Democrats Push a Budget to Fulfill Biden’s Aggressive Economic Ambitions

WASHINGTON — The $3.5 trillion budget blueprint that Democrats unveiled in the Senate this week promises to reshape the government’s role in the economy, in ways President Biden and his party have called essential to rebuilding the American middle class, lifting people out of poverty and tackling the threat of climate change.

Its passage in Congress remains far from assured, with a series of hurdles in the coming months, including filling in key details on taxes and spending and holding together a fragile Democratic coalition. But if the plan’s central components become law, it would be the capstone achievement Democrats had promised when they won a pair of Senate elections in January to gain narrow control of Congress — and come with a reach that could exceed its cost.

The proposal could pave the way for legislation that fundamentally overhauls Americans’ relationship with work, school and the federal government. It would put in place much of Mr. Biden’s vision to add years of guaranteed public education to fight inequality, lift more women into the work force with subsidized child care and paid leave, and send monthly checks to parents to alleviate poverty — a provision that Mr. Biden championed on Thursday at the White House.

It would expand Medicare in ways that go beyond Mr. Biden’s own health care proposals this year, to include dental and vision coverage, and it would impose large taxes on corporations, high earners and the greenhouse gas emissions that drive climate change.

And all of those changes could fade quickly — or never even make it to Mr. Biden’s desk — if Democrats’ political calculus is off and they cannot muster the 50 votes they need in the Senate or suffer even a handful of defections from fiscal moderates in the House.

The blueprint reflects a deliberate choice by the president and his party to advance as many new spending programs and tax cuts as possible, but also allow some of them to expire in a few years to conform to the limited tax and spending appetites of moderate senators, whose constituents tend to be wary of large budget deficits. The hope — and gamble — is that the programs will prove so popular that a future Congress will keep them alive.

The rewards and risks of that strategy were on display on Thursday at the White House, where Mr. Biden and Vice President Kamala Harris welcomed several families to celebrate the first round of monthly payments to parents under the expanded child tax credit that Mr. Biden signed into law in a separate $1.9 trillion aid bill aimed at helping people and businesses stay afloat through the pandemic.

The credit delivers payments of up to $300 per month for children younger than 6 and $250 per month for children ages 6 to 17, for families earning up to $150,000 a year, at which point the benefit begins to phase out gradually. The White House has promised the payments will cut child poverty in half, though the Treasury Department is struggling to reach some of the lowest-income families in the country with the money they are eligible to receive because they often do not earn enough to pay income taxes and do not file a return with the Internal Revenue Service.

Mr. Biden cast it as a legacy-defining move, saying that “it’s our effort to make another giant step toward ending child poverty in America” and “one of the things that the vice president and I will be most proud of when our terms are up.”

Yet the expanded credit is set to expire after this year. Democrats have aggressively pitched its benefits to voters this week, not only in hopes of winning points for future elections, but also as a sort of bid to make the credit a permanent fixture in the tax code. The budget blueprint would advance that cause — it includes the renewal of the expanded tax credit for an undetermined period of time.

Given that the benefit costs more than $100 billion per year, Democrats appear unlikely to make it permanent. A fact sheet Senate leaders distributed this week said the duration of the credit, along with many other tax benefits and spending programs, would be determined based on its budgetary effect and what amounts to a game of prioritization among Democrats operating under cost constraints imposed by their most centrist members. That could result in only a few years of extension, if that, leaving future members of Congress to decide whether to maintain the benefit.

“I hope this will be the moment where we would decide that we’re going to make it permanent,” Senator Michael Bennet, Democrat of Colorado and an early sponsor of the expansion, said in an interview. “If it’s not, we have I think a long extension and then, you know, we’ve got the chance to do it later.”

But he acknowledged there was a risk it could shrink to as little as a year in a final package. “I am worried about that,” Mr. Bennet said.

The balancing act is a direct product of Mr. Biden’s narrow hold on Congress and his approach to advancing his economic vision.

Mr. Biden is trying to push his $4 trillion economic agenda through Congress in pieces. He has reached an agreement with centrist senators, including several Republicans, to spend nearly $600 billion to upgrade roads, bridges, water pipes, broadband and other physical infrastructure. At the same time, he and Democratic leaders are collaborating on a larger bill jammed with as many of his remaining priorities as possible, which would advance on a party-line vote through a process called reconciliation that bypasses a Senate filibuster.

The budget blueprint is the first step toward that larger legislation. It includes new spending programs and tax incentives, though it is still light on details. Among them: an extension of Medicaid coverage to bring health insurance to some low-income residents of states that have refused to join the program’s expansion and an extension of Medicare benefits to include dental, vision and hearing coverage. It is also filled with efforts to reduce greenhouse gas emissions, including the creation of a “civilian climate corps” employed by the government. The blueprint calls for four additional years of guaranteed public education and a host of supports for workers, including paid leave and subsidized child care.

In nearly all of those cases, Democratic leaders noted in a background document for reporters this week, the “duration of each program’s enactment will be determined based on scoring and committee input.”

In other words, lawmakers are saying that they want it, but they are not sure how long they can fund it.

Any final legislation will be a math game, with a sort of Tetris twist: How many programs and tax cuts can Mr. Biden’s team and Democratic leaders cram into a spending box that will be no larger, and perhaps much smaller, than $3.5 trillion?

Republicans have already begun to attack the plan, calling the spending exorbitant and warning that the tax increases Mr. Biden plans to pay for some of the programs will stifle the economic recovery.

Moderate Democrats have expressed relatively little consternation over the scope of the budget’s spending ambitions, at least publicly. Senator Joe Manchin III of West Virginia has raised concerns over some spending related to climate change, and others have said they need more details, but party leaders have not seen large-scale revolts against entire spending proposals. Progressive lawmakers and outside groups have cheered the blueprint, a key to keeping the Democratic coalition intact.

There is far less agreement on how to pay for the programs — and to what degree they should be financed. Mr. Manchin has said the entire $3.5 trillion should be offset through revenue increases or cost savings. The budget blueprint includes calls for unspecified tax increases on corporations, high earners and greenhouse gas emissions (in part by taxing imports from high-emission countries, likely including China) and for savings on government spending on prescription drugs. It also proposes to “pay for” some spending by projections of increased economic growth — like the additional output generated by women who are able to work more hours if their child care is more affordable.

There is not yet party consensus on what those revenue raisers might look like. Mr. Manchin and other centrists have balked at some of Mr. Biden’s proposed increases, like raising the corporate income tax rate to 28 percent from 21 percent. Potential compromises loom: Some centrists have said they would accept a 25 percent corporate rate, for example.

Top Democrats are hoping they can push through tax increases by appealing to voters, who favor increased taxes on corporations and the wealthy in many polls. “I’m always looking at how the president approaches these tax discussions,” Senator Ron Wyden, Democrat of Oregon and the Finance Committee chairman, said in an interview. “He’s very aware that Americans by very large majorities feel like everybody should have to pay their fair share.”

The scope of the Democratic economic bill will depend on Mr. Biden’s ability to win that argument and fend off protests from Republicans and business leaders, while keeping the support of every senator that caucuses with his party. The more persuasive he is, the more expansive a plan he can push through to fund child benefits, paid leave and the rest of his programs, and the longer those programs might last.