U.S. markets closed
  • S&P 500

    -38.67 (-0.84%)
  • Dow 30

    -59.71 (-0.17%)
  • Nasdaq

    -295.85 (-1.92%)
  • Russell 2000

    -47.02 (-2.13%)
  • Crude Oil

    -0.28 (-0.42%)
  • Gold

    +21.40 (+1.22%)
  • Silver

    +0.25 (+1.12%)

    +0.0012 (+0.10%)
  • 10-Yr Bond

    -0.1050 (-7.25%)

    -0.0067 (-0.50%)

    -0.4090 (-0.36%)

    -3,358.95 (-5.97%)
  • CMC Crypto 200

    -74.62 (-5.18%)
  • FTSE 100

    -6.89 (-0.10%)
  • Nikkei 225

    +276.20 (+1.00%)

Why it’s important for Democrats to fully pay for the reconciliation bill

Ben Ritz, Progressive Policy Institute Director, joins Yahoo Finance to discuss PPI’s blueprint on the top priorities that should be included in the reconciliation bill and the reception of PPI's report on Capital Hill.

Video Transcript

KARINA MITCHELL: Well, the Progressive Policy Institute has released a blueprint for delivering on President Biden's promise to building back better. That as Democrats try to strike a deal amid a divided party. Here to discuss what the priorities need to be is Ben Ritz, Progressive Policy Institute director. Ben, thank you so much for being here. So we've heard that Democrats are planning to make some key-- possibly to two-year free college tuition, extended child tax credits as well. In your opinion, what needs to be included?

BEN RITZ: So our blueprint focuses on three key priorities that we think are essential for Democrats and that they can unite behind in a $2 trillion package and that they can deliver on these programs permanently. So the first thing we do is we propose $975 billion to support working families with a permanently expanded child tax credit, universal pre-K, and workforce development programs for people who don't go to college before working.

Next, we propose $600 billion for tax credits and other incentives that would encourage the adoption of affordable electric vehicles and other green technologies to combat climate change. And finally, we propose $425 billion to strengthen the Affordable Care Act by giving coverage to working families who don't already have it. And we pair that with other measures to control health care costs.

JARED BLIKRE: Well, one of the tricks that we're seeing-- that I'm seeing enacted in Washington right now to lower the total 10-year cost of the bill is to simply keep the yearly cost, but do it for a shorter period of time. So if there's a $100 million line item that would cost a billion dollars over 10 years, just do it for five years so now it's only $500 million. This has been done before, but not without cost. So what are some of the pros and cons here?

BEN RITZ: Yes, so our report is pretty strongly against that approach. And there are two main reasons why. The first is that temporary programs actually can expire. Think about what happened with the Affordable Care Act in 2017 when Republicans had to try to muster 50 votes in the Senate and 218 in the House to actively repeal it. And ultimately, they couldn't get it done because it was too popular. But if House Republicans had been able to just sit on their hands while President Obama's signature achievement just expired, they likely would have, and it would be gone today.

I think the second main reason is that shortening the duration of the programs doesn't actually address moderates' concerns about the bill and how it's paid for. You can't use 10 years of revenue to pay for five years of spending if you want to make those spending programs permanent, which everyone who votes for this bill ostensibly does. The offsets really have to line up with the spending.

KARINA MITCHELL: And Ben, you say that it is important for Democrats to fully pay for this reconciliation bill. Why is that?

BEN RITZ: So some people have argued that you don't need to pay for the programs that are investments in the future and that it's OK to borrow from future generations for them. But I think there are a few issues with this. Number one, a lot of the programs in this bill are actually more social programs than they are long-term investment. That doesn't mean they aren't worthwhile, but it means that we should be paying for them.

And the second is that the federal government is already projected to spend $8 trillion more over the next decade on just non-investment programs than it raises in revenue. So, you know, maybe you could think of this as instead of $2 trillion for investment, you're doing-- you know, you could be borrowing for the investment, but you've got to pay $2 trillion towards those other unfunded programs.

The other concern I think people need to consider is inflation. The COVID relief bills that we passed earlier this year, they helped contribute to the inflation that we're seeing now by exacerbating supply chain bottlenecks, pushing price increases over 5% this year. And we should be careful before we go on-- do even more deficit spending right now.

JARED BLIKRE: Well, Ben, you got your program here. What kind of-- or you have your report, excuse me. What kind of reception is it getting on the Hill right now?

BEN RITZ: I would say the reception has actually been overwhelmingly positive. I think for too long, there was really this focus on the $3.5 trillion bill that was originally proposed that couldn't pass. And we were sort of the first ones when that became clear that it couldn't happen that laid out a clear vision for a more focused package, what it could look like, and what you could fit within it.

And, you know, many people would make different choices than we did about which programs they would keep and which ones they would get rid of. But I think everybody appreciated that we put the choices out there and the conversation has been moved into a more productive direction now about, OK, what are the choices we need to make? And how do we get this done for the American people?

KARINA MITCHELL: Yeah, how urgent is it to get a deal done now?

BEN RITZ: I think it's important that-- I mean, I think there's two sides to it. We don't want to rush a deal because we want the bill to be well designed, and we want it to-- you know, we want these programs to be executed well so that they're popular and that people can be more confident in the government to deliver on these things in the future.

But I think that, you know, especially given that it's been tied to the bipartisan infrastructure bill, I do think that at the very least, we need an agreement soon on the framework. What are the key priorities? How long are the programs going to go? What's the total cost? How do we pay for it? And then once we have that framework, we need to flesh out the details. And so I think that framework is particularly urgent, even though I would take the time on the details.

KARINA MITCHELL: OK, Ben Ritz from the Progressive Policy Institute director there, thank you so much for your time.