Senator Joe Manchin, D-W.Va., recently gave a news conference where he called the Biden administration’s spending proposal a “shell game” filled with “budget gimmicks,” saying the Democrats artificially reduced the price tag of the bill and claimed the actual cost was likely to double that amount.
“This is a recipe for economic crisis,” he warned, while also suggesting that he would not support a bill before understanding its potential impact on the economy.
Biden and his administration have touted President Biden’s Build Back Better plan as a way to bolster child care and tackle climate change. They also claim the package will be fully paid for by an estimated $2 trillion in tax increases on high earners and corporations.
Budget experts, along with moderate Democrats and Republicans, say the actual cost of the legislation will be closer to $4 trillion because of the way the programs are accounted for and structured for the budgetary process.
The fiscal watchdog group the Center for a Responsible Federal Budget concurred, saying the bill could be around $4 trillion given the number of programs that expire and need to be renewed.
The expiring programs include an expanded earned income tax credit and an increased income tax credit that would last for only a year, as well as expanded Affordable Care Act premium tax credits that would last only four years, and universal pre-K, which would last for six years.
Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, compared the situation to 2017, saying, “It’s similar, but it’s much more egregious. They’re cutting the bill in half, more than in half, by having things expire early.”
Economic impact uncertain
The legislation’s overall impact on the economy is uncertain, despite the Biden administration’s assertions that it would spur economic growth.
According to the Treasury Department, the legislation will “generate net deficit reduction” by raising taxes on wealthy Americans and big companies. However, according to the recently-released Penn Wharton Budget Model, the cost of the House bill will not be covered long term by tax increases and will create a drag on economic growth as well as add to deficits.
Republicans and conservative groups have criticized the Democrat plan and called for a rigorous accounting of the legislation.
“Hiding the details of the real cost of the trillions of dollars in new government spending and tax increases by using budgetary gimmicks is an attempt to disguise the true cost and impact the reckless tax and spending spree will have on the nearly $29 trillion national debt, rising prices, jobs and inflation,” Senate GOP leaders said in a letter.
Passage of the Senate reconciliation bill remains uncertain with moderates holding out for the score by the Congressional Budget Office.