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PRESENTED BY

BY JOHN BRESNAHAN, ANNA PALMER AND JAKE SHERMAN
WITH MAX COHEN AND CHRISTIAN HALL

THE TOP

As the brutal behind-the-scenes brawl plays out over the Democrats’ $3.5 trillion reconciliation package, Rep. Thomas Suozzi of New York is warning once again that he and a group of blue state Democrats won’t support any legislation that fails to restore the full deduction for state and local taxes (SALT) eliminated by the 2017 GOP tax bill.

“No SALT, no deal,” Suozzi said in an interview on Tuesday. Suozzi serves on the House Ways and Means Committee, which writes tax policy. “I’m pushing for full repeal.”

Suozzi predicted that SALT repeal language will be included in the proposal released by the Ways and Means Committee as it begins its reconciliation markup, the most critical piece of the overall Democratic package. The panel’s markup is expected to last into next week, and the tax provisions aren’t likely to come up until that time. The opening days of the markup will focus instead on Democratic efforts to create a paid family leave program — a huge priority for Rep. Richie Neal (D-Mass.), Ways and Means chair  — as well as other social welfare initiatives.

Neal supports restoring the SALT deduction, as does Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer. So Suozzi and his fellow SALT backers, who include Reps. Josh Gottheimer (D-N.J.), Mikie Sherrill (D-N.J.), Bill Pascrell (D-N.J.), among others, have very powerful friends on their side. The issue is how long any repeal would cover — will it be permanent or will Democrats seek to phase it in by raising the deduction from its current $10,000 cap? These are options that Democrats may use if they need the revenue raised by retaining the provision.

But progressives have balked at repealing the current SALT limit because most of the benefit would go to taxpayers earning $100,000 or more annually. That goes against the Democrats’ message of being the party of the middle class and blue-collar voters.

Rep. Alexandria Ocasio-Cortez (D-N.Y.) has called restoring the deduction a “giveway to the rich” and a “gift to billionaires.” Sen. Bernie Sanders (I-Vt.) told Axios this spring that “it sends a terrible, terrible message when you have Republicans telling us that this is a tax break for the rich.”

Yet the Democratic budget resolution approved by both the House and Senate — initially drafted by Sanders — included language that would allow Democrats to restore the SALT deduction.

With only a three-vote margin to work with, Pelosi and House Democratic leaders can’t ignore the SALT opponents. Suozzi said, “I’m certain that we have enough people interested in this topic” to derail the reconciliation package.

Suozzi joked that party leaders “want a restraining order against me because no matter what we discuss, I bring up SALT.”

The dispute over SALT is just one of a number of tax and policy flashpoints being hashed out in “intense” discussions between House and Senate Democrats and the White House. One of the biggest disagreements appears to be over what to do about capital gains, a dispute that’s caused a serious rift between moderate and progressive Democrats in the two chambers. And expanding Medicare to cover vision, dental and hearing programs — which is being pushed by Sanders — is coming up against permanently funding Obamacare, another key Democratic priority.

On the issue of corporate tax rates, the Democratic consensus appears to support raising the current rate from 21 percent to 25 percent. Democrats also would raise the maximum individual tax rate from 37 percent to 39.6 percent.

But a host of other decisions have yet to be made on key programs or policy issues. Ways and Means and the Senate Finance Committee have been involved in a lengthy series of negotiations, with White House officials weighing in frequently. The success of the reconciliation package is vital to President Joe Biden, who needs to turn things around after a particularly rough August that saw his poll numbers dive as Afghanistan collapsed and Covid cases soared.

“It’s pretty intense stuff right now,” said a House Democratic lawmaker involved in the three-way talks. “Everything is very fluid, you could see everything change in the next couple of days.

WHAT THE DEM LEADERSHIP WILL BE PUSHING

This is a good story from Jonathan Weisman at the New York Times about the enormity of what Democrats and the White House want to accomplish with their reconciliation package:

When congressional committees meet this week to begin formally drafting Democrats’ ambitious social policy plan, they will be undertaking the most significant expansion of the nation’s safety net since the war on poverty in the 1960s, devising legislation that would touch virtually every American’s life, from conception to aged infirmity.

Passage of the bill, which could spend as much as $3.5 trillion over the next decade, is anything but certain. President Biden, who has staked much of his domestic legacy on the measure’s enactment, will need the vote of every single Democrat in the Senate, and virtually every one in the House, to secure it. And with two Democratic senators, Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, saying they would not accept such a costly plan, it will challenge Democratic unity like nothing has since the Affordable Care Act.

That is largely because the proposed legislation would be so transformative — a cradle-to-grave reweaving of a social safety net frayed by decades of expanding income inequality, stagnating wealth and depleted governmental resources, capped by the worst public health crisis in a century.

BEHIND THE SCENES 

Biden’s numbers down in new House GOP-aligned poll

The American Action Network, a GOP outside group focused on the House, has President Joe Biden’s approval ratings nose diving in seven key congressional districts. Check out the polling memo here.

The most dramatic example of Biden’s flagging popularity is in Rep. Elissa Slotkin’s Michigan district, where the president’s approval rating is at 42%, and his disapproval is 54%.

The districts AAN polled include those represented by Reps. Josh Harder (Calif.), Stephanie Murphy (Fla.), Cynthia Axne (Iowa), Haley Stevens (Mich.), Elaine Luria (Va.) and Kim Schrier (Wash.).

