US Senate Democrats agree to $4.7 trillion tax, spending plan

US President Joe Biden plans to go to Capitol Hill to discuss the plan. PHOTO: AFP

WASHINGTON (BLOOMBERG) - Senate Democrats on the budget committee agreed to set a US$3.5 trillion (S$4.7 trillion) top-line spending level for a Bill to carry most of President Joe Biden's economic agenda into law without Republican support.

Democrats on the committee had been divided about the size and scope of the package, with chairman Bernie Sanders initially pushing for a US$6 trillion measure that added an expansion of Medicare, immigration reform, more generous childcare benefits and more to Mr Biden's proposal.

The budget committee agreement includes the Medicare expansion, marking a significant win for Mr Sanders. Senator Mark Warner of Virginia, a moderate, said the Bill would be "fully paid for".

"We are very proud of this plan," majority leader Chuck Schumer, a New York Democrat, said on Tuesday (July 13).

Mr Schumer said it would include dental, hearing and vision benefits for Medicare recipients but did not detail whether a proposal to lower the eligibility age will be included or if a separate proposal to lower prescription drug prices is in the plan.

Mr Biden plans to go to Capitol Hill on Wednesday to discuss the plan. The President did not immediately endorse it publicly, but White House economic adviser Brian Deese and chief legislative liaison Louisa Terrell attended the Tuesday night meeting.

Though the Senate resolution falls US$2.5 trillion short of Mr Sanders' original proposal, the Vermont independent called it "the most significant piece of legislation to be passed since the Great Depression and I'm delighted to be a part of it".

Senate finance chairman Ron Wyden told reporters discussions are ongoing about how pieces of the agenda would be paid for, and many details will be determined later. The resolution will prohibit tax increases on people making less than US$400,000 a year and on small businesses, according to a Democratic aide familiar with it.

The US$3.5 trillion top line is in addition to the bipartisan infrastructure plan, which includes US$579 billion. The total long-term economic agenda would top US$4 trillion.

"What I was excited about was the momentum in the room," Mr Wyden said.

The agreement will allow Democrats to send a budget resolution to the Senate floor containing instructions for a later tax and spending Bill that would require just 50 Democratic caucus votes plus Vice-President Kamala Harris' tie-breaker to pass.

The draft budget proposal does not yet have the support of all 50 members of the caucus and could be changed further once moderates and progressives weigh in. House Democrats are coordinating with Mr Sanders' committee but have not yet announced whether they support the new agreement.

Tax questions

Democrats plan to pay for their proposals through large business and individual tax increases, the details of which the tax-writing committees will decide.

Negotiations on the US$579 billion bipartisan Bill focused on physical infrastructure, the second part of Mr Biden's two-track economic package, made some headway after meetings earlier on Tuesday night.

Senator Rob Portman of Ohio, the lead Republican negotiator, said "about half" of the outstanding issues were resolved on Tuesday night, but a "couple dozen" remain. The goal, he said, is to resolve the remaining issues by Thursday and work on drafting the legislation over the weekend.

Mr Schumer wants to send both the bipartisan infrastructure Bill and budget resolution to the floor this month, with votes on the follow-up partisan Bill enabled by the budget resolution in the fall.

Join ST's Telegram channel here and get the latest breaking news delivered to you.