Senate Democrats released a $3.5 trillion budget on Monday morning that doesn’t tackle the imminent need to raise the debt ceiling, setting the stage for a dramatic standoff with Republicans this fall.
The exclusion of debt limit language amounts to a political gamble by President Joe Biden’s party, with the Treasury Department expected to run dry on its borrowing limit in the coming weeks. Senate Republicans have already warned that they won’t give Democrats the votes needed to approach the issue on a bipartisan basis, which means that the debt limit’s omission from the budget tees up a future cross-aisle fight over the debt.
The budget also marks Democrats’ first step toward bypassing the filibuster in order to pass their party’s massive social spending plan, which envisions higher taxes on corporations and the wealthy in order to fund initiatives like expanded Medicare, free community college and green cards for some immigrants. The framework instructs a slew of committees to draft their pieces of Biden’s spending package by Sept. 15, officially kicking off the reconciliation process that Democrats can use to pass the measure without GOP votes.
Senate Budget Chair Bernie Sanders (I-Vt.) touted the budget measure as the key to passing “the most consequential piece of legislation for working people, the elderly, the children, the sick and the poor” since New Deal programs were enacted under President Franklin D. Roosevelt more than 80 years ago.
The Senate is expected to start voting on the budget as soon as Tuesday before leaving Washington for its August recess, but the final reconciliation bill isn’t expected to clear Congress until the fall at earliest.
Omitting the debt limit from the budget measure is expected to ease action on that multitrillion-dollar plan, as well as the bipartisan infrastructure bill that’s on track for Senate passage Monday or early Tuesday. But that calculated decision to procrastinate, as the Biden administration counts down toward a national default on U.S. debt, will make life substantially worse for Democrats this fall as they scramble for the votes to avert the cliff in time.
Democrats want to tie debt limit action to a short-term spending bill that would keep the government open beyond Sept. 30, meaning Congress will have little time to agree on both critical issues after returning from the August recess.
In a statement on Monday morning, Treasury Secretary Janet Yellen offered Democrats some cover for not pursuing the debt ceiling hike through reconciliation, stressing that Congress should tackle the issue “on a bipartisan basis.”
“The vast majority of the debt subject to the debt limit was accrued prior to the Administration taking office,” she said. “This is a shared responsibility, and I urge Congress to come together on a bipartisan basis as it has in the past to protect the full faith and credit of the United States.”
The majority party has been working toward this legislative kickoff for months, negotiating the starting total for the $3.5 trillion package and gaming out the challenges that lie ahead, both politically and procedurally. In order to adopt the measure and unleash the magic of budget reconciliation, Senate Democrats must first endure a “vote-a-rama” this week, the kind of voting spree that kept them up all night in February and again in March when they passed the $1.9 trillion pandemic aid package.
The budget resolution will bake in the spending ceiling, as well as a rough framework for what can be included in the final social spending bill Democrats are trying to enact. But the final product may well fall short of the $3.5 trillion allowed under the budget resolution, as moderate Democrats in both chambers squelch the dreams of their more liberal counterparts in the coming weeks.
In a preview of that intra-party battle over the top line spending number, Rep. Alexandria Ocasio-Cortez (D-N.Y.) publicly faced off with Democratic Sen. Kyrsten Sinema after the Arizona moderate tweeted late last month that she does not support “a bill that costs $3.5 trillion” and “will work in good faith to develop this legislation” in the coming months.
As senators now prepare for their third vote-a-rama of the year, Republicans have promised a typical no-holds-barred amendment process, to both exhaust their Democratic counterparts and force them into tricky votes that can be used as fuel for future campaign-trail attacks. While amendments during the vote-a-rama are non-binding, they often touch on politically symbolic flashpoints.
Even though the Senate was scheduled to adjourn already for August recess — and senators in both parties are worn out after weeks of wrangling over the bipartisan infrastructure bill — Republicans are intent on making Democrats suffer for choosing the reconciliation route instead of negotiating a deal that at least 10 Republican senators could support.
“Initiating another budget reconciliation process in a 50-50 Senate is as willfully partisan and go-it-alone as it gets,” Senate Minority Leader Mitch McConnell said, “especially in a Senate that keeps proving we can do bipartisan work.”
While Democrats have said their final $3.5 trillion plan will be fully paid for, the budget resolution unveiled Monday assumes the legislation will add hundreds of billions of dollars to the deficit. The majority party plans to offset much of the cost of the final package with a slew of tax hikes and savings from policies like empowering Medicare to negotiate prices with pharmaceutical companies.
Democratic leaders also contend that the core policies in the package will lead to long-term economic growth and an eventual surge in revenue — the same “dynamic scoring” assumption they bashed Republicans for using to claim a lower price tag for the 2017 tax cuts. The Congressional Budget Office won’t factor in many of those assumptions, however, since programs such as universal pre-kindergarten are not expected to substantially boost the inflow of taxes for well over a decade.