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On Aug. 11, The U.S. Senate passed a Budget Resolution on the Budget for Fiscal Year 2022 before leaving for its August recess in a 50-49 vote that will set the stage for a proposed $3.5 trillion partisan spending bill through the budget reconciliation process. Prior to the final vote, Senate Majority Leader Chuck Schumer, D-N.Y., also released reconciliation instructions for Senate committees so they can begin to draft relevant sections of the final spending bill as it relates to their policy areas, which they hope to finish by Sept. 15.

This action represents the first significant step to write and pass a detailed $3.5 trillion budget, which under the reconciliation process will also only require a simple majority for passage. The resolution will need to pass Congress with only Democratic votes, as Republicans are expected to vote solidly against the bill which they will not be consulted on and which is expected to include the tenets of President Biden’s American Families Plan. Although the details of the legislation are yet to be drafted, it is expected to include significant tax increases on corporations and individuals while implementing several expansive social policies.

As detailed by the Senate Budget Committee Chair, Bernie Sanders, D-Vt., the measure seeks to establish universal pre-K for 3- and 4-year-olds and make community college tuition-free for two years; establish a Civilian Climate Corps; add new dental, vision and hearing benefits to Medicare coverage; make a "historic level" of investment in affordable housing; lower the cost of prescription drugs; and provide "green cards to millions of immigrant workers and families." However, reports have also indicated that Democrats will seek to insert harmful labor provisions in the reconciliation package, which could include exempting union dues from taxes and monetary penalties for employers that interfere with workers’ union rights.

Democrats might also look to include new requirements that would make it harder for workers to qualify as independent contractors and additional financial support for striking workers. Notably, the provisions would need to pass the scrutiny of the budget reconciliation Byrd Rule, which prevents extraneous measures from passing through the reconciliation process, though Senate Democrats believe the employer penalties and tax provision should be deemed germane to the federal budget.

Before passing the resolution, the Senate considered a series of nonbinding votes known as “vote-a-rama” amendments to the budget resolution. ABC, as part of the Main Street Employers Coalition, also issued a statement of support for an amendment from Sen. Steve Daines, R-Mont., that would prevent changes to the 199A tax deduction for small businesses. That amendment passed by voice vote, along with other critical tax amendments from Sen. John Thune, R-S.D., to protect businesses against stepped-up basis; from Sen. John Kennedy, R-La., that would maintain the current tax treatment of like-kind exchanges; and from Sen. Todd Young, R-Ind., that would prevent tax increases on anyone making less than $400,000 a year.

The resolution has now been sent to the House for consideration. On Aug. 10, Speaker Nancy Pelosi, D-Calif., and House Majority Leader Steny Hoyer, D-Md., informed House members that they would be returning from recess early, on Aug. 23, to begin to consider the resolution and unlock the budget reconciliation process that could, paired with the recently Senate-passed bipartisan Infrastructure Investment and Jobs Act, pass in the House later this fall.