by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
June 22, 2021
LIKE THE PROVERBIAL KID IN A CANDY STORE, Senate Budget Committee Chairman Bernie Sanders is circulating a new spending plan that far exceeds President Biden’s proposals, focusing on higher outlays in the fiscal 2022 budget for health care, tuition aid, housing, broadband — and even a partial restoration of the state and local tax break.
WHILE TALKS DRAG ON to pass an infrastructure package, Sanders is on a separate track, seeking passage of a budget resolution that will provide the road map for Congressional committees as they vote on spending for the new fiscal year, which begins on Oct. 1.
THIS BUDGET RESOLUTION may be the bill that passes via the reconciliation process. Sanders, the self-proclaimed Democratic Socialist, might have just enough votes to move a massive spending bill; as of now, he would exceed Biden’s spending wish list by $1.6 trillion over the coming decade.
THE SANDERS PLAN, which has fewer tax revenues than Biden’s package, would add about $3 trillion to the deficit over the next decade, while Biden’s bill would add $850 billion in red ink.
HEALTH CARE TOPS THE LIST: About $500 billion of the spending increase over Biden’s plan would expand Medicare to include dental, vision and hearing coverage while lowering the minimum age of eligibility from 65 to 60, according to a summary of the Sanders plan, reported in this morning’s Roll Call.
OTHER SANDERS PROPOSALS: He would increase the Biden budget by $74 billion for other health care programs, including $25 billion for hospital construction and modernization; $19 billion for veterans’ dental care; $18 billion more for graduate medical education; and an extra $12 billion for maternal and behavioral health programs.
SANDERS WANTS TO SPEND about $330 billion more than Biden on affordable housing programs, including a new multiyear rental voucher program for low-income families. And he would spend $140 billion more on free college tuition and child care, according to Roll Call.
SANDERS ALSO WOULD SPEND $75 billion more in grants for electric buses; $50 billion on top of Biden’s plan for a proposed “Civilian Climate Corps”; $39 billion more for residential solar build-outs; and $20 billion more for electric vehicle charging infrastructure.
THE SANDERS PLAN’S TAX INCREASES would be about $1.2 trillion less than Biden’s proposal. Some of the Sanders “pay fors” would come from prescription drug price controls, but there would be a surprising tax cut — some relief on the SALT tax, which is loathed by progressives as a give-away to the rich.
BUT SANDERS KNOWS he will need the backing of virtually every Democratic member of the House, and over a dozen Democrats adamantly oppose a budget deal that doesn’t have some SALT relief. So Sanders may seek to restore the break for a couple of years or he may attempt to impose a lower dollar amount than the previous SALT tax break before it was whacked.
BOTTOM LINE: This enormous grab bag will encounter some pushback from moderate Democrats and from virtually all Republicans. As we wrote yesterday, getting a debt ceiling extension will be difficult enough without interference from the Sanders plan, which he considers a once-in-a-lifetime opportunity to greatly expand the role of government.
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This post was first published at the AGF Perspectives Blog.