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Democratic Divisions Jeopardize Scope of Biden Economic Plan

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Democratic congressional leaders vowed to forge ahead this month with President Joe Biden’s economic plan despite deep divisions within the party and growing uncertainty about the overall size and scope of the tax and spending proposal.

House Speaker Nancy Pelosi (D-Calif.) on Sept. 8 didn’t specifically commit to the $3.5 trillion price tag included in a fiscal blueprint that very narrowly cleared both chambers before an August recess. Her remarks leave the door open to a smaller package that would appease party moderates and infuriate progressives.

“I don’t know what the number will be,” Pelosi said, adding that $3.5 trillion is the plan’s initial size “and we will not go beyond that.”

Speaking at a separate press event the morning of Sept. 8, Senate Majority Leader Chuck Schumer (D-N.Y.) said Congress would move forward on the legislation, and negotiate for the votes needed to clear it — regardless of the call by moderate Sen. Joe Manchin (D-W.Va.) last week for a “pause” on the debate and for a plan that would be “significantly” smaller.

“We’re moving full speed ahead,” Schumer said on a call with reporters. “We want to keep going forward. We think getting this done is so important to the American people for all the reasons we have outlined. It’s so popular with the American people. So we are moving forward on this bill.”

Pelosi, who faces challenges with a cluster of independent-minded moderates in her own chamber, insisted that Democrats are “very excited about what the prospects are” as House panels draft the specific text of the broad-based bill. The legislation would boost taxes on the wealthy and corporations while expanding Medicare, child care, elder care and addressing a host other issues, including immigration and climate change.


Manchin last week in an op-ed called for a “strategic pause” in action on Biden’s main economic agenda, saying that soaring national debt and rising inflation necessitate a go-slow approach and a lower price tag. Democrats govern the Senate with a 50-50 majority and need every senator in their caucus to back the plan, with Vice President Kamala Harris able to cast a tie-breaking vote.

The tax and spending package also is facing obstacles in the House. Democrats can only afford three defections in that chamber if Republicans are united in opposition, and some moderate Democrats also are balking at the size of the package being drawn up. Progressives, meanwhile, have pushed for a larger package and would likely balk at anything smaller than $3.5 trillion.

Manchin is privately telling White House and Democratic leaders that he can’t support a package that would be more than $1.5 trillion, Axios reported late Sept. 7. He also wants revenue from tax increases to cover all of the cost, according to Axios. A spokeswoman for Manchin declined to comment.

Revenue Focus

“Not every line that gets drawn in the sand during these negotiations is credible or absolute,” Evercore ISI analysts Sarah Bianchi — a nominee for a post in the U.S. Trade Representative’s office — and Tobin Marcus wrote in a note Sept. 8. “We continue to believe that the final bill will land in the vicinity of $2 trillion and is more likely than not to pass.”

The Biden administration is planning to shift more of its pitch to highlighting revenue measures, such as those aimed at corporations and higher-income earners, that are part of the package — an implicit effort to calm fears among moderates about the total spending amount and emphasize that it’s not simply deficit-funded, according to an official familiar with their plans.

Biden believes the tax changes are an important component, both out of fairness and as a revenue measure, the official said.

President Joe Biden speaks from the Eisenhower Executive Office Building. (Al Drago/Bloomberg News)

The administration continues to speak with Manchin and is confident an agreement can be reached, the official said. It doesn’t believe any clear top-line spending cap has emerged among the moderates, according to the official.

The president said Sept. 7 that he would soon speak to Manchin. “Joe, at the end, has always been there. He’s always been with me. I think we can work something out. And I look forward to speaking with him,” Biden told reporters at the White House.

Pelosi was similarly confident and dismissed any idea that Democrats feel added urgency on the tax and spending package because they could lose their slim House majority in 2022, saying, “I know we’ll win the Congress.”

“I think that all of our members who survived Trump being on the ballot with them will survive next year, with Trump not being on the ballot,” Pelosi, referring to former President Donald Trump, said during an appearance in New Hartford, Conn. She instead attributed any urgency to the benefits the bill would bring Americans as “long overdue.”

— With assistance from Josh Wingrove.

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