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Illustration: Sarah Grillo/Axios

The "billionaire tax" and other revenues Democrats want to pay for President Biden's $2 trillion social safety net expansion are about to face a math test from a notoriously hard grader: the Joint Committee on Taxation.

Why it matters: The budget reconciliation instructions require the Senate Finance Committee to offset all the spending it authorizes with the same amount of revenue. Hot air from House and Senate leaders about pay-fors will be replaced by the joint committee's cold arithmetic — and the result is in doubt.

By the numbers: The tax rate increases on corporations, capital gains and wealthy taxpayers that Sen. Kyrsten Sinema (D-Ariz.) opposes would have raised up to $850 billion in new revenue.

To help offset that loss:

  • House Speaker Nancy Pelosi estimated a proposal to tax billionaires' liquid assets could raise $200 billion to $250 billion over 10 years.
  • Imposing a so-called minimum book tax on corporations, which Sinema might also accept, would capture another $150 billion.
  • Another big-ticket item, and one Sinema has not previously opposed — $700 billion in additional revenue from increased IRS enforcement — can’t officially be used to offset the Finance Committee's spending under the reconciliation instructions.

What they're saying: “JCT is where tax theory meets scoring reality,” said Eric Ueland, a longtime Senate staffer and former Trump administration official.

  • “When it comes to the reconciliation process, JCT won’t be handing out any easy scores to help provisions make it through the budget minefield.”

Flashback: Last February, the Senate parliamentarian dashed Democratic hopes of including a minimum wage increase in Biden $1.9 trillion COVID-relief bill.

  • The JCT — a committee of five House and Senate members that works in conjunction with the Senate parliamentarian and Congressional Budget Office — is poised to play a similar role now.
  • It has the power to effectively nix any proposal that doesn't add up, leaving some senators sweating.

Between the lines: Many of the priorities in Biden's reconciliation bill — the enhanced child tax credit, tax incentives for clean energy, paid family leave, home care subsidies and Medicare and Medicaid subsidies — must be reviewed by the Finance Committee and fully offset with revenues.

  • Spending that’s being authorized by other committees doesn’t face the same requirement.
  • That includes new programs for child care and education reviewed by the Senate Committee on Health, Education and Labor and Pensions, or climate provisions passing through the Senate Committee on Energy and Natural Resources.

Driving the news: Biden on Monday reiterated his goal to fully offset all the new spending.

  • “We pay for it all,” he said in New Jersey. “It doesn’t increase the deficit by one single cent.”

Some House centrists, like Rep. Kurt Schrader (D-Ore.), who'd previously indicated he might oppose the entire reconciliation package, now support approximately $1.5 trillion in new spending — “as long as it's fully paid for,” he said.

  • "I'm very concerned about the level of spending that we've done,” he told Axios. “I'm actually kind of agnostic as to the source of revenue."

Go deeper

Dec 7, 2021 - Politics & Policy

Congress hunts for shortcut to pass defense funding, debt limit combo

Senate Majority Leader Chuck Schumer returned to his office Monday. Photo: Anna Moneymaker/Getty Images

The scramble in Congress to pass the National Defense Authorization Act is being complicated by an effort to tie it to a needed hike in the federal debt limit.

Why it matters: The House and Senate are rapidly coming up against a series of deadlines they must address before the end of the year — or risk disrupting crucial military funding and upending the economy. Congressional leaders are now hoping they can knock out both "must-pass" priorities in one, complex swoop.

Updated 59 mins ago - Politics & Policy

Congressional leaders clinch support for crucial defense bill, debt limit votes

Senate Majority Leader Chuck Schumer passes waiting reporters on Tuesday. Photo: Eric Lee/Bloomberg via Getty Images

Congress has found a shortcut to pass its annual defense funding bill and raise the debt limit.

Driving the news: The House voted Tuesday night on two major bills — one creating a one-time, fast-track process for the Senate to raise the debt ceiling with just 51 votes, and another passing its annual defense bill.

House passes annual defense bill

Speaker of the House Nancy Pelosi. Photo: Chip Somodevilla/Getty Images

The House voted to pass the annual defense bill 363-70 on Tuesday night, authorizing nearly $770 billion in funding for defenses and national security programs.

Why it matters: The National Defense Authorization Act (NDAA) still has to clear the Senate, but the House passage greatly increases the chances that the must-pass defense bill will move through both chambers of Congress before the end of the year.