Sources: Committee for a Responsible Federal Budget, Biden American Rescue Plan.
Getting to 60 votes
President Biden’s first effort is to pass the stimulus package quickly on a bipartisan basis. That of course means getting the support of 10 Republicans in the Senate and keeping all 50 Democrats on board to overcome a filibuster. There are challenges on both sides. For Republicans, one natural litmus test is the last-minute, unsuccessful push by former President Trump to boost the December stimulus payments to households from $600 per person to $2,000. That happens to be the largest item in Biden’s proposal. By our count only four Republican Senators (Rubio (FL), Hawley (MO), Graham (SC), and Collins (ME)) publicly supported that effort. Perhaps three or four other “usual suspects” thought to be moderates may have been supportive but were either circumspect or non-vocal. Collins, along with Romney (UT), has more recently voiced concern about the overall cost of Biden’s full proposal.
To make the math even more challenging, Democrat Senator Joe Machin (WV) was explicitly dubious of the proposed boost to checks in December, citing the cost, and there are several other Democrats who may be wary. In our view, losing one Democrat is more than just losing one vote, as it will be much more challenging to gain any Republican votes if the party in power is not united. Brian Deese, director of Biden’s National Economic Council, met with a group of moderate Senators this weekend to argue the case for stimulus and reportedly received significant pushback on the total cost of the package and arguments for a smaller, more targeted effort.
The other route: budget reconciliation
A failure to get enough bipartisan support would immediately lead the Democrats to pursue their policy through the arcane budget reconciliation process, which requires only 51 votes in the Senate (50 Democrat senators plus Vice President Harris as the tie-breaker). This is already on the table, with House Speaker Pelosi reportedly telling donors last week she’d like to have the stimulus passed “in two weeks” using this method. Majority Leader Schumer alluded to it this past weekend.
We hesitate to delve into too much detail on the process and instead focus on the takeaways. Budget reconciliation was created in 1974 as a way for Congress to take some budgetary power back from the President. Accordingly, the process is designed to be solely budgetary in nature and intended as a tool for Congress to get the nation’s finances back on track in case they had drifted off course.
Legislators are restricted to items that affect revenue, “mandatory” spending, and the debt ceiling and can only use the process one time per fiscal year. Critically, the budget reconciliation process cannot worsen the budget deficit after the 10-year budget window, so eleven years after passage. Any permanent increased spending, or higher debt that adds to interest payments, then, must be made up for with increased revenue.
Over the past three decades this process has increasingly been used to implement active policy. Republicans used budget reconciliation to pass tax cut legislation in 2017 and also “removed the individual mandate” from Obamacare to buy health insurance. That may not sound like it fits the rules stated above, but it technically does. The 2017 legislation did not actually remove the mandate from the law, but simply changed the penalty from $695 to $0 (see screenshot below). This passed muster with the rules because the mandate was deemed by the Supreme Court to be a tax in 2012, so it falls in the “revenue” category for budget reconciliation.
This may seem like minutiae, but it goes to the heart of whether President Biden and the Democrats will be able to implement the proposed stimulus (as well as Biden’s broader agenda) via the budget reconciliation process. The “direct checks” of $1,400 in the proposal can be implemented as one-time tax credits (also falling into the revenue category) and sent to individuals ahead of tax filing season.
Section of the 2017 tax cut law “removing” the Obamacare individual mandate