The Democrat Dilemma
By Stephen Tuttle | Oct. 16, 2021
The Democrats' two big legislative initiatives, the infrastructure bill and the budget reconciliation bill, have stalled. They have no one to blame but themselves.
President Biden initially said there would be no connection between the two massive bits of spending; that they were distinctly different legislation. The $1 trillion infrastructure proposal includes $550 billion in new spending for roads, bridges, rail, ports, the expansion of broadband services and some climate mitigation issues. The Senate leadership of both parties determined the need was sufficiently great and passage of the bill sufficiently important they would not connect it to any other legislation. In a truly rare bit of bipartisanship, it passed the Senate 69-30, with 19 Republicans, including Mitch McConnell, voting with all 50 Democrats.
But that was the end of bipartisanship, as progressive Democrats in the House decided they would not vote for the infrastructure package unless it was connected to the more controversial $3.5 trillion Build Back Better Act budget reconciliation legislation, a 2,465 page behemoth that reads like a wish list of progressive goodies.
It includes, among many other things, two years of free community college; funding for childcare and two years of free pre-K; expanded Medicare to cover hearing, vision and dental care; extension of the increased child tax credit through 2025; and 12 weeks of paid medical and/or family leave up to $4,000/month. It creates corporate tax incentives and penalties depending on how they mitigate the impact of climate change, allows Medicare to negotiate drugs prices...and much, much more. It takes many programs and lots of spending to get to $3,500,000,000,000.
As you might have guessed, we don't have the money, so we're going to have to develop some additional revenue streams. The plan would raise corporate income taxes from 21 percent to 26 percent, increase the top income tax rate for individuals making at least $400,000 or more annually from 37 percent to 39.6 percent, and increase capital gains taxes from 20 percent to 25 percent. There are also some tax cuts for lower- and middle-income wage earners.
However, the tax increases as proposed will not cover the increased spending, and Democrats are loathe to explain how the extra money -- estimated at somewhere between $1 trillion and $1.5 trillion -- will be raised. Closing tax loopholes and unnecessary deductions is always a popular claim, but the loopholes always remain open and the deductions in place.
Other problems are even stickier. Progressives in the House say they won't vote on the infrastructure bill unless the Senate agrees to pass the larger budget reconciliation, while the Senate says they won't consider the budget reconciliation until the House passes the infrastructure bill. This is foolish chicken-and-egg gamesmanship that calls for the kind of leadership the president is either unable or unwilling to provide.
The Democrats have one rather serious additional problem: They don't have the votes in the Senate to pass the reconciliation bill. Both Senator Joe Manchin of West Virginia and Kyrsten Sinema of Arizona oppose the bill, and those two votes are enough to spell doom because Republicans are unanimous in their opposition.
The president and Democratic leadership should have seen Manchin's position coming from the outset. He's never made his lack of progressive instincts a secret, and it's easy to see why.
West Virginia is a very bright red state. There is a Republican governor and every statewide elective office is either non-partisan or held by a Republican. Their state House of Delegates has 78 Republicans and just 22 Democrats, their Senate 23 Republicans and 11 Democrats. All three members of the U.S. House are Republicans, and the state gave Donald Trump a whopping 36-point margin in 2020. Manchin survives there on the thinnest of political ice, and his objections to the price tag of the Build Back Better Act reflect his reality.
Sinema's opposition is more of a mystery, because Arizona, once as red as West Virginia, is now purple. The Arizona House has 31 Republicans and 29 Democrats, and the Senate is equally close with 16 Republicans and 14 Democrats. The governor and attorney general are Republicans, but the secretary of state is a Democrat. Three of the five corporation commissioners are Republicans – they regulate the state's utility companies – but five of the nine-member congressional delegation are Democrats, and both U.S. Senators are Democrats. Sinema risks more politically by opposing the reconciliation bill than by supporting it. Oddly, she is not publicly sharing her reasons for her opposition.
We need the two sides to at least agree to move the infrastructure bill before bridges start collapsing. If the Democrats want to capitalize on their shrinking legislative window of opportunity and pass a version of the landmark reconciliation bill, they will have to learn to compromise...with each other.