Chop-Chop: Biden's $1.75 Trillion Bill Facing Further Cuts in US Senate, Academics Say

Joe Biden's revamped $1.75 trillion social spending bill might be further trimmed in the US Senate, according to The Hill. American academics Ross Baker and Charles N. Steele have weighed up what parts of the bill are likely to be snipped by moderate Democratic senators.

Joe Biden's landmark bill was passed on Friday in a 220-213 vote in the House of Representatives, receiving zero support from the Republicans. The president's original Build Back Better package amounted to $3.5 trillion but shrank to a slightly less ambitious $1.75 trillion after moderate Democrats, including Senators Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Az), expressed concerns over what they called excessive spending. Narrow margins in the House and an evenly split Senate require almost unanimous support from the Democratic lawmakers for the legislation to pass.

Increased Taxes and Growing Debt

While the Build Back Better bill is heading to the upper chamber, neither Manchin nor Sinema have signalled that they approve of it. “No, no, I’m still looking at everything,” the West Virginia senator said, as quoted by The Hill. According to the newspaper, Manchin is still opposed to including paid family leave in the package. Furthermore, the Democratic senator may delay the social spending bill until 2022 over inflation fears, as Axios suggested earlier this month.

For her part, Sinema has reiterated that she wants to ensure that, "any spending that we do is targeted, so that it's efficient and effective" and "fiscally responsible". Time is running out for the Democrats, who are hoping to pass the bill by Christmas.

"There have been some intense talks going on between Speaker Pelosi and the two Senate Democrats most lily to demand changes in the Build Back Better bill that recently passed the House," says Dr. Ross Baker, a political science professor at Rutgers University in New Jersey.

It is impossible to predict "how the political horse-trading and arm-twisting might go", according to Charles N. Steele, a professor at Hillsdale College in Michigan. He notes that Manchin is highly concerned that the Build Back Better bill will add to the already bloated national debt.

"Forecasts of the impact on the debt seem highly sensitive to assumptions of the modellers," explains the academic. "The White House claims a zero impact on the debt, but the Congressional Budget Office (CBO) forecasts an increase between $160 billion and $367 billion, depending on the details. The Penn Wharton School models a scenario in which the spending and revenue provisions are made permanent and give a $3.5 trillion debt increase over ten years."

In addition to this, the bill calls for tax increases and increased tax enforcement, Steele notes, adding that the Treasury Department claims that tax enforcement will provide at least $400 billion in new revenue without raising taxes. However, the professor believes that these assertions are "just playing with words": "This would constitute an effective tax increase, with the usual deadweight losses and suppression of employment and economic growth", he says. Moreover, it is likely that the Treasury has greatly overestimated the revenue from increased enforcement, since the CBO finds a much smaller effect, according to Steele.

"There is a tendency to overestimate revenues, because those bearing the increased tax burden take actions to protect their earnings," Steele says. "There is also a tendency to underestimate spending; politicians and bureaucrats have an incentive to go over budget. I think it's almost certain the Build Back Better bill in any form would add to the debt, if passed. It is easy for politicians to spend money they don't have; that's how they buy political support. That explains why national debt seems to grow without end, until the crisis calls a halt."

Potential Cuts: Child Care, Pre-K Spending & Green Energy Subsidies

The professor does not rule out that Manchin and Sinema will vote for the bill if its price tag is further reduced. Eliminating child care and pre-K spending and some of the green energy subsidies, would be most likely, according to him.

"The most significant obstacle and likeliest casualty will be the family and medical leave provision in the House bill," suggests Baker. "Democratic Senator Joe Manchin claims that it is too generous and his concerns will have to be met or the Democrats won't have the 50 votes in the Senate that will need to pass the bill."

Then the bill will be sent back to the House where it is likely to come under fierce criticism from progressive Democrats. However, a potential dissent from the progressive caucus in the lower chamber could be overcome if some Republicans are brought on board, Steele believes.

"Does the bill have a chance of passing? Perhaps," Steele says. "It ultimately depends on the behaviour of what Adam Smith calls "that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs".

Meanwhile, President Biden signalled that he would sign the social spending bill, even if it is further reduced by Senate Democrats. "I'm going to sign it, period!" Biden told CBS News when asked whether he would still ink a Build Back Better package without paid family and medical leave.

The president's approval ratings are continuing to plummet and one of the possible reasons is that he cannot unify his own party to pass his landmark initiatives, The Atlantic presumes. "If that’s true, it helps explain why Biden’s slide has been particularly driven by eroding support among Democrats and independents," the media outlet says. "The party’s a mess, and people who voted for it are annoyed."