President Joe Biden’s fiscal year 2020 budget blueprint largely drew praise from Nevada’s congressional Democrats for providing free universal preschool, free community college and funding rebuilding the nation’s infrastructure.
Nevertheless, Sen. Catherine Cortez Masto (D-NV) raised concerns about a tax increase that could adversely affect farmers and ranchers.
“I am concerned that certain provisions of the administration’s tax proposal may unfairly impact Nevada’s small businesses and family-owned farms and ranches,” Cortez Masto said in a statement provided by her office.
Cortez Masto was the latest of a growing number of Democrats with rural constituencies who balked when asked about a Biden proposal to repeal a tax break on inherited assets that have appreciated, including property. The break allows heirs to avoid paying capital gains on the appreciation. The rule is known as stepped-up basis, since the cost basis of an inherited asset is “stepped up” to its value at the time of the owner’s death instead of at the time of purchase by the original owner.
Their comments follow those of Rep. David Scott (D-GA.), chairman of the House Agriculture Committee, who told Roll Call on Wednesday that he is fearful the repeal would hurt minority farmers.
Rep. Mark Amodei (R-NV), the delegation’s lone Republican, was critical of the spending plan over its $6 trillion price tag.
But on the whole, Democrats were pleased with the budget.
“These are things that I've been talking about, that the president has talked about on the campaign trail,” Rep. Dina Titus (D-NV) said this week of Biden’s budget. “So it's a long way from soup, but it's certainly moving in that direction.”
Titus also noted that the budget proposal included no funds to build a nuclear waste repository at Yucca Mountain. “A huge accomplishment” for the delegation’s Democrats, who oppose the project, she said. Biden opposed the project during the 2020 campaign and Titus said he was “as good as his word.”
Amodei said in an interview that the budget struck him as an effort by Biden to undo policies initiated by President Donald Trump’s administration, including prioritizing national defense, border security and domestic energy production.
“As a general proposition, the answer to every question is not more borrowed federal money,” Amodei said.
“I look at this thing, and I'm going, ‘Wow, this is a repudiation, you know,’ because you put resources where your priorities are,” Amodei said of the Biden budget. “There's a repudiation of some fairly basic stuff in terms of defense, borders [and] energy.”
The $6 trillion budget was released on the Friday before the Memorial Day weekend, timing that had the effect of playing down some of the numbers including the projected growth in the debt. By the end of the current fiscal year, federal debt is projected to hit a record 110 percent of gross domestic product, according to the Committee for a Responsible Federal Budget. It would swell to 114 percent by the end of 2024 and 117 percent by the end of 2031.
The White House stressed its position that now is the time to boldly invest in infrastructure and domestic programs because borrowing rates are low and are predicted to remain relatively low.
Amodei said that’s a big gamble, though. “If they could lock in the interest rate, they’d have a hell of an argument,” he said. “I missed the part where they can lock in the interest rate.”
Amodei admitted that Republicans are guilty of turning a blind eye to the growth of the debt and deficit under GOP presidents. But he added that the pandemic response accounts for most of the recent increases. “Hopefully, it’s closer to over than it is to the middle,” Amodei said of the pandemic response.
Biden's budget comes after Trump's last two spending proposals totaled about $4.8 trillion. Amodei said he is concerned that continuing to spend and provide aid at elevated pandemic levels will hurt the labor force and the economy.
“Are we trying to create a major vocation, here, where your vocation is federal checks?” Amodei said.
Amodei was a critic of the last COVID-aid package, passed with only Democratic votes and signed into law in March, which included the third round of direct payments to taxpayers ($1,400 per person), and extended the $300 weekly federal unemployment insurance bonus payment through Sept. 6. He wanted the aid more targeted to where he believed it was needed.
Titus and Amodei's takes on the White House's annual spending proposal essentially mirror the response in Congress and hint at the fiscal fights to come between the political parties. That includes an expected battle over raising the statutory ceiling on the federal debt, which was suspended in 2019 and will be reinstated on Aug. 1, requiring a raise before then.
Amodei said he doesn't support shutting down the government or defaulting on the nation's debt, but he would like to see more fiscal discipline. He said he would decide how to vote on such matters as they arise.
The president’s budget request is far from the last word on annual spending, but it does kick off the process. Congress will now set about drafting the 12 annual spending bills, though it usually tends to miss the Sept 30 end-of-fiscal-year deadline for doing so.
