House Democrats on Friday passed their mammoth social spending and climate plan in a 220-213 vote, securing a major victory for the party ahead of the Thanksgiving break and providing a boost to President Biden at a tumultuous moment for his administration.
The vote came a half-day later than scheduled, a delay caused by House Minority Leader Kevin McCarthy (R-Calif.), who had commandeered the floor Thursday night for more than eight hours with an angry, rambling speech protesting legislation he warned would send the country into an economic tailspin.
“What I saw is that if you take Treasury estimates on the IRS provision, we end up with a surplus,” said Rep. Stephanie Murphy (D-Fla.), a co-chair of the moderate Blue Dog Coalition. “And I have received sufficient information to understand how Treasury gets to their estimate, because they’re the ones that implement the IRS provisions.”
Republicans quickly panned such arguments and accused Democrats of breaking their promise to pass a bill that’s deficit neutral.
“Contrary to President Biden’s repeated claim that this bill will cost zero dollars, it will actually cost trillions,” said Rep. Tom Cole (Okla.), senior Republican on the House Rules Committee.
Friday’s vote caps months of messy infighting between liberal and moderate House Democrats who have jousted over the size, scope and strategy surrounding the multitrillion-dollar package, a cornerstone of Biden’s economic agenda.
The public divisions have helped to drag Biden’s approval numbers underwater and have shadowed the party’s efforts to utilize their control of Congress and the White House ahead of the 2022 midterm elections, when they are looking to defend slim majorities in the House and Senate.
Democrats have pressed ahead to pass popular legislation in the face of rising inflation, an ongoing COVID-19 crisis and a disastrous showing in state elections around the country earlier in the month, including a stunning loss in the high-profile Virginia governor’s race.
“I thank Speaker Pelosi and the House leadership and every House member who worked so hard and voted to pass this bill,” Biden said in a statement Friday morning. “For the second time in just two weeks, the House of Representatives has moved on critical and consequential pieces of my legislative agenda.”
The House vote, which sends the spending package to the Senate, comes just days after Biden signed into law a $1.2 trillion bipartisan infrastructure bill — back-to-back victories Democrats hope will demonstrate their governing chops and give them something to tout back home.
“I wish we didn’t have to go through the public discourse,” Rep. Norma Torres (D-Calif.) told reporters on Thursday, adding she was “really happy” where Democrats stood.
The social spending bill includes a host of policies that Democrats have sought for years, or even decades. The list includes child care subsidies, universal preschool, paid family leave, renewable energy tax incentives and extensions of both the expanded child tax credit and enhanced ObamaCare subsidies.
It also features efforts to slash prescription drug prices for seniors — a provision Speaker Nancy Pelosi (D-Calif.) has tried to pass, unsuccessfully, since her first stint with the gavel in 2007.
All told, Pelosi said, the package “is a spectacular agenda for the future, with transformational action on health care, family care and climate that will make a significant difference in the lives of millions of Americans.”
To help offset the cost of the new spending and tax cuts, the legislation includes a series of tax increases for high-income households and corporations, such as a surtax for multimillionaires and a 15 percent minimum tax for large corporations.
The costs of the bill are also partially neutralized through increased funding for IRS enforcement — empowering the agency to go after tax cheats — and the savings generated by reducing the cost of prescription drugs under Medicare.
It was the IRS provision that led to the disagreement between the White House and the CBO over whether the package was fully paid for. The CBO’s revenue number was much lower than the administration’s, producing the $160 billion deficit figure. But the discrepancy was well known among moderate Democrats ahead of time, which freed most of them to support the package.
“That seems to be a matter of opinion,” said Rep. Kurt Schrader (D-Ore.).
Debate over the bill now shifts to the Senate, which is expected to consider it after the Thanksgiving break.
“As soon as the necessary technical and procedural work with the Senate Parliamentarian has been completed, the Senate will take up this legislation,” Senate Majority Leader Charles Schumer (D-N.Y.) said in a statement on Friday. “We will act as quickly as possible to get this bill to President Biden’s desk and deliver help for middle-class families.”
