The Democrats have made a deal — with themselves first and foremost, and then some Republicans — for a $3.5 trillion domestic spending package over the next decade, the whoppingest budget ever proposed by Congress.
In fact, it is more than that. Because it does not stand alone in a Washington budgetary vacuum. As Sen. Charles Schumer, the official announcer of the deal done on Tuesday night, noted, this bill adds to the previously agreed bipartisan $1 trillion for traditional infrastructure improvements, like roads, bridges and electricity grids. That brings the overall interim total close to President Joe Biden’s initial $4 trillion-plus goal.
And let’s not forget the roughly $2 trillion American Rescue Plan for pandemic recovery, by itself expected to elevate the Federal deficit to $3 trillion for a second year running, according to The Washington Post.
Such budgeting may render obsolete a dictionary definition of being “on a budget,” meaning “to plan for having a restricted amount of money.” Once you get into the multitrillions, the feeling of restrictions fades, like the pull of gravity when you reach the weightlessness of outer space.
Asked about the Democrats’ deal on Wednesday, Republican Senator Mitt Romney called it “a shocking figure, particularly at a time when the economy is already heating. It seems that our Democrat friends may have lost their bearings,” Reuters quoted him as saying. He probably had in mind the consumer price index, which leaped 0.9% in June, the largest one-month increase in 13 years.
But Senate leaders insist that they have not totally lost their grip on financial reality.
Reminding his colleagues of the existence of gravity, Sen. Joe Manchin (D-W.Va.) said, “We need to pay for it. I’d like to pay for all of it. I don’t think we need more debt.”
Sen. Mark Warner (D-Va.), a moderate who reportedly helped shape the immense entity, gave his assurance that it would be fully paid for with offsetting revenue, but provided no detail, the Associate Press reported.
Much deviltry will be in the details of how to pay for it. Biden has proposed raising the corporate tax rate to 28% from 21%, tightening the net on U.S. companies’ foreign earnings and raising the top capital-gains rate to 43.4% from 23.8%. Those ideas, along with a proposal to expand the IRS’ authority for tax collection, will be the stuff of controversy in the days to come.
The inevitable question, “What’s in it?” could be answered in a word: “Everything.” But the Senators will answer with more words, as best they can, given the complexities and uncertainties involved. Pronouncements so far have been largely devoid of details.
But certain main points can be outlined. A large chunk of the spending is earmarked for climate change, which now comes under the rubric of “human infrastructure.”
The damage that these strictures could do to the nation’s industrial base — by, among other things, subsidizing non-fossil fuels — is incalculable, even for those now accustomed to thinking in terms of trillions. If cutting is to be done, that’s where it should start.
On the other hand, there is much to be said for its provision to expand Medicare to cover dental, vision and hearing services. For the elderly, so many of whom are financially burdened to the point of even foregoing needed care, this is certainly good news.
Demands for lowering Medicare’s eligibility age to 60 from 65, and empowering the government to negotiate the price of prescription drugs, among many other items, were left open for the time being.
Funding for schools is also to be welcomed. Although passage of the legislation and actual funding lines will not be possible until well after the start of the new school year, it should be of immense help to an educational system ravaged by pandemic shutdowns. Money for child care, coronavirus protections and academic needs (such as helping students who have fallen behind while schools were closed) cannot be disbursed too soon.
Small businesses are supposed to be protected from any tax increases. We hope so.
The agreement reached on Tuesday night was framed in the most general terms. Even if Democrats meet the August target date for voting on the bill, they will only be voting on a broad framework. It will take much longer to work out the details. It could take a decade.