White House faces grueling choices as major cuts hang over Biden economic package
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WASHINGTON - Under pressure from centrist lawmakers, White House officials are debating whether to drop many cherished priorities from President Joe Biden's sprawling economic package or keep a fuller range of initiatives in dramatically reduced form, according to five people with knowledge of internal discussions.
Even as Democratic leaders on Capitol Hill haggle over the overall size of the massive budget package, White House officials on the National Economic Council (NEC), the Domestic Policy Council and the Council of Economic Advisers (CEA) have begun discussing what policies could be reshaped or jettisoned should Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz., insist on trimming as much as $2 trillion from the administration's initial spending proposals, said the people familiar, who spoke on the condition of anonymity to discuss private deliberations.
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Desperate to find a compromise that can win favor in a narrowly-divided Congress, White House officials have begun contemplating painful trade-offs that could involve shrinking key parts of their agenda. Biden has pitched lawmakers on a compromise that would include as much as $2.3 trillion in new spending, but Manchin has said the package should top out at $1.5 trillion - a position that would slash the administration's original agenda by more than half.
The choices are stark: Should tackling rising rates of homelessness be dropped in favor of confronting climate change? Should Democrats prioritize seniors over the poor? Is it more important to reduce the cost of child care or the cost of a school lunch?
While many senior Democrats are urging Biden to choose a handful of programs and execute them well, this option is complicated by a lack of consensus about which priorities should prevail. Meanwhile, no lawmaker wants to see his or her favored program cut entirely from the legislation.
But keeping a larger number of policy initiatives also would entail difficult trade-offs to bring down the overall price of the package. Programs would have to be made temporary or sharp limits would have to be placed on who qualifies. Even Biden's $2.3 trillion offer would require more than $1 trillion in cuts from his initial plan.
"The president and his team have to make some very tough decisions here. There will have to be some real serious cuts to key priorities," said Jim Manley, who served as an aide to former Senate Majority Leader Harry Reid, D-Nev. "The cuts required are going to be really ugly and really painful."
Either path has major drawbacks. By picking only a few programs to implement, the White House likely would improve its odds of ensuring lasting change through achievements noticed by the public. In private conversations, people close to the White House have argued that choosing a handful of key programs - and making sure they reach tens of millions of people - would help fortify their ability to withstand attack under future GOP administrations.
The Affordable Care Act, which Republicans failed to repeal after it extended health insurance to millions, is as an instructive example, key Democrats say. Social Security and Medicare benefits - which similarly reach a majority of Americans - have also proved next to impossible for conservatives to trim or dislodge. Several officials in both the NEC and the CEA share this view, according to four of the people familiar with internal talks, but it is not clear how widespread that view is held within the administration - or if the president himself agrees.
On Friday, the president said "even a smaller bill can make historic investments" - though he did not indicate whether he prefers a broader array of temporary programs or a smaller number of programs with permanent funding.
In an interview, former Obama administration economist Jason Furman argued that "if Congress needs to shrink the legislation, it is much better to drop the lowest priority programs than to try to do everything."
"As tempting as it may be to sunset programs in the hopes they are extended in the future," Furman said, "most of these programs are not popular enough to make extension inevitable or even likely."
Another economist, speaking on condition of anonymity to reflect private conversations, said she had relayed similar advice to the White House. Centrist House Democrats in the New Democrat Coalition have similarly urged the White House to focus on executing a few programs, listing the child tax benefit and expansion of Obamacare as among their priorities, according to a spokesman for the group.
"What we're telling them is: You start to whittle down the top-line number, and suddenly you're not doing any one particular thing well," this economist said. "You really don't want to roll out a huge number of programs all poorly."
The challenge with pursuing this route, however, is that it would require Democrats to entirely ditch other programs that key parts of the party believe require urgent government investment.
If constrained to $1.5 trillion, Democrats could only fully fund a handful of their most important policy priorities. For instance, Democrats would already come close to reaching that number in spending if, hypothetically, their plans consisted of just three top priorities - tackling climate change, creating a national paid leave program, and extending a tax benefit that alleviates child poverty.
Together, those three initiatives would represent a substantial expansion of the American welfare state, as well as a significant step toward Biden's goals for combating climate change. But a package that contained only those initiatives would jettison an enormous number of priorities many Democrats campaigned on, including universal prekindergarten, free child care, more affordable housing, and a dramatic expansion of government-funded health care.
Democrats' health care goals alone could cost in the range of $750 billion if extended over the next decade. House Speaker Nancy Pelosi (D-Calif.) wants to spend hundreds of billions of dollars on new Obamacare subsidies, while Senate Budget Committee Chairman Bernie Sanders, I-Vt., wants to spend hundreds of billions of dollars to add dental, vision and hearing benefits to Medicare. Other Democrats, such as Sen. Raphael Warnock, D-Ga., are pushing to expand Medicaid eligibility to poor Americans in Republican-run states that so far have refused to take advantage of extra Medicaid dollars made available under Obamacare.
Health care was a key plank for Democrats in both the 2018 and 2020 campaigns, and failing to meaningfully address the issue could lead to blowback from voters in future elections.
"Democrats have raised expectations for a year about these health care expansions, and it will be very hard to back away from any of them," said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, a nonprofit focused on health care.
Some people close to the administration argue that Biden would be better off providing temporary funding for a larger number of new initiatives in the reconciliation package and seeing what sticks. Approving programs that only last until the next election also would allow Democrats to make their desire to permanently extend those programs a key selling point in next year's midterm campaigns.
"In most of these areas, you can get a foot in the door and really create momentum for going forward," said Dean Baker, an economist at the Center for Economic and Policy Research, a left-leaning think tank.
A bigger package also would increase the odds of uniting the fractious Democratic caucus, which holds razor-thin majorities in both the House and Senate.
Economist Larry Summers, who served under presidents Bill Clinton and Barack Obama, pointed to Franklin Delano Roosevelt's New Deal as an example of "getting a lot of things started" and hoping the effective ones persist. Summers also acknowledged the potential drawbacks of such an approach.
"The lesson of successful democracy is you plant a lot of seeds, and some of them grow really well and some of them don't," Summers said. "The New Deal was a lot of different programs, too."
But other policy experts are skeptical of creating programs that could abruptly expire with no guarantee of extension. The Biden administration has struggled to implement key parts of the economic stimulus plan passed last March, and a rapid timetable for distributing the money could pose added logistical challenges. Since the start of the pandemic, the U.S. government has lurched from one enormous benefit cliff to the next, fueling a sense of unease among the unemployed, whose benefits have stopped and started multiple times.
"You want sustainability, you want permanency, you want to be able to plan ahead of time. By having these cliffs start and stop, you create uncertainty and it makes it hard for families to plan," said G. William Hoagland, a senior vice president at the Bipartisan Policy Center.
"When you have these cliffs, you have no guarantee that the programs people rely on will continue. It adds a great deal of consternation and angst to what is really a lot of uncertainty on many fronts in the world. It's uncertainty on top of uncertainty."
But choosing inaction on critical policies would also invite howls of protest. The White House has, for instance, documented a severe housing shortage, with rents skyrocketing and the number of homeless people increasing during the pandemic. Still, policy experts, lobbyists, and congressional aides believe the administration's housing proposal, which called for more than $300 billion to build or retrofit over three million housing units, may prove among the first to hit the cutting room floor.
"The whole shrinking of the pie pits Medicare recipients against poor families against home care workers against victims of climate change," said Faiz Shakir, who was Sanders' campaign manager. "It makes the working class of America fight over scraps."
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