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Senate Democrats prepare to tweak House reconciliation package

Roll Call logo Roll Call 6 days ago Lindsey McPherson
a man wearing a suit and tie: Senate Majority Leader Charles E. Schumer, D-N.Y., leaves the Senate Democratic Caucus lunch in the Capitol on Tuesday. © Provided by Roll Call Senate Majority Leader Charles E. Schumer, D-N.Y., leaves the Senate Democratic Caucus lunch in the Capitol on Tuesday.

Senate Democrats on Tuesday began vocalizing the many ways in which they expect their reconciliation package to differ from the legislation House committees have been marking up, with some of the biggest disagreements occurring in the tax, health care and climate policy arenas. 

The Senate Finance Committee wants to directly tie energy tax credits for business to a reduction in their carbon output, to ensure millionaires and billionaires cannot pass on stocks and other assets to heirs without having to pay taxes and to increase financial reporting for tax compliance. Those are goals panel Democrats say the House Ways and Means Committee legislation does not meet. 

The Finance panel, which also has jurisdiction over health care entitlements, also wants to accelerate the expansion of Medicare benefits, potentially through vouchers, compared to the House version of the bill that does not begin new dental benefits until 2028.

Other Senate panels are eying different ways to structure spending on child care, a Civilian Climate Corps and workforce development programs, among other differences. 

The House is much further along in the process, with all 13 committees that received reconciliation instructions under the fiscal 2022 budget resolution scheduled to conclude their individual markups Wednesday. Those pieces will be transmitted to the Budget Committee to package together, likely next week. The package is then sent to the Rules Committee, where significant changes are likely to be made before the legislation goes to the House floor. 

Under a deal Speaker Nancy Pelosi, D-Calif., struck with centrist Democrats last month, the House is expected to try to resolve major differences between their product and the Senate’s version before voting on the package. The centrists, concerned about political attacks, don’t want to vote on some of the party’s most progressive ambitions that won’t become law.

Senate Democrats, meanwhile, held what is expected to be the first of many caucus-wide discussions on the legislative proposals their 12 committees with reconciliation instructions have started putting together. 

Majority Leader Charles E. Schumer, D-N.Y., said some Senate committees, but not all, have met his goal of producing text by Sept. 15, but they all contributed to a PowerPoint presentation used to provide senators a status update during their weekly Tuesday lunch. 

“It took about 35-40 minutes on everything that has been agreed to between House and Senate. That’s eight committees,” Schumer said. “And the four committees where there hasn’t been an agreement we went over the Senate positions.”

Schumer didn’t provide a formal deadline for the Senate to complete its work or resolve differences with the House, but he said “there’s going to be a lot of intense discussions and negotiations over the next few weeks.”

In addition to the policy details, the majority leader acknowledged members of his caucus are still divided over the proposed $3.5 trillion topline. But Schumer said he’s confident all 50 Democrats will reach agreement on “a strong, robust plan that includes every part of what [President Joe] Biden has asked for.”

Tax differences 

One of the widest gaps between the House Ways and Means Committee’s tax proposals and what the Senate Finance Committee wants to do is on energy tax policy. 

The House panel would modify and expand a hodgepodge of tax breaks under existing law, including production and investment tax credits for solar, wind and geothermal. But the Senate tax-writing committee has sought to replace most current law incentives with just three credits that scale up or down based on reduced emissions or energy usage.

The two chambers have been heading in different directions on energy tax policy all year, and have yet to make any significant headway in compromising with just weeks left now to resolve their differences. 

“Under our proposal for the first time, tax savings would be tied to reducing carbon emissions,” Finance Chair Ron Wyden, D-Ore., told reporters. He said Ways and Means has “moved a ways in our direction” but “they still have not put in place the game changer … if you still get your tax break without tying the tax break to actually reducing carbon emissions in this country.” 

The Finance panel’s energy tax proposal is the only one the committee has actually marked up and is a top priority for Wyden. He’s introduced plenty of other tax legislation, mostly for raising taxes on corporations and wealthy individuals, but Finance is not expected to mark any of those bills up. 

