Biden to reveal major spending plan that calls for revamp of tax code

President Joe Biden this week will reveal the scope and ambition of his plans to expand and reorient the U.S. government, setting the stage for a bitter fight on Capitol Hill that could define his presidency.

Biden will unveil the framework for a major infrastructure-and-jobs program on Wednesday in Pittsburgh, and later in the week offer the first glimpse of his 2022 budget—which promises to redirect federal funds to areas such as climate change and health care.

The announcements will offer the first concrete details of Biden’s plan to overhaul federal spending, in a sales pitch without the immediacy of the pandemic emergency that he had for his first package. To succeed, Biden will have to convince the public and lawmakers on a multi-trillion dollar investment in infrastructure and social safety nets, along with a revamp of the tax code to help address funding needs and widening inequality.

“Successful presidents—better than me—have been successful in large part because they know how to time what they’re doing,” Biden said Thursday when asked why he was pursuing the massive spending package instead of other legislative priorities, such as gun control. Infrastructure is “the place where we will be able to significantly increase American productivity, at the same time providing really good jobs.”

While Biden has made clear his plans will include tax-policy changes to help fund what aides have laid out as a roughly $3 trillion long-term program, how specific he’ll be on Wednesday is uncertain. His budget plan also won’t include a comprehensive breakdown about the agency-by-agency spending increases the administration is seeking.

White House Press Secretary Jen Psaki said on “Fox News Sunday” that Biden will present his infrastructure plan this week, with social initiatives including health care and child care later in April.

Republican lawmakers are already greeting Biden’s intentions with stiff opposition, as they look to build a case against tax and spending increases ahead of the midterm elections in 2022. The GOP needs just one seat in the Senate and a handful in the House to retake control of Congress and cripple the rest of the Biden agenda.

And even keeping Democrats united will be a challenge, given rising deficit concerns among moderates and escalating demands for higher spending from progressives.

Justice Democrats want $2 trillion in climate change initiatives alone. The Sunrise Movement has called for a $10 trillion bill—investing $1 trillion per year in infrastructure and climate change efforts. Some lawmakers are pushing a major Medicare expansion.

White House aides have discussed breaking Biden’s proposal, dubbed “Build Back Better,” into two separate pieces of legislation, after Republicans signaled they thought the administration was trying to shoehorn “social infrastructure”—such as child and elder care—into the package.

The idea: one bill with strong bipartisan appeal, centered on physical infrastructure like roads, bridges, waterways and broadband internet, with the other containing tax benefits for the poor and a strengthening of the social safety net. The latter, which would feature the largest tax hikes since 1993, would likely need to pass by a party-line vote.

Senate Democrats could use the same budget tool they used to pass the stimulus bill with just 51 votes—including the support of Vice President Kamala Harris—to enact part of the jobs bill. Senate Majority leader Chuck Schumer is exploring whether he has the option of doing more than one such budget reconciliation bill before Sept. 30, according to a Schumer aide.

“There are badly needed investments in our infrastructure, in R&D, in our workforce” that could lift productivity and job growth, White House economic adviser Cecilia Rouse said Friday. “That is the focus of the next round.”

West Virginia Senator Shelley Moore Capito, the top Republican on the committee responsible for transportation infrastructure, said she’s concerned the administration is trying to slip social programs under the infrastructure hood.

“We’ve got to define what infrastructure is and has been over the years—and one of those is, I mean, it wasn’t free public school and pre-K,” Capito said.

Biden’s budget office also plans to send to Congress its request for regular 2022 agency funding. That comes at pivotal moment: It’s the first time in a decade without the budget caps that were put in place by an agreement between the Obama administration and congressional Republicans. This year’s cap was $1.298 trillion.

Defense spending is expected to come in largely flat, a rebuff to Republican demands for a 3% to 5% increase above inflation. Richard Shelby, the top GOP senator on the Appropriations Committee, called for equal treatment with non-defense outlays if Biden moves to boost those.

Meantime, progressives advocate a significant shift of defense resources to the State Department for aid and diplomacy. Some 50 House Democrats sent Biden a letter this month urging him “to seek a significantly reduced Pentagon topline.”

Biden has signaled that one priority for his administration will be the fight against cancer—an issue with personal salience for Biden, who lost his son Beau to glioblastoma.

During a visit to a cancer hospital in Ohio this month, Biden floated the idea of a federally backed health research agency that mirrored the experimental role DARPA plays for the defense industry.

The effort would “deliver health breakthroughs to find cures for cancer and other diseases by investing billions of dollars that companies are not willing to,” Biden said.

That effort would likely be in addition to a boost he’s pledged for the National Institute of Health’s National Cancer Institute, building on the $1.8 billion he secured as vice president for a “moonshot” type initiative launched in the wake of his son’s death.

Other areas of NIH and the Centers for Disease Control are also expected to receive a funding boost, with money focused on emerging disease detection, treatment research, and stockpiles of supplies and equipment depleted during the Covid-19 crisis.

And the budget could provide some insight into how or whether the president aims to boost efforts to process child migrants at the U.S.-Mexico border—or address Democratic priorities like prescription-drug prices and health care costs.

The 2022 budget proposal this week won’t contain the tax revenue, mandatory entitlement-spending figures and deficit-reduction proposals that come in the usual full 10-year budget vision from the White House. That’s expected later this spring.

Amid all the looming changes, one element will be familiar to Washington watchers. If there’s no agreement on spending levels, there’s at least some risk of a government shutdown—after the Oct. 1 start of the new fiscal year.