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| Image via African Skies. |
We've finally got some text on the Human Infrastructure budget reconciliation package, in the form of a one-page summary of budget topline items under four headings of spending categories (Families, Climate, Infrastructure and Jobs, and Healthcare), and a nine-page Memorandum addressed to Democratic senators, organized by committee, with very broad numbers for how much spending each committee is instructed to approve. Or saving in the case of the Finance Committee, which is instructed to come up with a plan to cut the deficit by "at least one billion dollars", which reminds me enough of Dr. Evil to make me laugh, but is evidently standard procedure in these matters, for reasons I'm not grasping:
There is ample precedent over the past fifteen years for using a nominal reconciliation instruction as a mechanism to allow a committee to bring forth legislation with larger budgetary implications than such an instruction suggests. Republicans used a nominal instruction amount to both the Finance and the Health, Education, Labor, and Pension (HELP) Committees to move forward with their efforts to repeal the Affordable Care Act in 2015 and 2017. The instruction to each committee in each case was to reduce the deficit by $1 billion.... In addition, Democrats used nominal reconciliation instructions in 2010 and 2007 to achieve important changes to health care and education programs. The 2010 example, the Health Care and Education Reconciliation Act (HCERA) included a nominal instruction of $1 billion in deficit reduction to both the Senate Finance and HELP Committees. According to CBO, That bill impacted hundreds of billions of dollars in meeting those targets.
But it seems to be about "flexibility", and connected to the fact that they won't be asking the Congressional Budget Office to score the programs before the vote:
It is not possible to draft and score all of the expected policies prior to consideration of the budget resolution. Given that we will not have budgetary certainty for all of the expected policies prior to locking in the reconciliation instruction to the Finance Committee, the Budget Resolution will not require a specific level of revenue, outlay, or deficit amount in its reconciliation instruction.
It should be noted that the $3.5 trillion framework agreement total represents the level of new investments, but does not represent the net budgetary impact of the expected reconciliation bill because the reconciliation bill will also include substantial offsets.
Which offsets are listed as
- Corporate and international tax reform
- Tax fairness for high-income individuals
- IRS tax enforcement
- Health care savings
- Carbon Polluter Import Fee
which, assuming these are in order of magnitude, the biggest at the top, looks just about right to me. The "health care savings" are supposed to come chiefly from drug price negotiations for Medicare Part D, I believe, estimated by some experts as yielding between $34 billion and $58 billion over the ten-year period, while the IRS enforcement measures could be collecting anywhere from $63 billion to slightly over a trillion dollars, depending on how much money the IRS gets to spend on it (mostly increasing staff). If my assumption is correct, that would mean the top two items, corporate tax and taxes on the rich, are both well over a trillion dollars each, which is where they would have to be if the package is really all "paid for" as promised, which would be fantastic news if true.
David Dayen/American Prospect, who is kind of my guide here, is not so optimistic on that score, relying on the first paragraph of the memorandum (and not, as he says the "resolution"), although that makes him optimistic on the other side, of spending, in that he does think it's realistic to hope they'll allocate the whole $3.5 trillion, whether the pay-fors add up or not:
Critically, it doesn’t have to net out completely. According to the resolution, the $3.5 trillion will be offset by “a combination of new tax revenues, health care savings, and long-term economic growth.” The health care savings refers to the hundreds of billions that can be saved from allowing prescription drug price negotiation through Medicare; the long-term economic growth just reflects how much projected deficit lawmakers will be willing to run up. Under reconciliation there cannot be any deficit increase outside the 10-year budget window; as much of the spending is one time, that shouldn’t be a big problem. Given that Democrats have balked at most of Biden’s suggestions on taxes, not wedding all $3.5 trillion in investment to finding enough tax measures is a positive step.
I'm not at all sure of all of that. I see a huge amount of spending that is not one-time, in the first place, in making the child tax credit permanent, in lowering the entry age for Medicare, adding vision, dental, and hearing benefits to Medicare, and closing the Medicaid coverage gap, and in the universal public early childhood education and universal two-year college programs—at least some of these are pretty big and all of them are very recurrent.
The other thing is that expectation of "long-term economic growth" isn't mentioned anywhere outside that opening paragraph, but nor is any increased borrowing authority. I'm afraid I think Dayen is reading that wrong: the point of mentioning the growth prospects is to suggest something the CBO could have been but wasn't asked to score, the increase in tax revenues that economic growth will bring with it, along with the increase in well-paying jobs, transportation efficiency, brand-new industries and greatly expanded old ones, and increased immigration ("lawful permanent status for qualified immigrants" is actually a budget line, though it's not obvious what will be spent or what exactly it will be spent on). Revenue is going to go up because that's what growth does!
For the plan on the whole, I think I'm with Dayen in seeing the plan as a huge fucking deal and at the same time not quite what we need. There are things that are clearly insufficient, as I was pointing out earlier at some point I'm not finding at the moment, especially in the environmental proposals—
It was going to be a stretch to replace the nation’s lead water pipes for Biden’s proposed $45 billion; this bill only provides $15 billion, and doesn’t mandate that it all go to replacing lead water pipes. The $65 billion for broadband deployment will continue to funnel money into the waiting mouth of incumbent cable and wireless providers, without requiring higher speeds or more competition; it will likely run into similar resistance to a truly equitable build-out. The transportation split still favors highways at a time when human-caused climate change is now seen as irreversible, thanks in part to decades of the same bias in favor of cars. One-third of the rail funding is subject to future appropriations and therefore might not even happen, and too much goes to repairs, rather than new services. The $20 billion for reconnecting historically severed minority communities remained whittled down to a trivial $1 billion
—but it's so much more than we've ever seen that it's hard not to feel we're turning a corner, if this holds up.
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