The House Budget Committee on September 25th approved by a 20-17 vote the $3.5 trillion budget reconciliation bill that includes tax increases on corporations and wealthier individuals as well as tax incentives for renewable energy.
The approved legislation is over 2,400 pages long and a link to it is here. The Budget Committee did not amend the bill.
The tax/revenue provisions in the bill were recently approved by the House Ways and Means Committee. This section of the bill begins on page 1,243. The tax increase portion begins on page 2,109. Coverage of the House Ways and Means Committee’s debate over these tax provisions can be found here and here.
Next Steps:
The $3.5 trillion bill goes to the House Rules Committee. This committee is charged with preparing legislation for a vote on the House chamber’s floor. It can also amend bills, which is expected to happen to this legislation.
Modifications to the bill could include changes to the cap on the State and Local Tax Deduction. Potential changes could be raising the cap (from $10,000 to possibly $30,000) or repealing the cap for taxable incomes below $400,000. Another possible change could be requiring banks to report account activities above $10,000 to the IRS.
It is not clear when the House Rules Committee will take up the $3.5 trillion bill, but Speaker Nancy Pelosi (D-Calif) seeks a floor vote on it during the week of September 27th. If lawmakers commit to this timetable, then the Rules Committee must act on this legislation in the next few days.
Analysis:
The fate of the $3.5 trillion tax and spending bill is unclear. It is tied to the success of the $1.2 trillion bipartisan infrastructure bill, which has already passed the Senate but not the House.
Certain House Democrats oppose passing the $3.5 trillion bill unless the $1.2 trillion infrastructure bill has already been approved by the chamber.
Other House Democrats have promised to oppose passage of the infrastructure bill until the $3.5 trillion tax and spending bill is approved by the House and the Senate – this a very tall order.
House Republicans are not expected to support the $3.5 trillion bill and only a handful of them might support the infrastructure bill. This means that Democratic support is essential in passing both bills and the current divide within the democratic caucus makes for a foggy picture in determining if passage for either legislation is possible.
Despite the uncertain fate for both bills, President Joe Biden’s approval rating is declining and passing at least one of these measures could help turn his numbers around. This puts pressure on all congressional Democrats to find a way to support these pieces of legislation.
One option to shore-up Democratic support could be lowering the overall cost of the $3.5 trillion bill. There is talk of dropping the price tag to $2 trillion. A drop in the cost would reduce the number of tax increases included in the bill and could entice more Democrats to support it. If such support were to materialize, that could induce more Democratic support for the infrastructure bill.
If both bills pass the House, their paths will then diverge. The $1.2 trillion bipartisan infrastructure bill can be signed into law by President Biden. The $3.5 trillion tax and spending bill travels to the Senate where lawmakers in that chamber are expected to modify it.
If the House and Senate produce different bills, those differences must be hashed-out before the legislation can pass Congress. Reaching consensus will be time consuming and a finalized product might slip into October, or even later. At this point it is hard to predict.
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