Here Comes Bernie Sanders, Upping the Ante on Spending
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.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.