Senate Democrats, White House agree on $3.5 trillion budget package

Biden headed to Capitol Hill on Wednesday for sales pitch; Warner says plan is 'fully paid for'

Senate Majority Leader Charles E. Schumer, D-N.Y., exits the Mansfield Room in the Capitol on Tuesday after Senate Democrats held their weekly policy lunch. (Bill Clark/ CQ Roll Call)
Senate Majority Leader Charles E. Schumer, D-N.Y., exits the Mansfield Room in the Capitol on Tuesday after Senate Democrats held their weekly policy lunch. (Bill Clark/ CQ Roll Call)
Posted July 13, 2021 at 9:39pm, Updated at 10:59pm

Top Senate Democrats and White House officials reached agreement late Tuesday on an overall spending target of $3.5 trillion for a filibuster-proof budget reconciliation package that Majority Leader Charles E. Schumer said will fund “every major program” President Joe Biden proposed in his economic plans.

Biden will come to the Capitol Wednesday to help Schumer and Budget Committee members pitch the spending target to the broader Senate Democratic Caucus over lunch. In a key selling point for his fellow centrists Democrats, Virginia Sen. Mark Warner told reporters the plan will be “fully paid for.”

The $3.5 trillion reconciliation bill, combined with $579 billion new spending in a bipartisan infrastructure bill that is still being drafted, will bring the total new spending on infrastructure, climate, child care, education and paid leave programs to $4.1 trillion. That figure “is very, very close to what President Biden asked us for,” Schumer said. “Every major program that President Biden has asked us for is funded in a robust way.”

Senate Democrats are also adding to Biden’s proposals a “robust expansion of Medicare,” including funding for dental, vision and hearing benefits, Schumer said, noting that was a priority for Budget Chairman Bernie Sanders, I-Vt.

Schumer announced the agreement alongside Sanders and other Budget Committee Democrats after they emerged from a two-hour, closed-door meeting shortly after 9 p.m. Tuesday. The group also met for two hours Monday as they worked to finalize the topline spending figure. White House legislative affairs director Louisa Terrell and National Economic Council director Brian Deese attended both meetings.

Although Warner announced that the $3.5 trillion will be “fully paid for,” it’s not clear how much of that will be from new revenues and how much would be from other savings. 

Senate Finance Chair Ron Wyden, D-Ore., indicated the exact combination of offsets is still being worked through. 

“I will raise the money that the caucus says it wants for its priorities,” Wyden said. “And there are discussions about, ‘This will be paid for. This will be one type of scoring or another.’”

Sanders said the revenue target is “still evolving” but the group has a general idea of how much would be paid for with tax increases versus other budgetary savings from policies like lowering prescription drug costs. 

“I think you’ll hear more details in the coming days,” he said. 

'Long road to go'

The next step will be to get buy-in from the full Democratic Caucus on the spending and revenue targets so the Budget Committee can draft its fiscal 2022 budget resolution. That document will provide instructions to various Senate and House committees to draft the implementing legislation, based on the topline budgetary agreement struck Tuesday.

Once the budget resolution is adopted, Democrats can bring to the floor a reconciliation bill that can pass with simple majorities in both chambers.

“We are very proud of this plan. We know we have a long road to go, but we are going to get this done for the sake of making average Americans’ lives a whole lot better,” Schumer said. “If we pass this, this is the most profound change to help American families in generations.” 

A Democratic aide familiar with the agreement said the budget resolution will include specific language that would bar the reconciliation package from including tax increases on individuals earning less than $400,000, as well as tax increases on small businesses.

Sanders said tax increases on wealthy individuals and corporations will be among the revenue raisers in the package. The total amount of those increases would be set by the reconciliation instructions to the Finance Committee in the budget resolution, but the exact policies would be worked out later in the implementing legislation. 

“The wealthy and large corporations are going to start paying their fair share of taxes, so that we can protect the working families of this country,” Sanders said. 

It wasn’t immediately clear how House Democrats would receive the package, even if it can be sold to the full Senate Democratic Caucus. But for weeks Democrats in the House have said they’d likely follow the Senate’s lead since it would be pointless to adopt their own budget if it wouldn’t get 51 votes in the Senate.

Also, Sanders’ imprimatur could sway progressives in the House, while centrists will likely applaud a package that envisions adding little or nothing to the national debt. 

The scope of tax increases could yet be a sticking point, however, with moderates balking at some of the leading revenue raisers in Biden's initial budget plan. 

There are also concerns over aspects of prior proposals to cut spending on prescription drugs, chiefly House-passed bills in the 116th Congress that would have required government negotiation with drugmakers to lower prices to targets based on an international average.