As budget bill talks intensify, here are five biggest issues dividing democrats

The White House and senior Democrats in the House and Senate are trying to bridge divides on major issues to salvage a massive climate and social policy bill, a key plank of President Biden’s domestic agenda. With a bill this large and congressional margins as narrow as they are, every member has red lines and demands they hope to include (or exclude) from the final legislation.

The clearest battle lines have been drawn over certain top issues, and whether they can be resolved remains key to the ultimate passage of the proposal. Here are five areas of disagreement among Democrats.

Healthcare

Democrats are wrestling with the funding for and duration of the three central healthcare provisions of the bill: an extension of expanded Affordable Care Act subsidies; Medicare coverage for dental, vision and hearing; and an effort to provide healthcare coverage for some people in Republican-led states that haven’t expanded Medicaid.

Speaker Nancy Pelosi has previously said all three of those priorities will be in the final bill—but that could become increasingly challenging if moderate Democrats push for a lower amount of overall spending.

The healthcare puzzle became more complicated after a handful of centrist lawmakers in the House and Sen. Kyrsten Sinema (D., Ariz.) voiced their opposition to the main Democratic proposal for lowering prescription drug costs by giving Medicare the ability to negotiate drug prices with pharmaceutical companies. Their plan could save as much as $500 billion over a decade, money that Democrats are counting on to pay for their Medicare, Medicaid and ACA plans.

Long-term home care and child care

Mr. Biden’s plan called for $400 billion in funding for home healthcare for the elderly and disabled. But West Virginia Sen. Joe Manchin has balked at spending that much, as have other centrists. The House Energy and Commerce Committee drew up a $190 billion expansion plan to help the elderly and the disabled stay in their homes, and Sen. Bob Casey (D., Pa.) has his own $250 billion plan. Progressives worry that an insufficiently funded plan won’t be able to achieve its objectives, and they continue to push for Mr. Biden’s requested $400 billion.

Mr. Manchin also has called for means tests of other new benefit programs, including tax credits for child care, the expanded monthly Child Tax Credit (which already phases out above certain income levels) and free prekindergarten. Progressives argue that universal programs are less likely to be cut in the future, and that adding hurdles, like work requirements or extra paperwork, would prevent the programs from benefiting those most in need.

Climate

The centerpiece of Democrats’ plan to address the climate crisis is the Clean Electricity Performance Program, which would pay utilities that switch to clean energy and penalize those that don’t. Utilities that increase their use of clean energy by 4% each year (under the current House bill) would get money from the federal government, and those that fail to do so would get hit with a fine. To many progressives and environmentalists, this program is the preferred way to decarbonize the electrical grid.

But Mr. Manchin, who leads the Senate Energy and Natural Resources Committee, has questioned whether the plan is even necessary. “The transition is happening. Now they’re wanting to pay companies for what they’re already doing," Mr. Manchin said on CNN earlier this month. “It makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions."

Ms. Sinema, on the other hand, told the Arizona Republic on Thursday that she gives priority to the climate provisions in the bill, noting the droughts and wildfires that have afflicted her state and the West in recent years. “Right now, we have the opportunity to pass smart policies to address it—looking forward to that," she said.

Immigration

Democrats are seeking a path forward after the Senate parliamentarian ruled that they couldn’t include a pathway to citizenship for millions of immigrants living in the country illegally in the budget legislation. They say they have prepared several more measures that they plan to run by the parliamentarian to see if they can be deemed kosher under the arcane budgetary procedure Democrats must use to avoid a Republican filibuster.

One possibility they have considered is to update an immigration law known as the registry, which would allow anyone present in the country earlier than a certain date to become a legal permanent resident.

Taxes

Senior Democrats on the Senate Finance Committee and House Ways and Means Committee have prepared a long menu of options to pay for the spending, along with tax credits that will add to the bill’s overall cost. At this point, nothing has been firmly settled upon, and for members who demand that the entire bill be paid for upfront, agreeing on taxes is a prerequisite for deciding what programs get funded.

Progressives and centrists are divided on a new corporate tax rate (anywhere between the current 21% and 26.5%), the top individual rate (probably between the current 37% and the old top rate of 39.6%), as well as whether to include measures to raise taxes on private-equity managers, capital gains and supersize Roth IRAs used by the ultrawealthy.

And on top of it all, several House members, primarily from higher-tax blue states, want to reinstate part or all of the state and local income-tax deduction, which Republicans capped at $10,000 in 2017. Many progressives oppose this idea, since it would benefit the wealthy and would add costs to the bill that would likely have to be cut from other areas.

Bonus: the top-line cost

The bill is the sum of a dizzying number of parts, but ultimately, the top-line cost is a sticking point for members, too. Progressives like Senate Budget Committee Chairman Bernie Sanders (I., Vt.) say the $3.5 trillion figure that passed the House and Senate to start the drafting of the bill was already a compromise—he would have preferred $6 trillion. But Ms. Sinema, Mr. Manchin, and House moderates have warned that it would be hard to support that much spending, or have ruled it out entirely from the start.

How the total cost is measured is another sticking point. The White House bristles at the notion the bill will cost $3.5 trillion, given all the revenue measures in it. “The net cost of Build Back Better is zero," said Biden chief of staff Ronald Klain earlier this month.

To move forward, though, Democratic leaders want to know the maximum moderates are willing to spend. “He just basically said find a number you’re comfortable with," Mr. Manchin said after emerging from a meeting with Mr. Biden at the White House on Wednesday.