The surveys — conducted by Remington Research Group Aug. 28-Aug. 30 with 800 likely voters in each one — has Biden underwater on his handling of the economy and foreign policy, something that will be of particular concern to Democratic lawmakers. 

Republicans also lead the generic ballot by 6 percentage points, as the Democrats’ $3.5 trillion reconciliation bill is upside down by 19 points.

Polls such as this are of interest to lawmakers and political operatives involved in the battle for control of the House. Biden’s national numbers get a lot of media attention, but where his popularity is of immediate import is in competitive House districts like those polled here. 

We understand this is a GOP-leaning poll from a GOP affiliated group. But this kind of data is going to pique interest around town. 

Biden’s approval ratings suffered a serious hit in August following the botched U.S. withdrawal from Afghanistan, which continues to get heavy media coverage. The surge in the Delta variant has led to a huge increase in the rate of Covid infections, hospitalizations and deaths, despite the enormous efforts by the Biden administration to encourage vaccinations nationally.

There are 427 days until the 2022 midterm elections.

NATIONAL TREND

On weighty issues, Dems find themselves with limited options

When Attorney General Merrick Garland warned Monday that the Justice Department would protect women’s access to abortions clinics while it considers potential legal challeges to the state’s new abortion law, the message sounded very similar to DOJ’s message on voting rights earlier in the summer.

This is because the Biden administration faces a stark reality here — with GOP governors and Republican-run state legislatures dominating red states, and a conservative majority controlling the Supreme Court, the White House’s legal and political options are really pretty limited. And Senate Republicans have already blocked Democratic attempts to pass new voting rights bills, and they can do the same on abortion. So while these issues move to the forefront of the national political debate, the Democrats’ control of Washington doesn’t mean they can force through any new federal laws to change what’s happening at the state level.

And this will once again force Senate Democrats to debate whether to get rid of the filibuster in order to pass legislation on abortion rights, similar to what’s happened on voting rights. Sen. Amy Klobuchar (D-Minn.), for instance, made this point during a CNN interview this past Sunday.

“While the Justice Department urgently explores all options to challenge Texas SB8 in order to protect the constitutional rights of women and other persons, including access to an abortion, we will continue to protect those seeking to obtain or provide reproductive health services pursuant to our criminal and civil enforcement” of federal law allowing access to abortion clinics, Garland said in his statement.

In mid-June, as Texas, Georgia and Florida and other GOP-run states all debated or enacted new laws restricting voting rights — a byproduct of former President Donald Trump’s false claim that the November election was stolen — Garland gave a speech saying that DOJ would add new staff to scrutinize state voting laws but really needed Congress to act on the issue.

“​​And, as the president has said, we need Congress to pass S.1 and the John Lewis Voting Rights Act, which would provide the department with the tools it needs,” Garland warned at that time.

Our friend Michael Scherer at the Washington Post has captured this situation well in a recent story: “Democrats may control the elected levers of power in Washington — after a remarkable three-year run in which they took back the House, reclaimed the Senate and evicted Donald Trump from the White House — but the battle over the future direction of the country remains wide open. By focusing on state and judicial power, Republicans are enjoying something of a provincial policy renaissance. Democrats, meantime, face new pressures to wield their power more aggressively by breaking long-standing precedent.”

Scherer added: “The success has rewarded a long-running Republican strategy of looking beyond the top-line national ballot trend to focus on state and local elections and judicial appointments. The decision of a new conservative majority on the Supreme Court to allow the Texas abortion law to take effect is one of the biggest events in conservative jurisprudence since the 1973 Roe v. Wade decision, which enshrined a women’s right to have an abortion.”

MOMENTS

8:30 a.m.: President Joe Biden will get his daily intelligence briefing.

9:50 a.m.: Biden will leave the White House for Andrews. He will fly to JFK Airport in New York. Jen Psaki will gaggle on the plane.

11:15 a.m.: Biden will travel to Hillsborough Township, N.J.

12:15 p.m.: Biden will get a briefing on the impact of Hurricane Ida.

2:10 p.m.: Biden will tour a neighborhood in Manville, N.J.

3:10 p.m.: Biden will leave New Jersey for Queens. He’ll fly to LaGuardia. 

4 p.m.: Biden will speak about the administration’s response to the hurricane.

5:40 p.m.: Biden will leave for JFK and fly to D.C. He’ll arrive at the White House at 7:15 p.m.

CLIP FILE

NYT

→ “Unemployment Benefits Expire for Millions Without Pushback From Biden,” by Jim Tankersley and Ben Casselman

 → “Alphonso David, Who Advised Cuomo, Fired as Human Rights Campaign President,” by Maggie Haberman

→ “Rupert Murdoch’s Australia News Outlets to Ease Their Climate Denial,” by Damien Cave in Sydney, Australia

 WaPo

→ “Justice Department to protect women seeking an abortion in Texas,” by Hamza Shaban

→ “New Texas voting bill deepens growing disparities in how Americans can cast their ballots,” by Elise Viebeck

WSJ

→ “Covid-19 Resurgence Clouds Business Travel Rebound,” by Alison Sider and Chip Cutter

→ WSJ Editorial Board: “Our Friends the Taliban: Biden is relying on the group with ties to al Qaeda. Good luck.”

LAT

→ “Candidates swarm Southern California, with a week to go before recall election,” by Ben Poston 

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Editorial photos provided by Getty Images