Biden and the Democrats Need to Make Hard Spending Choices

After weeks of being unable to agree on their party’s spending priorities, Democrats in Congress are in a time-out. On Friday, President Joe Biden went up to Capitol Hill and urged the members of his party to come together and pass a sweeping reconciliation bill that will fund his domestic agenda alongside a bipartisan infrastructure bill that progressives have threatened to derail; he said it didn’t matter whether this happened in “six minutes, six days, or six weeks.” Some reports called this a tack to the left on Biden’s part—and that assessment wasn’t inaccurate. It was simply a recognition by Biden that, with razor-thin majorities in both legislative chambers, the only way for the Democrats to pass anything is to bring along everybody.

Imposing a time-out was the easy part for Biden, House Speaker Nancy Pelosi, and other Democratic leaders. According to reports over the weekend, White House officials are now debating how Biden’s spending priorities can be fit into a drastically shrunken reconciliation bill. To get the support of the conservative Democratic senators Joe Manchin and Kyrsten Sinema, Biden, during his visit to the Hill, reportedly suggested reducing the bill’s price tag from $3.5 trillion over ten years to somewhere between $1.9 trillion and $2.3 trillion. That would represent a cut of up to forty-five per cent. “The choices are stark,” the Washington Post’s Jeff Stein wrote in a piece about internal White House deliberations. “Should tackling rising rates of homelessness be dropped in favor of confronting climate change? Should Democrats prioritize seniors over the poor? Is it more important to reduce the cost of child care or the cost of a school lunch?”

In terms of economics, asking either-or questions doesn’t make much sense. Other advanced economies spend a much larger portion of their G.D.P.s than the United States does on things such as alleviating child poverty, tertiary education, affordable housing, and promoting green energy. In claiming that we can’t afford to spend an additional 1.5 per cent to two per cent of G.D.P. per year on these areas, Manchin and Sinema are grossly mistaken. But the political reality is that they both revel in their roles as spoilers inside the Democratic Party, and it was never likely that they would yield to economic logic or calls for party unity. And yet, Biden largely left things to unfold on their own in Congress, seemingly hoping, like Dickens’s Mr. Micawber, that something would turn up to resolve this problem. Nothing did.

The first decision facing the White House now is a strategic one. Should it try and squeeze as many programs as it can into a smaller reconciliation bill, using delayed implementation dates, early sunsets, and other accounting ploys to hold down the over-all price tag? (During the Administrations of George W. Bush and Donald Trump, Republicans successfully employed similar tactics to pass hefty tax cuts that primarily benefitted large corporations and the rich.) Or should Biden try to focus the bill on a handful of his top priorities, insuring that these programs get adequately funded for longer, an approach that would make it harder for Republicans to roll them back in a future Congress? The first option may well be the easiest to sell to individual Democrats on the Hill, who each have their own priorities, and it appears to be the favored option of some prominent progressives. The second option, by providing more clarity to voters, could conceivably work out better for Biden and the Party as a whole going into the 2022 midterms and the 2024 Presidential election, and it could also make it more likely that the policy changes stick.

“I think some of my fellow progressives who want to do everything for a few years are making a big mistake,” Robert Greenstein, a veteran budget analyst who has worked with Democrats and is now at the Brookings Institution, told me on Monday. “The idea that all this stuff will be so popular that the Republicans will roll over and extend everything is extremely naïve—and dangerous. Trying to do everything for a short time is a recipe for ending up with little that is enduring over the long term.”

As Biden considers his options, he should perhaps look back at two policy documents that the White House released in March and April: the American Jobs Plan and the American Families Plan. Together, these proposals laid out an ambitious agenda focussed on strengthening working families, tackling climate change, and rebalancing the tax system to make big corporations and the wealthy pay more. These three priorities were the heart of the policy agenda that Biden campaigned on in 2020. This spring, when the White House decided to pursue a bipartisan infrastructure bill, many of the green elements got left out and added to the reconciliation bill. Biden’s three biggest priorities—families, climate, and tax reform—were reflected in the $3.5-trillion budget blueprint that the House passed in August. But influential players on Capitol Hill also pushed for other programs, including a series of health-care proposals that together would cost more than a trillion dollars over ten years, according to estimates from the Committee for a Responsible Federal Budget, a nonpartisan fiscal monitor.

These proposals include bolstering Obamacare; expanding Medicaid coverage to states that have balked at accepting more federal aid; and providing hearing, vision, and dental benefits to seniors through Medicare—all entirely worthwhile goals. But, if the White House is now fully committed to a much smaller total spending cap, choices have to be made. By centering the reconciliation bill on five or six key elements of the original Build Back Better Plan, Biden could argue to voters that he was fulfilling his electoral promises. To progressives, he could say that, despite the lower cap, he was still making some transformative reforms.

Extending the expansion of the child tax credit that was introduced in the big pandemic-relief bill Democrats passed in March would guarantee monthly checks of two hundred and fifty or three hundred dollars per child to virtually all working-class and middle-class families. If these “Biden checks” became a fixed feature of American life, they would reduce child poverty by up to half, according to some experts. That would be a major achievement for progressives, and it would particularly benefit minority households, which are overrepresented in the ranks of those struggling to make ends meet.

As part of the Build Back Better Plan, Biden also promised to provide paid medical and family leave for all American workers, affordable child care, and universal preschool for all three-year-old and four-year-old children. Polls suggest that these policies would be favored by a majority of voters from both parties. Funding those initiatives and the expanded child tax credit for five years would cost roughly $1.2 trillion. Adding on the White House’s key green proposals—which include beefing up tax credits to encourage the production and use of clean energy and switching most of the nation’s electrical grid to zero-emissions energy sources in ten years—would raise the cost by roughly another six hundred billion dollars. That might not satisfy some environmental activists (who want more drastic actions) or economists (who tend to favor carbon taxes), but it would represent the most significant step yet in addressing climate change, which is a huge issue for many voters, particularly young ones.

Assuming an over-all spending cap of $2.3 trillion, that would leave roughly five hundred billion dollars to help fund other Democratic priorities, such as guaranteeing two years of free community college and expanding Medicaid. Without adding any financial cost, Biden could deliver a significant benefit to another key voting group—seniors—by cajoling or shaming Manchin and Sinema into supporting a long-overdue measure to allow Medicare to negotiate the prices that it pays for prescription drugs.

There are other ways to do the math and split the pot, of course. Like the one I just outlined, they all involve making difficult ethical and political choices. Despite this harsh reality, Biden was right when he told House Democrats on Friday that a smaller reconciliation bill can include historic investments. They need more leadership from Biden, though, and they need it quickly. Politics, rather than economics, demand it.