Wyden hasn’t solidified his approach, saying he plans to discuss the “menu of options” with other Senate Democrats. But he’s made clear there are some things the House left out of its package he wants to address, like a mechanism to ensure that millionaires and billionaires cannot avoid paying taxes on their fortunes simply by holding onto assets and passing them down to heirs to do the same. 

“I feel very strongly that billionaires who did extraordinarily well in the pandemic should make tax payments, just like nurses and firefighters,” Wyden said. 

The Finance Committee is considering multiple proposals for taxing wealth. One would eliminate the “stepped up basis” provision in current law that resets the value of inherited property to the date of death, basically erasing any capital gains that would otherwise be subject to tax. That was included in Biden’s budget proposal. Another option not in Biden’s budget that Wyden has floated is “mark-to-market,” which would annually tax unrealized gains like stock holdings. 

Sen. Chris Van Hollen said the Senate is looking at adding the second of Biden’s proposals for bolstering tax enforcement to collect more revenue that the House is excluding. “They didn’t propose any changes in [bank] reporting requirements, which are a big part of trying to make sure that people are paying taxes already due and owed,” the Maryland Democrat said.

Wyden and Van Hollen both acknowledged that the Senate’s extension of the expanded child tax credit enacted under the March coronavirus relief law may not end up aligning perfectly with the House proposal given the cost, but that they are trying to extend it as long as possible. 

The House has proposed extending the expanded credit of $3,000 per child, or $3,600 for children under 6 years old, through 2025 but permanently making the full credit refundable so that low-income individuals who don’t have tax liability can receive the benefit. 

“A key piece of that is making sure the refundability portion actually extends on forever,” Van Hollen said. 

Added Wyden: “I feel very strongly about securing that.”

Health care, climate differences 

The House and Senate also diverge on health policy. Wyden has suggested he is likely to offer a somewhat different proposal for allowing Medicare to negotiate drug prices than the House version, but he declined to get into details on Tuesday.

A gripe that several Senate Democrats have raised with the House proposals for expanding Medicare benefits is that their 2028 effective date for beginning dental coverage is too far away. Part of the rationale that House lawmakers have given is that adding dental benefits to Medicare is more complicated than the hearing and vision benefits that would kick in sooner under their plan since doctors who treat the latter already accept Medicare payments, but dentists do not. 

Senate Budget Chairman Bernie Sanders, I-Vt., has floated Medicare vouchers as a potential transitionary tool, which Wyden confirmed is among the proposals senators are discussing. 

“I’m talking with Sen. Sanders about the best way to get this up and running efficiently as quickly as possible,” he said.

Sanders and House progressives have also pushed to lower the Medicare eligibility age, but that’s not in the House measures moving through committee. Wyden signaled it may not make it in the Senate version either but he declined to say it’s off the table, saying only that his “first priority” is providing Medicare dental, hearing and vision coverage. 

The Senate Health, Education, Labor and Pensions Committee is also taking a different approach to the House on some issues, like the design of its child care program, according to panel member Sen. Tim Kaine. The Virginia Democrat said the child care spending totals are “pretty close” and the differences are more in the way the program is structured.

Kaine also said Senate Democrats have differences with the House on the proposed Civilian Climate Corps and workforce development pieces. 

“But these all seem to be the kinds of things that do get hammered out,” he said. “There didn’t seem to be differences that won the Super Bowl.”

A big unknown is how Senate Energy Chairman Joe Manchin III, D-W.Va., who opposes climate programs that fully shift away from fossil fuels, will handle negotiations with the House. He’s already signaled opposition to the House Energy and Commerce plan to spend $150 billion on a Clean Electricity Performance Program that would require utility companies to use more sustainable fuel sources. 

“They’re wanting to pay companies to do what they’re already doing. Makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions,” Manchin said Sunday on CNN.

Chris Cioffi, David Lerman and Jennifer Shutt contributed to this report. 

The post Senate Democrats prepare to tweak House reconciliation package appeared first on Roll Call.

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