Biden’s landmark spending bill faces next battle in Senate

Joe Biden’s battle to pass a $1.75tn package to enhance the social safety net and combat climate change moves to the thorny terrain of the US Senate, after clearing the House of Representatives.

The House on Friday passed the sweeping Build Back Better bill, which includes subsidies for early childhood education, tax credits for families with children, an expansion of public healthcare for senior citizens and some $550bn in programmes to combat climate change.

The vote came just days after Biden signed into law a separate $1.2tn bipartisan infrastructure package that will fund repairs to bridges, roads, tunnels and other transport systems.

It was a significant achievement for a president who has been trying to regain momentum after months of declining approval ratings and a disappointing showing for his party in state and local elections this month.

“We will be telling our children and grandchildren that we were here this day,” Nancy Pelosi, the Democratic Speaker of the House, said after Friday’s vote.

But the Build Back Better bill faces an uncertain future in the Senate, where lawmakers are expected to wrangle over the package for several weeks. At the same time they are contending with the looming threat of a government shutdown, a potential federal default and the need to strike a deal to continue funding the US military. Chuck Schumer, the Senate’s top Democrat, has insisted all of the issues will be addressed — and Build Back Better will pass the upper chamber — by Christmas.

“The rubber is going to have to meet the road here. The House has added some things in, and it has come back to the Senate,” said Meghan Pennington, a former Democratic Senate aide now with the Washington advisory firm Hamilton Place Strategies. “It is show time for the Democratic leader [Schumer] to go to work.”

Build Back Better has already been through the Senate sausage-making machine once before, with the White House and Democratic congressional leaders engaged in lengthy negotiations with two senators — Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — to establish a “framework” to satisfy their demands. Those talks resulted in the price tag for the package being slashed from the White House’s proposal of $3.5tn to the current version of $1.75tn.

Manchin and Sinema are the two most conservative Democrats in the upper chamber of Congress, and wield outsized influence because the Senate is split 50-50 between Democrats and Republicans, with the US vice-president Kamala Harris able to cast a tiebreaking vote. Given the Republican party is resolute in its objections to Build Back Better — which they say amounts to wasteful public spending at a time of rising inflation — the White House needs the support of all 50 Democratic senators if the bill is to become law using a procedure called reconciliation to bypass Senate filibuster rules.

Jen Psaki, White House press secretary, said senior administration officials had remained “in touch” with pivotal Democratic senators even as they focused on securing approval of the spending package in the House.

“We know that is the next important step here,” Psaki said. “And I’m sure the president will engage when [it’s] the right moment to do that with them as well.”

The House version of Build Back Better includes two provisions that are likely to hit road blocks in the upper chamber. One is a reversal of a Trump-era tax policy that led to higher income taxes for wealthy homeowners in states such as New York, New Jersey and California. The other is the introduction of four weeks of paid family and medical leave for all workers.

The tax changes, which would allow people to deduct up to $80,000 in state and local taxes — commonly referred to as Salt — from their federal income taxes, were demanded by House moderates including Josh Gottheimer and Mikie Sherrill of New Jersey, a state where Democrats performed poorly in state and local elections earlier this month and are already fretting about stemming losses in next year’s midterm elections, when control of both chambers of Congress are up for grabs.

But progressive Democrats say the changes are an unnecessary handout for the rich, and budget hawks are wary of how much the changes will cost the Treasury.

The shadow of rising consumer prices also looms large for the president. While Republicans have largely sought to pin the blame for higher inflation on Biden, members of his own party have also raised red flags, suggesting the president should do more to clamp down on consumer costs.

The paid leave provisions, meanwhile, were inserted into the legislation by Pelosi after a more ambitious proposal for 12 weeks of paid family and medical leave championed by Senator Kirsten Gillibrand of New York were stripped out of the framework after objections from Manchin. Unlike other western economies, the US does not guarantee paid time off work for new mothers. Manchin has said repeatedly he would only be open to supporting a scheme if it were structured like Social Security, in which everyone pays into it.

At the same time, senators from Bernie Sanders — who has pushed for the inclusion of an expansion of Medicare to cover dental and eyecare costs for senior citizens — and Ron Wyden — who wants to impose a new tax on billionaires — have suggested that they are committed to further negotiations on their own legislative priorities.

That sets the stage for several more weeks of negotiations that could spill over into the Christmas period. Yet Democrats insist that they will not walk away from the table without a deal.

“It will go on as long as it can possibly go on,” Pennington said. “But success is the only reasonable outcome.”

Any Senate agreement would need to be sent back to the House for yet another approval vote before Biden could sign the package into law — potentially opening up the Democrats to intraparty wrangling once more.

But Pelosi struck an optimistic note on Friday, saying she would work with the Senate “so that we have agreement when it comes back down [to the House]”.

“Ninety-some per cent of the bill was written together: House, Senate, White House,” she added. “There were some differences at the end, and we will deal with those as we go forward.”