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

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    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

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

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    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

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    As Infrastructure Bill Nears Key Vote, Deficit Takes Back Seat

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    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

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

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    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

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

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    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

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    Senators and Biden Aides Struggle to Save Bipartisan Infrastructure Deal

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    A looming deadline and a last-minute need for a new revenue source are complicating a deal that was announced nearly a month ago.WASHINGTON — Congressional negotiators and the Biden administration tried on Monday to salvage a nearly $600 billion bipartisan agreement to invest in roads, water pipes and other physical infrastructure, after Republicans rejected a key component to pay for the plan and resisted Democratic plans for an initial procedural vote on Wednesday.Senators and administration officials are still working to hammer out the details of the deal, including how to ensure that a plan to finance it will secure 60 votes for Senate passage. White House officials expressed confidence on Monday that the agreement could be finalized. But its fate was uncertain.Mr. Biden is pushing his economic agenda in parts. The bipartisan agreement is meant to be Step 1 — with a much larger, Democratic bill to follow. But weeks after their announcement of a deal, the bipartisan group has not released legislative text or received external confirmation that it is fully financed. A top negotiator said over the weekend that the group jettisoned a key plan included in the deal that would have raised revenue by giving the I.R.S. more power to catch tax cheats.Republicans have come under pressure to oppose that funding method from conservative anti-tax groups, who say it would empower auditors to harass business owners and political targets. Democrats say the increased enforcement would target large corporations and people who earn more than $400,000 — and note that improved tax enforcement has been a bipartisan goal of administrations dating back decades.Still, on Monday evening Senator Chuck Schumer of New York, the majority leader, set up a procedural vote to begin moving toward debate on the bipartisan deal, even without the text of the plan, on Wednesday. Mr. Schumer said that if senators agreed to consider infrastructure legislation, he would move to bring up either the bipartisan deal, should one materialize this week, or a series of individual infrastructure bills that have been approved on a bipartisan basis by Senate committees.The plan was an effort to force negotiators to move toward finalizing details and a critical mass of Republicans to commit to advancing the deal, with Democrats eager to advance the legislation before the Senate leaves for its August recess. Mr. Schumer said he had support from the five main Democratic negotiators involved in talks.“It is not a deadline to determine every final detail of the bill,” he said. A vote of support on Wednesday, he added, would signal that “the Senate is ready to begin debating and amending a bipartisan infrastructure bill.”On Monday, Mr. Biden pushed for passage of the agreement during remarks at the White House, where he promoted his administration’s economic progress. But administration officials made clear later in the day that their patience for the finalization of the bipartisan agreement was running thin.“We believe it’s time to move forward with this vote — with congressional action,” Jen Psaki, the White House press secretary, said at a news briefing. Asked what the administration’s backup plan was if the plan failed to clear the test vote, Ms. Psaki demurred.“We’re not quite there yet,” she said. “There is a lot of good work that’s happened. Two days is a lifetime in Washington, so I don’t think we’re going to make predictions of the death of the infrastructure package.”Republican leaders said they wanted to see legislative text before voting on a deal.