Senators plan to make a number of changes to the legislation, including potentially removing the family leave benefit, which has drawn concerns from Sen. Joe Manchin (D-W.Va.), a prominent moderate whose vote is crucial to the success of the package.
In addition, Senate Democrats have indicated that they want to take a different approach to rolling back the $10,000 cap on the state and local tax deduction, known as SALT, which was created by the Republicans’ 2017 tax law. Some Senate Democrats think the House approach is too beneficial for high-income taxpayers — a dynamic highlighted relentlessly by Republicans, who are accusing Democrats of showering undue tax cuts on the wealthy.
“Democrats are rewarding their wealthy friends while sending the bill to the working families who are already paying more to put food on their tables, gas in their cars, and clothes on their backs,” said Rep. Jason Smith (Mo.), senior Republican on the House Budget Committee.
Changes in the Senate would send the legislation back to the House for a final vote before it can reach Biden’s desk. Democrats are hoping to wrap up the entire process by the end of the year.
“This is the end of the beginning,” said Rep. Dean Phillips (D-Minn.). “We all expect it will be further modified before coming back to us. But to keep the ball rolling, I think it’s important” to advance it through the House.
Pelosi acknowledged that the Senate will make changes to the bill, adding of the final legislation, “Whatever it is, it will still be transformative and historic. And I don’t fear that.”
Democrats have been advancing the bill using a complex process known as budget reconciliation, a strategy that would allow them to pass it through the evenly split Senate by a simple majority, bypassing a certain Republican filibuster.
In the House, unanimous opposition from Republicans meant that Pelosi could afford only three defections to pass the bill. That razor-thin margin gets even smaller in the 50-50 Senate, where Democratic leaders will need the support of all their members, the two Independent senators who caucus with the party and a tie-breaking vote from the vice president to secure passage.
But remaining unified has been a difficult task for Democrats amid disagreements over the size and the contents of the package — clashes that have delayed House passage for months.
Leadership had initially set their sights on passing the ambitious spending plan in September, but that plan was punted through October and into November as progressives warred with moderates over spending.
House progressives had insisted that passage of the spending package and the infrastructure proposal be linked to ensure that moderates, leery of the initial $3.5 trillion price tag for the larger bill, would ultimately back it.
Democratic leaders then tried to pass the social spending plan in the first week of November. It was blocked by moderates demanding a CBO score. That impasse led to a deal struck between the moderates and progressives under which the moderates committed to backing the spending package once they received more “fiscal information” from the CBO. In return, the liberals supported the infrastructure package, which passed on Nov. 5 and was signed into law on Monday.
The social spending package is the more contentious of the two. The CBO released a full cost estimate of the bill early Thursday evening, finding it would add $367 billion to the deficit over 10 years. That figure didn’t take into account the CBO’s estimate of $207 billion in revenue that would be raised by increased IRS funding for enforcement. Combining the two factors yields the $160 billion in deficit spending.
The Treasury Department has estimated that the IRS funding provision would raise considerably more money than the CBO has estimated. And Treasury Secretary Janet Yellen said in a statement Thursday that the bill is completely paid for when looking at the combination of CBO and Treasury analyses.
“With this bill, members of Congress have a unique opportunity to put our economy on a path to increased growth, productivity, labor force participation, and equity, while ensuring we do not burden future generations with unsustainable debt,” Yellen said. “I urge them to pass it.”
Republicans spent the debate preceding the vote delivering the same message they’ve delivered throughout the months-long process, warning that the massive spending bill represents a gross case of government overreach that will only pile onto the deficit, exacerbate inflation and expand entitlement programs that the country simply can’t afford.
They also accused Democrats of ramming an enormous bill through the lower chamber without ample time to weigh the impact of its many provisions. It was an attack line immediately dismissed by Democrats, who pointed to the many hours of committee hearings and markups that preceded Friday’s vote.
“We’ve [had] exhaustive debate for months here about the bill. I think it’s been vetted from A to Z,” said Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee. “We feel very strongly that there was sufficient opportunity there for people to hear what we wanted to do with this legislation.”
Updated at 10:22 a.m.