Senate Democrats Begin $3.5 Trillion Push for ‘Big, Bold’ Social Change

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In a memo, senior lawmakers also indicated that they plan to adjust the cap on how much taxpayers can deduct in state and local taxes, a provision that Mr. Biden did not originally include in his proposals, but one that remains a key priority for a number of lawmakers in high-tax states, particularly New York, New Jersey and California. (It will likely be a partial repeal, according to an aide familiar with the ongoing discussions.)

With an ongoing effort to get countries, including the United States, to adopt a global minimum tax of at least 15 percent, Democrats also hope to make significant changes to the international tax system to reduce incentives for companies to move their profits and operations abroad to tax havens. Lawmakers and aides have been discussing doubling the U.S. tax on foreign income to 21 percent.

After Republicans rejected beefing up the I.R.S.’s tax enforcement abilities as part of the bipartisan infrastructure package, Democrats are also likely to substantially bolster the tax collection agency’s staff and enforcement resources to help narrow the gap between what the federal government is owed in taxes and what it actually collects, which has reached an estimated $1 trillion per year.

Notably, Democrats declined to address the approaching statutory limit on the federal government’s ability to finance the country’s debt in the budget blueprint. It is a risky decision, given that Senator Mitch McConnell of Kentucky, the Republican leader, has said Republicans will not vote to raise the borrowing limit. A failure to raise the limit could prompt a default on the nation’s debt and a global economic crisis.

Democrats would like to use separate, bipartisan legislation to raise or suspend the debt limit, a strategic decision made in part because of the budget rules. Janet L. Yellen, the Treasury secretary, endorsed that approach in a statement on Monday, after employing “extraordinary measures” earlier this month to delay the official deadline to extend the Treasury’s borrowing authority.

But Republicans have warned that on the brink of being cut out of both the $1.9 trillion pandemic bill and the $3.5 trillion package, they have little will to address the debt ceiling, which allows the government to pay debts already incurred. Their debt ceiling threat is potent in a chamber that normally requires at least 10 votes from their side to advance legislation.

“Democrats want Republicans to help them raise the debt limit so they can keep spending historic sums of money with zero Republican input and zero Republican votes,” Mr. McConnell said. He added, “If they want 50 lock-step Democratic votes to spend trillions and trillions more, they can find 50 Democratic votes to finance it.”


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