August 9, 2021
Senate budget resolution clears way for $3.5t reconciliation bill
Senate Budget Committee Chairman Bernie Sanders (I-VT) August 9 released the FY2022 budget resolution with reconciliation instructions for a potential $3.5 trillion package of Democratic priorities that can pass with a simple majority vote in the Senate. The reconciliation instructions target September 15 for committees to submit their reconciliation bills, meaning tax increases identified to pay for the reconciliation bill may not be known until then. The resolution sets revenue targets for reconciliation but does not prescribe policy details. Senate Majority Leader Chuck Schumer (D-NY) said, "The Budget Resolution provides a target date of September 15th to the committees to submit their reconciliation legislation. We will work towards this goal and meet, as a caucus, during the week of the 15th to review the bill."
The reconciliation instruction targets by committee are as follows:
A Democratic memo on reconciliation circulated in conjunction with the resolution said offsets envisioned to be developed by the Senate Finance Committee should address corporate and international tax reform; tax fairness for high-income individuals; IRS tax enforcement; health care savings; and a Carbon Polluter Import Fee. The reconciliation instructions envision from the Finance Committee $1.8 trillion in investments for working families, the elderly and the environment, which would require, to meet the $1 billion instruction target, revenue-increasing proposals of at least $1.81 trillion. Not all revenue for the reconciliation bill will come from tax increases; some will come from health provisions and, potentially, macroeconomic growth.
"In order to give the Senate Finance Committee the flexibility it needs to accomplish these goals, the text of the Budget Resolution will provide the Finance Committee with an instruction to reduce the deficit by a nominal amount of $1 billion over ten years," the memo stated. "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."
Finance Chairman Ron Wyden (D-OR) released a statement saying in part, "the Finance Committee has been working on a menu of options for the caucus to consider. Our proposals will fall into four categories: multi-national corporations, the wealthiest individuals, enforcement against wealthy tax cheats and savings from other programs. Many of these proposals have been laid out — the Wyden-Brown-Warner international tax framework to ensure mega-corporations pay their fair share, legislation to expand the pass through deduction while dedicating it to Main Street small businesses, legislation to close the carried interest loophole for private equity moguls and legislation to ensure wealthy investors pay tax on investments underlying derivatives contracts, just to name a few."
In his Dear Colleague letter, Majority Leader Schumer said, "At its core, this legislation is about restoring the middle class in the 21st Century and giving more Americans the opportunity to get there. By making education, health care, child care, and house more affordable, we can give tens of millions of families a leg up." The text of the budget resolution does not allocate specific funding levels for health initiatives, but broadly gives committees with health policy jurisdiction large pots of money to work with. Additional detail on the direction of those investments is provided in a memorandum to Democratic senators, listing over half a dozen health care items as part of the budget resolution "framework." This includes investments within the jurisdiction of the Senate Finance and Health, Labor, and Pensions (HELP) Committees, including:
Offsets listed include those from "health care savings" broadly, as well as additional detail for the Senate Finance Committee that allows for "hundreds of billions in additional savings by lowering the price of prescription drugs." Chairman Wyden said: "The Finance Committee will be a central part of the debate when it comes to lowering Americans' health care costs and making high-quality health care available to more families. That begins by lowering the cost of prescription drugs by making good on Democrats' promise to allow Medicare to negotiate a fair price with Big Pharma." Wyden also outlined his commitment to expand Medicare benefits, including "giving seniors access to a dental, vision and hearing benefit," as well as investing in home-and community-based care and building on the Affordable Care Act." That means extending the improvements to the middle-class tax credits for health insurance that have lowered premiums dramatically, and it means meeting the needs of the millions of Americans who have been deprived of health coverage just because they live in a red state that refuses to expand Medicaid," said Wyden.
The budget resolution includes instructions to the Senate Banking Committee to produce a $332 billion piece of the reconciliation bill, with the House Financial Services Committee's assignment totaling $339 billion. In the Senate Democratic memo Monday morning, the Banking Committee's instruction is broken down entirely in terms of housing-related spending, a major priority of both Chairman Sherrod Brown (D-OH) and House Financial Services Chairman Maxine Waters (D-CA). The Banking Committee's instruction includes creating affordable housing by investing in existing vehicles like the Housing Trust Fund, HOME, the Capital Magnet Fund and rural housing; providing down-payment assistance and aid to renters; public housing capital investments; and "community investment" initiatives such as Community Land Trusts, community development block grants (CDBGs), zoning, land use and transit improvements.
While the House has not yet offered a correlate to the Senate Democratic memorandum, Chairman Waters released a statement on July 8 saying President Biden "assured me that housing would be included in reconciliation" and adding, "To say that the pandemic destabilized an already unstable housing market is an understatement. Our nation's chronic shortage of affordable housing has left millions of people at all income levels struggling to pay their housing costs, and in the worst cases, has locked people out of homeownership, led to people being evicted or foreclosed on, and exacerbated our homelessness crisis." When introducing her ambitious, $600b legislative housing package on July 15 — considerably more than the committee's $339b assignment in the budget blueprint — Waters said in a statement, "For the first time in a generation, we have a real opportunity to fix these deep-rooted issues in our housing system. We can end homelessness. We can make rental housing affordable. We can provide the American dream of homeownership. We can do all of this by finally making the investments that we have postponed, diminished or denied for years. The reconciliation bill provides us with a once-in-a-generation opportunity to provide the housing resources that our country so desperately needs."
The budget does not address the federal limit reinstated on August 1. While the issue could be addressed with solely Democratic support under budget reconciliation, Treasury Secretary Janet Yellen said August 9: "In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support. In fact, during the last administration, Democrats and Republicans came together to do their duty three times. Congress should do so again now by increasing or suspending the debt limit on a bipartisan basis. The vast majority of the debt subject to the debt limit was accrued prior to the Administration taking office. This is a shared responsibility … "
The budget resolution and a memo summarizing reconciling instructions are available here.
Chairman Wyden's statement is available here.
Sec. Yellen's letter is available here.