The White House budget also gives Democrats, who control both the House and Senate, guidance on how to proceed as they write the first drafts. Republicans will have some input as the bills are amended in committee and again on the House and Senate floors, but their real power is in the Senate. The chamber is split 50-50 between the parties, and 10 Republicans will be needed to overcome any filibuster to advance spending legislation.
Nevada’s congressional Democrats this week highlighted several provisions of the budget, which included the $2 trillion American Jobs Plan (AJP) proposed by Biden to revamp the nation’s infrastructure and the $1.8 trillion American Families Plan (AFP), which would provide $200 billion for universal preschool for three- and four-year-olds and about $100 billion for two free years of community college.
“We've been woefully near the bottom of the list over the years,” Titus said of early childhood education.
Rep. Susie Lee (D-NV) also praised the education provisions. “I came to Congress to fight for better educational opportunities for all students, and this budget is certainly a step in the right direction,” Lee said.
But negotiations on the AFP have yet to begin in earnest. Other provisions include $225 billion to help families with childcare costs for kids up to five years old and $225 billion to provide workers with up to 12 weeks of paid family and medical leave.
Cortez Masto said she was pleased to see that the federal budget included a $65 million increase for rural broadband over the $1 billion the Rural e-Connectivity Program received in the current fiscal year.
“This proposal includes a number of important investments, and I’m especially glad to see the Biden Administration focus on improving rural broadband and expanding access to paid family leave,” Cortez Masto said.
A member of the House Transportation and Infrastructure Committee, Titus said the AJP would help Nevada widen I-15 between Las Vegas and California and finish the Arizona piece of I-11 in order to better connect Las Vegas and Phoenix. The two are the largest cities in the nation not currently linked by an interstate highway.
She said the Biden jobs plan would help build a high-speed rail line along I-15 between Los Angeles and Las Vegas.
“You’ve got to invest boldly or we won't be able to compete with China,” Titus said, adding that U.S. infrastructure ranked 13th in the world in a survey by the Peterson Foundation and received a C-minus from the American Society of Civil Engineers.
Biden has been in negotiations with a handful of Senate Republicans, led by Sen. Shelley Moore Capito (R-WV), on the infrastructure plan. According to The Washington Post, they met Wednesday and Biden lowered his topline to $1 trillion, but insisted that the money represent new spending. The most recent GOP infrastructure offer totaled $928 billion but contained only $257 billion in new spending, with the rest coming from unused covid-relief money.
It remains to be seen whether a bipartisan deal can yet be struck. Some House Democrats, including Titus, believe time is just about up for talks if Congress is to pass a bill by July 4th, as Speaker Pelosi has proposed. Titus is also skeptical that Senate Minority Leader Mitch McConnell (R-KY) would go along with the bipartisan deal, even if it is struck.
Biden also has offered to pay for the infrastructure package with a 15 percent minimum corporate tax rather than claw back tax cuts under the 2017 Trump tax law. He had previously proposed raising corporate taxes to 28 percent from 21 percent in order to pay for a large part of his plan. Tampering with the 2017 cuts has been a red line for the GOP.
Notably, some Democrats also have pushed back on the level of Biden’s tax increases. Sen. Joe Manchin (D-WV) has said the 28 percent corporate tax increase is too high and urged a 25 percent rate. Biden has said he is open to that.
And there has been a growing number of Democrats speaking out against repealing the stepped-up basis rule. Biden’s budget includes an exemption for farmers and ranchers that delays the tax liability until the asset is sold, but Scott has called that inadequate.
“My understanding of the exemptions is that they would just delay the tax liability for those continuing the farming operation until time of sale, which could result in further consolidation in farmland ownership. This would make it more difficult for young, beginning, and socially disadvantaged farmers to get into farming,” Scott said in a letter.
Titus said that the tax proposals would get worked out. She added that there is unity among Democratic and even some GOP voters, according to recent polling, for making the wealthy pay a higher share of their income — and noted that Biden has pledged not to raise taxes on those earning less than $400,000 a year.
“I think that it's an approach that is popular with the public, Democrats and Republicans,” Titus said. “It is just making people pay their fair share.”
Lee said that the wealthy and corporations needed to do their part, but she also struck a cautious note.
“Of course, the devil is in the details, and I will continue to analyze the impact that these tax proposals would have on Nevada families and our economy,” Lee said in a statement provided by her office.