“We need to see the bill before voting to go to it. I think that’s pretty easily understood,” Senator Mitch McConnell of Kentucky, the Republican leader, told reporters on Monday. “I think we need to see the bill before we decide whether or not to vote for it.”Democrats have argued that negotiators have had nearly a month to iron out the details and that the Senate has previously taken procedural votes without finalized bill text — including when Mr. McConnell led his caucus in a failed attempt to repeal and replace the Affordable Care Act in 2017.The biggest sticking point remains how to pay for the plan. The I.R.S. plan was estimated to bring in more than $100 billion in new tax revenue over a decade.It is unclear what the group will turn to as a substitute. White House officials and the 10 core Senate negotiators — five Democrats and five Republicans — were working on Monday to find a new revenue source.Senator Rob Portman, Republican of Ohio and a key negotiator, floated the prospect on Sunday of undoing a Trump-era rule that changes the way drug companies can offer discounts to health plans for Medicare patients as an option. The Congressional Budget Office estimated in 2019 that it would cost $177 billion over 10 years, and the rule has not yet been implemented.Ms. Psaki told reporters that the administration is “open to alternatives, very open to alternatives from this end.”“But we’ll let those conversations happen privately and be supportive of them from our end,” she said.Senators were expected to virtually meet Monday evening as they continued to haggle over the details. The group met for more than two hours Sunday evening.“I think we need to see the bill before we decide whether or not to vote for it,” Senator Mitch McConnell, the Republican leader, told reporters on Monday.Stefani Reynolds for The New York TimesMr. Biden continued to push on Monday for legislative action, casting his economic policies, along with vaccination efforts, as a critical driver of accelerating growth. He promised that his remaining agenda items would help Americans work more and earn more money while restraining price increases, pushing back on a critique from Republicans.Administration officials and Mr. Biden say the Democrats’ $3.5 trillion plan — the larger bill that would follow the bipartisan infrastructure bill — will dampen price pressures by increasing productivity. The president said the proposals would free up Americans to work more through subsidized child care, national paid leave and other measures, as well as improve the efficiency of the economy.The spending “won’t increase inflation,” Mr. Biden said. “It will take the pressure off inflation.”He also said he had faith in the independent Federal Reserve and its chair, Jerome H. Powell, to manage the situation. The Fed is responsible for maintaining both price stability and maximum employment.“As I made clear to Chairman Powell of the Federal Reserve when we met recently, the Fed is independent. It should take whatever steps it deems necessary to support a strong, durable economic recovery,” Mr. Biden said. “But whatever different views some might have on current price increases, we should be united on one thing: passage of the bipartisan infrastructure framework, which we shook hands on — we shook hands on.”Mr. Biden used more of the speech to push for the $3.5 trillion plan, which Democrats aim to pursue without Republican support through a process known as budget reconciliation, which bypasses a Senate filibuster.In describing the varied social and environmental initiatives he hopes to include in the plan, the president repeatedly stressed the need for government action as a means to raising living standards and creating jobs.That plan contains the bulk of Mr. Biden’s $4 trillion economic agenda that is not included in the bipartisan bill, like expanding educational access, building more affordable and energy-efficient housing, incentivizing low-carbon energy through tax credits and a wide range of other social programs meant to invest in workers.Republicans have also amplified concerns about inflation since Democrats pushed through a $1.9 trillion pandemic relief bill in March. In a letter to his conference this week, Representative Kevin McCarthy of California, the Republican leader, said that “prices on everything from gas to groceries are skyrocketing,” and he vowed that “we will continue to hold Democrats to account for their reckless handling of the economy.”Mr. Biden’s economic team has said repeatedly that inflation increases are largely a product of the pandemic and will fade in the months or years to come.Mr. Biden dismissed a question from a reporter after the speech about the potential for unchecked inflation, which he said no serious economist foresaw.Margot Sanger-Katz More

