Since centrist Democrats likely won't accept more than $1.5 trillion in additional taxes, "this would likely amount to less than the $3 trillion in additional spending we have been assuming."

They expanded on their view in five points:

The outlines of the Senate's budget resolution have emerged. Senate Majority Leader Schumer has announced that Democrats on the Senate Budget Committee have agreed to a top line spending increase of $3.5 trillion. In a separate comment, Sen. Warner, who sits on the committee, told reporters the resolution would be "fully paid for", i.e., that it would not increase the deficit.

If the resolution does not provide for an increase in the deficit, the spending increase might be limited to however much new revenue can be agreed to. The resolution only sets the upper limit on the spending increase that Democrats can pass using the reconciliation process; if a smaller set of tax increases is all that can win support, the spending increase might need to be dialed back. This is an area where the details of the resolution matter and at this point the details are still very unclear.

It is very unlikely that congressional Democrats will raise taxes by $3.5 trillion over ten years, we believe. Our expectation has been that congressional Democrats might be able to agree on tax increases worth around $1.5 trillion over ten years. This would include a 25% corporate rate and a 28% long-term capital gains rate, among other changes.