An intraparty split among House Democrats over budgets and deficits spilled into the open on the first full day of legislative business for the 117th Congress, even as the chamber adopted its rules package without any defections.

Given Democrats’ narrow House majority, how the new rules are interpreted could have big implications for getting President-elect Joe Biden’s agenda through the chamber, as party moderates are already threatening to oppose big spending packages.

The rules changes, adopted on a 217-206 party-line vote, stipulate that deficit-increasing legislation is exempt from rules requiring budgetary offsets as long as it is related to the COVID-19 response or climate change.

[House adopts rules package for 117th Congress]

That’s a change from past years and a compromise brokered by Democratic leaders between the progressive wing of the party, which wanted pay-as-you-go rules eliminated entirely, and centrist Democrats who wanted to preserve them.

The leadership of the moderate Blue Dog Coalition, in a letter made public after Monday’s vote, pressed House Budget Chairman John Yarmuth, D-Ky., to preserve a narrow interpretation of the pay-as-you-go exemptions.

“We want to let these exemptions work as intended to help meet the COVID-19 and climate crises we face, but not let the application of them drift into what amounts as a de facto waiving of the PAYGO rule,” says the letter signed by Democrats Stephanie Murphy of Florida, Ed Case of Hawaii, Tom O’Halleran of Arizona and Kurt Schrader of Oregon.

That’s in response to influential progressives like Pramila Jayapal, D-Wash., chairwoman of the Congressional Progressive Caucus, and Alexandria Ocasio-Cortez, D-N.Y., who have tweeted approvingly in recent days about using the rules to pass major health care and climate legislation.

In a statement after Monday’s vote, Jayapal said the rules package “automatically exempts all climate change, pandemic relief, and related public health measures” from the House budget rule.

“This is not a time for incrementalism. We need bold and visionary action from Congress that meets the scale of the crises we face,” Jayapal said. The rules changes, she continued, would ensure that “big ideas don’t get bogged down by procedural hurdles or harmful, outdated austerity measures.”

Not-so-veiled threat

The size of those ideas seems likely to get a thorough vetting before House leadership puts them on the floor for votes, however.

Under the new rules, Yarmuth gets to dictate which bills qualify for the coronavirus- and climate-related exemptions from budget limits.

The Blue Dog leaders wrote to Yarmuth that they “will continue to vigorously monitor the use of PAYGO waivers to ensure they are being utilized appropriately and sparingly.” That includes potentially voting against rules for floor debate on expensive legislation they believe doesn’t meet their standards for ditching budget restraints, the letter states.

With big-ticket items on the agenda such as expansive new coronavirus relief and clean energy infrastructure packages that Biden wants, the Blue Dogs’ implied threat is that they can stall the Biden agenda, as few if any Republicans are likely to vote for Democratic leaders’ rules for floor debate.

The Blue Dogs’ numbers are small — just 18 at the start of the 117th Congress, after they suffered several defeats in November — but Speaker Nancy Pelosi has only a few votes to spare on partisan legislation.

Moreover, the Blue Dogs include a handful of incumbents in swing districts who are still at risk in 2022, unlike many of the leading progressives who are in safe seats.

O’Halleran, for example, won by 3.2 percentage points in November, in a district where Biden edged out President Donald Trump by 1.7 points. Rep. Abigail Spanberger, D-Va., won her race by just 1.8 points, while Biden narrowly beat Trump by 1.1 points in her district. Both districts backed Trump in 2016 and GOP presidential nominee Mitt Romney in 2012, according to data compiled by Daily Kos.

Jayapal and Rep. Mark Pocan, D-Wis., the former Progressive Caucus co-chairman, had pushed for full elimination of pay-as-you-go rules last year, but Democratic leaders weren’t willing to go that far.

Progressives then offered about a dozen exemptions to the rule in negotiations with leadership and Rules Chairman Jim McGovern, D-Mass., but were rebuffed, according to a senior Democratic aide associated with the Blue Dogs. The aide described the eventual rules changes as a win for the Blue Dogs who were able to preserve the core of the budget rules.

As for coronavirus relief legislation, lawmakers already have waved through more than $3 trillion in spending that was not offset, so the COVID-19 exemption is not really that big a concession, the aide said. On climate bills, most Blue Dogs would argue that the Congressional Budget Office doesn’t account for the cost of inaction in their official “scores” of legislation, so that exemption makes sense, the aide added.

For example, the CBO has said the effects of climate change, if left unaddressed, could knock 1 percent off the inflation-adjusted size of the U.S. economy by 2050. But Democrats have required the agency to use “static” scoring of bills rather than “dynamic” analyses that take into account broader economic factors.

Congressional Progressive Caucus aides did not respond to a request for comment.

House Majority Leader Steny H. Hoyer, a longtime budget hawk within his party, said he agrees with the Blue Dogs’ interpretation of the rules shift.

“The assertion that the Green New Deal and ‘Medicare for All’ would qualify under the exemption I think is incorrect,” the Maryland Democrat told reporters on Tuesday.

Hoyer said the budget exemptions would apply to “very specific needs” covered, for example, by the $2 trillion March coronavirus relief law as well as House-passed aid packages that didn’t move in the GOP-controlled Senate. He also said clean energy elements of a $1.5 trillion infrastructure package that the House passed last year would qualify.

Tug of war

The tug of war between party factions that’s underway is reminiscent of divisions among Democrats over the past two years that prevented the party from uniting behind a budget resolution for fiscal 2020 or fiscal 2021.

Yarmuth gave up plans to write budgets during those years in part because he was unable to reconcile demands from more liberal members for higher domestic spending and lower defense spending, and from moderates who favored defense but wanted to keep overall spending down.

House Republicans were only too happy to try to exploit the Democrats’ intraparty differences. Jason Smith, R-Mo., the new ranking member on the House Budget Committee, said during debate over the rule on Monday that the exemptions will “allow passage of socialist policies with large price tags.”

Smith said the exemption for climate change legislation “could apply to any radical, progressive, out-of-touch legislation dreamed up next by House Democrats.” He went on to say the “exemption was designed as a mechanism to ram through socialist policies like the Green New Deal and other ideas aimed at hurting American workers, families and farmers.”

Republicans on Monday offered a procedural motion that would have struck the pay-as-you-go exemptions from the rules package. It was defeated on a 217-203 party-line vote.

Republicans also criticized Democrats for repealing a rule that barred the reconciliation instructions in a budget resolution from increasing net mandatory spending.

And they faulted Democrats for extending a “deeming resolution” from last year that set enforceable spending and revenue levels for fiscal 2021, which began Oct. 1, 2020, in the absence of a budget resolution. Smith said extending the deeming resolution “will continue to let Democrats shirk their duty to write and pass a budget.”

Yarmuth has said he plans to write a budget resolution for the fiscal year beginning Oct. 1.

Extending the deeming resolution into the new Congress ensures that the Budget chairman has the authority to enforce spending and tax limits that were agreed to last year for the fiscal year that ends Sept. 30.

Lindsey McPherson contributed to this report.