How much does Biden’s plan cost? Democrats want zero | Economic news

By JOSH BOAK, Associated Press

WASHINGTON (AP) – How much will it cost to implement President Joe Biden’s massive expansion of social programs?

Congress has authorized spending of up to $ 3.5 trillion over a decade, but Biden urges Democrats to fully cover the cost of the legislation – by raising taxes on corporations and the wealthy, by negotiating the price of drugs on ordinance and by leveraging other sources of federal revenue such as increased IRS funding.

The idea is that the whole package should pay for itself.

Defending a bill not yet fully drafted, Democrats are determined to avoid a deficit-funded spending spree. They are increasingly frustrated by the focus on the proposed spending total of $ 3.5 trillion, arguing that too little attention is paid to the work they do to balance the books. Biden said on Friday he would prefer the price described as “zero.”

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“We pay for everything we spend,” Biden told the White House. “It’s going to be zero. Zero.”

But the income side of the equation is vexing, and it has become a major challenge for Democratic negotiators as they strive to build one of the biggest legislative efforts in a generation. Their success or failure could help determine whether the bulk of Biden’s agenda becomes law and can withstand future political attacks.

Republicans, in opposition, are not waiting for details. They focused on the $ 3.5 trillion spending cap set by Democrats, calling it reckless, misguided, and worst-case government.

“The radical left is pushing all its chips – it wants to use this terrible but temporary pandemic as a Trojan horse for permanent socialism,” Republican Senate Leader Mitch McConnell of Kentucky said Thursday. “Billions and billions more in government spending as families already face inflation.”

Part of the problem for Democratic leaders is the lack of consensus on which programs to fund and for how long. House Speaker Nancy Pelosi, D-Calif., And Senate Majority Leader Chuck Schumer, DN.Y., agree the price will likely drop and say they have a ‘menu’ of revenue streams to pay for it. But without certainty on which initiatives will be included, no final decision can be made.

“It’s not a question of price,” Pelosi said Thursday. “It’s about what’s in the bill.”

Biden and administration officials stress that the plan is as much about fairness as it is about dollars and cents. By taxing the rich and corporations, they hope to fund paid family leave and child tax credits that help those reaching the middle class, while enacting environmental and economic policies that help the United States compete with China. . But the haggling over an ultimate spending goal overshadows the political goals they’re trying to achieve.

Washington Representative Pramila Jayapal, chief negotiator for the House Progressives, said on Friday reporters should not describe the measure as costing trillions of dollars when proposed tax increases cover the cost.

“I just think it’s going to be a zero dollar bill – it’s priority # 1,” she said.

Sharron Parrott, chair of the Center on Budget and Policy Priorities, a Washington-based liberal think tank, has warned Democrats that focusing on the $ 3.5 trillion figure could hurt what they are trying to achieve.

“So far, the debate has focused too much on one number: the $ 3.5 trillion in gross new investment over the next ten years – including spending increases and tax cuts – that could be included in the package, ”Parrott wrote in an August blog post. Publish. “True budget stewardship requires focusing on the net cost of the whole and, more fundamentally, on the merits of the investment and compensation proposals themselves. “

What Biden is really pushing are two goals that can easily clash. He wants to bring the middle class back to the epicenter of economic growth, but without increasing the national debt or raising taxes for people earning less than $ 400,000 a year.

To complicate matters further, many of his spending policies are actually tax cuts for the poor and the middle class, which means he raises taxes for one group in order to reduce them for another.

Democrats also face how the measures are assessed by the Congressional Budget Office, the final arbiter of how the legislation will affect the federal balance sheet.

The Democrats’ expanded child credit and dependent credits, enacted earlier this year, are counted as costs in a CBO score. Biden wants to expand those programs as part of the budget, which he says now represents one of the biggest middle-class tax cuts in U.S. history.

“It’s about lowering taxes, not raising taxes,” Biden said Friday.

It is not entirely clear whether Biden’s claim of a “zero” cost is feasible within the 10-year outlook used by the CBO to assess the economic impacts of the legislation. Biden’s own budget officials earlier this year estimated his program would increase the national debt by nearly $ 1.4 trillion over the decade.

Biden described the multi-level talks with lawmakers on Friday as “at an impasse.” Further meetings are expected in the coming days.

In the equally divided Senate, key Democratic senators such as West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema have qualms about total spending. Moderate Democrats are vying for the advantage over their liberal counterparts. Time is running out, Biden asks for more patience to get the correct numbers so that the votes follow.

“It’s a process,” he said. “But it’s just going to take a while.”

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