Congressional Democrats are eyeing a repeal of former President Donald Trump’s signature tax cuts to pay for a party-line social spending package, a package loaded up with liberal priorities such as funding for racial justice programs and Medicare expansion.
Fully or partially scaling back the 2017 tax cuts is a topic on which both progressive and moderate Democrats agree as they debate a multi-trillion “human infrastructure” package. The consensus is both political and practical.
Since Democrats have no hope of attracting Republican support for a major social welfare deal, they will have to rely on the budget reconciliation process to get a repeal of the tax cuts through the Senate. The process allows spending bills to avert the 60-vote threshold required for most legislation in the evenly split Senate and pass by a simple majority of 51 votes.
But for the reconciliation strategy to succeed, Democrats have to remain united. At the moment, the feat may be impossible unless the package is paid for without borrowing new money and increasing the federal deficit.
“Everything should be paid for. How much more debt can y’all handle?” said Sen. Joe Manchin III the West Virginia Democrat who is often the key swing vote in the chamber. “I think we’ve incurred over $28.5 trillion of debt and I’d like to start paying for things.”
The easiest way to meet the goal — or at least come close — is to boost revenue by jettisoning the Trump-era tax cuts. Mr. Manchin himself suggested the idea last month, telling ABC’s “This Week” he was ready to “step forward” on the issue.
“I didn’t vote for the 2017 tax cuts under President Trump,” Mr. Manchin said then. “I thought they were weighed in too much towards the high end, if you will. I think we need to make some adjustments.”
Whether Democrats opt to repeal the tax cuts entirely or simply increase rates partially on individuals and corporations remains uncertain.
President Biden has pledged not to raise taxes on individuals making less than $400,000 annually. Mr. Manchin, on the other hand, has said he is only likely to support raising the corporate tax rate from 21 % to 25%, instead of the pre-Trump high of 35%. The final number will be influenced by how much money Democrats need to raise to pay for their reconciliation package.
Progressives are likely to have a big influence on the price tag. Some far-left Democrats have proposed spending anywhere between $3.5 trillion and $6 trillion on initiatives as far-ranging as a pathway to citizenship for illegal aliens to subsidized home care for the elderly.
“I’m going to fight to make that proposal as robust as it can be,” said Sen. Bernard Sanders, an independent and a self-described socialist from Vermont. “We want to see a reconciliation bill which shows the working families of this country that the government can and must work for them.”
As chairman of the Senate Budget Committee, Mr. Sanders play a central role in the resolution that kicks off the Senate reconciliation battle. The resolution will set the overall spending figures.
Budget Committee Democrats hope to temper Mr. Sanders’ ambitions and hammer out a deal acceptable to all factions in the party.
Democratic Sen. Jeff Merkley of Oregon, a progressive who sits on the committee, said the main focus now was on crafting a deal “the entire caucus” could get behind. Increasingly, though, repealing the Trump tax cuts is part of that calculus.
Voting to do so would not be a surprise, although it could prove a political problem for moderate Democrats on the ballot next year.
When Mr. Trump used the reconciliation process in 2017 to pass his tax cuts, no Democrat in either the House or Senate voted for passage. In 2020, numerous Democratic candidates, including Sens. Raphael Warnock and John Osoff of Georgia, followed Mr. Biden’s lead and vigorously denounced the tax cuts for being skewed to favor the wealthy.
“The tax code has always, and continues to, need targeted reform,” said Colin Strother, a Democratic political strategist. “If Democrats use a scalpel and tie each specific tax reform to a direct benefit to taxpayers, we will be successful and have a great narrative to campaign on.”
Republicans, however, already appear eager to test that thesis out, and Mr. Trump and his followers are also watching the debate over his tax cuts with deep interest.
“Democrats want major tax increases to pay for their fake infrastructure bill,” Mr. Trump said in a statement. “The tax cuts were a great achievement of the Trump Administration and the Republican Party. More importantly, they were a great victory for our nation. Do not increase them one penny.”