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    Democrats Roll Out $3.5 Trillion Budget to Fulfill Biden’s Broad Agenda

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    “We’re going to get a lot done,” President Biden said, as Senate Democrats began drafting the details on a social and environmental bill that could yield transformative change.WASHINGTON — President Biden and congressional Democrats vowed on Wednesday to push through a $3.5 trillion budget blueprint to vastly expand social and environmental programs by extending the reach of education and health care, taxing the rich and tackling the warming of the planet.The legislation is still far from reality, but the details that top Democrats have coalesced around are far-reaching. Prekindergarten would be universal for all 3- and 4-year-olds, two years of community college would be free, utilities would be required to produce a set amount of clean energy, and prescription drug prices would be lowered. Medicare benefits would be expanded, and green cards would be extended to some undocumented immigrants.At a closed-door luncheon in the Capitol, Mr. Biden rallied Democrats and the independents aligned with them to embrace the plan, which would require every single one of their votes to move forward over united Republican opposition. But crucial moderate lawmakers had yet to say whether they would accept the proposal, with a majority of policy details left to resolve.Mr. Biden’s message to the senators on Wednesday, said Senator Richard Blumenthal of Connecticut, was “be unified, strong, big and courageous.”Senate Democratic leaders have said they aim to pass both the budget blueprint and a narrower, bipartisan infrastructure plan that is still being written before the chamber leaves for the August recess — a complex and politically tricky task in a 50-50 Senate. The narrowly divided House would also have to pass the budget blueprint before both chambers begin tackling the detailed legislation.Speaker Nancy Pelosi, who must ultimately get the package through the House, embraced the deal, telling Democrats in a letter on Wednesday, “This budget agreement is a victory for the American people, making historic, once-in-a-generation progress for families across the nation.”The outline includes large swaths of Mr. Biden’s $4 trillion economic agenda. It wraps in every major category from his American Families Plan, including investments in child care, paid leave and education, and expanded tax credits that this week will begin providing a monthly check to most families with children.“I think we’re going to get a lot done,” Mr. Biden told reporters as he left his first in-person lunch with the Democratic caucus as president.Nodding to budget constraints, party leaders conceded that many of the programs included in their plan — including the tax credits — could be temporary, leaving a future Congress to decide whether to extend them further.The proposal also includes some measures that go beyond what Mr. Biden has called for, like expanding Medicare to cover dental, vision and hearing benefits. Democratic leaders left it to the Senate Finance Committee to decide whether to include reducing the eligibility age for Medicare to 60, a priority of Senator Bernie Sanders of Vermont, the Budget Committee chairman.The resolution would also create what would effectively be a tax on imports from countries with high levels of greenhouse gas emissions. That could violate Mr. Biden’s pledge not to raise taxes on Americans earning less than $400,000 a year if the tax is imposed on products that typical consumers buy, such as electronics from China.Democrats on Mr. Sanders’s committee must produce a budget resolution in the coming days that includes so-called reconciliation instructions to other Senate committees, which in turn will draft legislation detailing how the $3.5 trillion would be spent — and how taxes would be raised to pay for it.That would pave the way for Democrats to produce a reconciliation bill this fall that would be shielded from a filibuster, allowing them to circumvent Republican opposition but requiring all 50 of their members — and a majority in the narrowly divided House — to pass it.“In some cases, it doesn’t provide all the funding that I would like to do right now,” Mr. Sanders said. “But given the fact that we have 50 members, and that compromises have got to be made, I think this is a very, very significant step forward.”He added: “If you’re asking me at the end of the day, do I think we’re going to pass this? I do.”A neighborhood in Austin, Texas, where many homes have solar panels. The blueprint of the legislation includes clean energy provisions and other social programs.Tamir Kalifa for The New York TimesAt the private lunch, Senator Chuck Schumer of New York, the majority leader, outlined the proposal and the directives it would lay out.Democrats included the creation of a civilian climate corps to add jobs to address climate change and conservation, and to provide for child care, home care and housing investments. They are also expected to try to include a path to citizenship for some undocumented immigrants and address labor protections.Democrats would also extend expanded subsidies for Americans buying health insurance through the Affordable Care Act that were included in the broad pandemic aid law that Mr. Biden signed this year.Huge investments would go to renewable energy and a transformed electrical system to move the U.S. economy away from oil, natural gas and coal to wind, solar and other renewable sources. The budget blueprint is to include a clean energy standard, which would mandate the production of electricity driven by renewable sources and bolster tax incentives for the purchase of electric cars and trucks.To fully finance the bill, it is expected to include higher taxes on overseas corporate activities to alleviate incentives for sending profits overseas, higher capital gains rates for the wealthy, higher taxes on large inheritances and stronger tax law enforcement.Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said on Wednesday that he was also preparing to overhaul a deduction for companies not organized as corporations, like many small businesses and law firms — created by the 2017 Republican tax law — in order to cut taxes from small businesses but raise additional revenues from wealthy business owners.Specific provisions will have to pass muster with the strict budgetary rules that govern the reconciliation process, which require that provisions affect spending and taxation, not just lay out new policies. The Senate parliamentarian could force Democrats to overhaul or outright jettison the clean energy standard, the provision that climate activists and many scientists most desire, as well as the immigration and labor provisions, among others.Moderate Democrats, who had balked at a progressive push to spend as much as $6 trillion on Mr. Biden’s entire economic agenda, largely declined to weigh in on the blueprint until they saw detailed legislation, saying they needed to evaluate more than an overall spending number.“We’ve got to get more meat on the bones for me,” Senator Jon Tester, Democrat of Montana, told reporters, though he added that he would ultimately vote for the budget blueprint. “I’ve got to get more information on what’s in it.”The size of the package could be shaped by the success or failure of the bipartisan infrastructure plan, which would devote nearly $600 billion in new spending to roads, bridges, tunnels, transit and broadband. The group of lawmakers negotiating that package has yet to release legislative text as they haggle over the details of how to structure and pay for the plan.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee.Stefani Reynolds for The New York TimesIf Republicans cannot deliver enough votes to move the package past a filibuster, Democrats could simply fold physical infrastructure spending into their reconciliation plan and take away any chance for Republicans to shape it, said Senator Rob Portman, Republican of Ohio and one of the negotiators of the bipartisan bill.“If we don’t pass infrastructure, they’re going to put even more infrastructure in than we have and worse policies,” said Mr. Portman, who fielded skepticism from his colleagues at a private Republican lunch on Tuesday. Some Republicans had hoped that a bipartisan accord on physical infrastructure projects would siphon momentum from a multitrillion-dollar reconciliation package. Instead, it appears very much on track, and it may intensify the pressure on Republicans to come to terms on a bipartisan package, even if they fiercely oppose the rest of the Democrats’ agenda.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Budget Committee and a peripheral presence in the bipartisan talks.He added that the lengthy floor debate over the blueprint would allow Republicans to “ferociously attack it, to have amendments that draw the distinctions between the parties, to scream to high heaven that this is not infrastructure.”Senator Joe Manchin III of West Virginia, a moderate Democrat, said he looked “forward to reviewing this agreement” but was also interested in how the programs would be financed.Sarahbeth Maney/The New York TimesSenator Joe Manchin III of West Virginia, the centrist Democrat whose support might be determinative, told reporters after lunch with the president that he had concerns about some of the climate language. But he did not rule out supporting the budget proposal or the subsequent package. Senator Kyrsten Sinema, Democrat of Arizona and another key moderate, also hung back on Wednesday.Still, the $3.5 trillion package had plenty in it to appeal to senior Democrats who were eager to use it to advance their longtime priorities. For Senator Patty Murray of Washington, the chairwoman of the Health, Education, Labor and Pensions Committee, it was an extension of a more generous child tax credit, as well as subsidies for child care, prekindergarten and paid family leave.For Mr. Sanders, it was the Medicare and climate provisions.“Finally, we are going to have America in the position of leading the world in combating climate change,” he said.Mr. Tester said the need for school construction was so high that trillions could go to that alone.“The plan is a strong first step,” said Senator Elizabeth Warren, Democrat of Massachusetts, adding that she was focused on funding universal child care. “We’re slicing up the money now to find the right ways to make that happen.”The budget measure is expected to include language prohibiting tax increases on small businesses, farms and people making less than $400,000, fulfilling a promise Mr. Biden has maintained throughout the negotiations. Asked on Wednesday whether the proposed carbon tariff would violate that pledge, Mr. Wyden replied, “We’ve not heard that argument.”Lisa Friedman More

