support earlier than it had planned, and put at risk the longevity of the recovery,” said Michael R. Strain, an economist at the conservative American Enterprise Institute.Other economists in and outside the administration say those effects would be swamped by the potential of the spending programs like paid leave to reduce inflationary pressure.“The economics of these investments strongly belies the Republican critique because these are investments that will yield faster productivity growth, greater labor supply, the expansion of the economy’s supply side — which very clearly dampens inflationary pressures, not exacerbates them,” Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers, said in an interview.Administration officials pivoted their sales pitch on the president’s agenda last week to emphasize the potential for his plans to reduce prices.Mr. Biden’s agenda is “about lowering costs for families across the board,” Mike Donilon, a senior adviser at the White House, told reporters. He said officials believed they were in “a strong position” against Republican attacks on inflation, in part by citing Mr. Zandi’s recent analysis. The president also referred to that analysis last week during a forum in Ohio on CNN, saying it had found that his proposals would “reduce inflation.”The Moody’s analysis did not say that; instead, it found that some of Mr. Biden’s spending plans could help relieve price pressures several years from now. It specifically cited proposals to build additional affordable housing units nationwide, which could help hold down rents and housing prices and reduce the cost of prescription drugs.White House officials concede that Mr. Biden overstated the analysis but point to more measured remarks in a speech this month, when he said his plans would “enhance our productivity — raising wages without raising prices.” More