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    Democrats Propose $3.5 Trillion Budget to Advance with Infrastructure Deal

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    The measure, which would include money to address climate change, expand Medicare and fulfill other Democratic priorities, is intended to deliver on President Biden’s economic proposal.WASHINGTON — Top Democrats announced on Tuesday evening that they had reached agreement on an expansive $3.5 trillion budget blueprint, including plans to pour money into addressing climate change and expanding Medicare among an array of other Democratic priorities, that they plan to advance alongside a bipartisan infrastructure deal.Combined with nearly $600 billion in new spending on physical infrastructure contained in the bipartisan plan, which omits many of Democrats’ highest ambitions, the measure is intended to deliver on President Biden’s $4 trillion economic proposal. The budget blueprint, expected to be dominated by spending, tax increases and programs that Republicans oppose, would pave the way for a Democrats-only bill that leaders plan to push through Congress using a process known as reconciliation, which shields it from a filibuster.To push the package — and the reconciliation bill that follows — through the evenly divided Senate, Democrats will have to hold together every member of their party and the independents aligned with them over what promises to be unified Republican opposition. It was not clear if all 50 lawmakers in the Democratic caucus, which includes centrists unafraid to break with their party like Senator Joe Manchin III of West Virginia and Senator Kyrsten Sinema of Arizona, had signed off the blueprint. The package is considerably smaller than the $6 trillion some progressives had proposed but larger than some moderates had envisioned.Mr. Biden was set to attend lunch on Wednesday with Democrats, his first in-person lunch with the caucus since taking office, to rally the party around the plan and kick off the effort to turn it into a transformative liberal package. The blueprint, and subsequent bill, will also have to clear the House, where Democrats hold a razor-thin margin.The agreement, reached among Senator Chuck Schumer of New York, the majority leader, and the 11 senators who caucus with the Democrats on the Budget Committee, came after a second consecutive day of meetings that stretched late into the evening. Louisa Terrell, Mr. Biden’s head of legislative affairs, and Brian Deese, his National Economic Council director, were also present for the meeting.“We are very proud of this plan,” Mr. Schumer said, emerging from the session flanked by the other Democrats in the corridor outside his office just off the Senate floor. “We know we have a long road to go. We’re going to get this done for the sake of making average Americans’ lives a whole lot better.”Senator Bernie Sanders of Vermont, the liberal chairman of the Budget Committee, and Senator Mark Warner of Virginia, a key moderate who is negotiating the details of the bipartisan framework, also confirmed their support for the agreement, in impassioned remarks.“This is, in our view, a pivotal moment in American history,” proclaimed Mr. Sanders, who had initially called for a package as large as $6 trillion.Details about the outline were sparse on Tuesday evening, as many of the specifics of the legislative package will be hammered out after the blueprint is adopted. Mr. Warner said the plan would be fully paid for, though Democrats did not offer specifics about how they planned to do so. Discussions of how to raise that money are expected to continue in the coming days, one aide said.“I make no illusions how challenging this is going to be,” said Mr. Warner, who made a point of thanking both the committee and the bipartisan group he had been negotiating with. “I can’t think of a more meaningful effort that we’re taking on than what we’re doing right now.”The resolution is expected to include language prohibiting tax increases on small businesses and people making less than $400,000, according to a Democratic aide familiar with the accord, who disclosed details on the condition of anonymity.Mr. Schumer said the resolution would call for an expansion of Medicare to provide money for dental, vision and hearing benefits, a priority for liberals like Mr. Sanders. It is also likely to extend a temporary provision in the president’s pandemic relief law that greatly expands subsidies for Americans purchasing health insurance through the Affordable Care Act, one of the largest health measures since the law was passed more than a decade ago.“Every major program” requested by Mr. Biden would be “funded in a robust way,” Mr. Schumer said.Democrats will now have to hammer out the terms of the budget resolution and the bipartisan infrastructure deal, which Mr. Schumer has said he hopes to pass in the Senate before the chamber leaves for the August recess. Once the resolution is passed, the caucus will then draft the legislative package, which will fund and detail their ambitious proposals — and most likely impose hefty tax increases on the rich and on corporations to pay for them.Even before the agreement was reached, committees had quietly been working on a series of proposals for the bill and discussing how to keep the bill within the confines of the strict rules that govern the reconciliation process.The Senate Finance Committee had been drafting tax provisions to help pay for the spending. They include a restructuring the international business tax code to tax overseas profits more heavily in an effort to discourage U.S. corporations from moving profits abroad. They would also collapse dozens of tax benefits aimed at energy companies — especially oil and gas firms — into three categories focused on renewable energy sources and energy efficiency.Finance Committee Democrats will now turn their attention to the individual side of the tax code, where they want to raise taxes on large inheritances and raise capital gains tax rates on the richest Americans.On the spending side, Mr. Biden, working with Mr. Sanders, wants to make prekindergarten access universal and two years of community college free to all Americans. Money is expected to be devoted to a series of climate provisions, after liberal Democrats warned that they would not support the bipartisan framework without the promise of further climate action.Democrats also want to extend tax credits that were in the pandemic recovery plan for many years to come, including a $300-per-child credit for poor and middle-income families that began this week.The bipartisan infrastructure framework is expected to total $1.2 trillion, though about half that amount is simply the expected continuation of existing federal programs. Still, the nearly $600 billion in new spending, combined with funds already approved in Mr. Biden’s pandemic relief law and the pending infrastructure plan, could be transformative, steering government largess toward poor and middle-class families in amounts not seen since the New Deal.Jonathan Weisman More