One down, one to go.
Democrats are renewing their focus on their $1.75 trillion social-spending and climate package in the wake of Friday’s passage of the bipartisan infrastructure bill, with President Joe Biden saying he’s confident the House of Representatives will approve his “Build Back Better” plan during the week of Nov. 15.
Even if the House approves the “human infrastructure” package, however, it will likely face revisions in the Senate, where Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona wield key votes. Manchin opposes a paid-leave provision, for example, and unlike with the infrastructure measure, Republicans aren’t expected to help pass this next measure.
Democrats are still smarting from last week’s election results including a loss in Virginia’s gubernatorial contest, and Biden has said “people want us to get things done.”
Related: Democrats now will ‘circle the wagons and pass’ spending bills — analysts react to Virginia, N.J. elections
House Democrats, Senate Democrats and the White House have floated numerous proposals for inclusion in the social-spending bill. Here are some key proposed categories for spending, as well as how Democrats would pay for their plans.
Extended child tax credit: Expanded child-tax-credit payments began in July, stemming from March’s $1.9 trillion stimulus law, but they had been due to fade away in the new year. The Democratic-run House Ways and Means Committee backed extending the new CTC payouts (up to $300 a month per child) through 2025, and some Democrats have wanted to make them permanent, but the latest plan is for them to continue for just one year.
Universal pre-K: On the earlier side of the education spectrum, Democrats are proposing universal pre-K for 3- and 4-year-olds. They would spend about $400 billion on universal pre-K and lowering the cost of childcare, according to a framework released by Biden on Oct. 28. As a result, most families would not pay more than 7% of their income on childcare, the framework says.
Paid family and medical leave: It hasn’t been looking promising for this issue, but the Democratic-run House keeps pushing for it. While top Democrats had been aiming to give all workers in the U.S. up to 12 weeks of paid family and medical leave, Biden in a CNN town hall last month said the proposed program had been cut to four weeks in negotiations with the party’s moderates. Then paid leave was dropped entirely in Biden’s framework. House Democrats last week put the program back in their latest version of the Build Back Better Act, even as Manchin said he still opposes including paid leave. In touting the need for addressing this topic, Democrats have emphasized that just 23% of Americans have access to paid family leave, with lower-wage workers the least likely to have access.
Expand on Obamacare: Biden’s framework proposes a reduction in premiums for more than 9 million Americans who buy insurance through what’s known as the Affordable Care Act Marketplace, saying more than 3 million people who would otherwise be uninsured will gain health insurance. Democrats have been wanting to make permanent an increase in ACA subsidies that was passed as part of March’s $1.9 trillion stimulus law.
Medicare expansion only for hearing: The Democratic social-spending measure currently features an expansion of Medicare to offer hearing benefits — but not dental or vision coverage. In September, the House Ways and Means Committee backed having the Build Back Better Act provide new vision and hearing services to Medicare recipients starting in 2022 and 2023, respectively, while dental benefits would begin in 2028. But Biden last month said a Medicare expansion to include vision, hearing and dental benefits would be a “reach” due to opposition from Manchin and Sinema, whose votes are crucial given the Senate’s 50-50 split.
Read: Democrat? Republican? ‘I don’t know where in the hell I belong,’ Manchin jokes
And see: Manchin, drawing flak for holding up Biden’s agenda, says Democrats should ‘elect more liberals’ if they want bigger spending
Let Medicare negotiate drug prices: Democrats reached a deal on the issue of cutting the cost of prescription drugs
for older Americans, including lowering what they pay for insulin. Medicare officials would be able to negotiate prices for high-cost prescription drugs including meds that seniors get at the pharmacy counter (through Medicare Part D), and drugs that are administered in a doctor’s office (through Medicare Part B), as one MarketWatch column puts it.
SALT relief: House Democrats propose hiking the $10,000 limit on state and local tax deductions that hits high-tax states and was enacted as part of Republicans’ 2017 tax overhaul. The cap on SALT deductions for federal income taxes would be lifted to $80,000 for 10 years, starting with the 2021 tax year. However, critics say this plan is a tax cut for the rich. Sen. Bernie Sanders of Vermont said last week that Congress should “eliminate the SALT cap on middle-class families who need it the most and ensure that millionaires and billionaires don’t receive any of the benefit.” Sanders, an independent who usually votes with Democrats, said he and Democratic Sen. Bob Menendez of New Jersey have reached a deal on a plan that would do that. Multiple published reports last week said an expansion of the alternative minimum tax, or AMT, might get paired with a hike for the SALT cap to lessen the benefit for wealthy Americans.
Related: SALT deduction, disliked on both sides, may live another day as Congress debates $1.75 trillion social-spending bill
And see: Lawmakers launch bipartisan ‘SALT caucus,’ escalating push to remove cap on federal deductions for U.S. state and local taxes
EV tax credits: The House Ways and Means Committee has proposed tax credits up to $12,500 for electrical vehicles. However, automobile makers with non-unionized workforces, such as Tesla
have spoken out against a provision that would reduce the credits for their vehicles by $4,500, as only union-made vehicles assembled in the U.S. would qualify.
Don’t miss: Automobile industry’s future ‘is electric, and there’s no turning back,’ Biden says, as he touts EV goal
Immigration changes: The House’s version of the bill would shield immigrants in the U.S. illegally from deportation for five years and provide a five-year, renewable work authorization, available to anyone in the country before 2011, notes a Wall Street Journal report. In addition, House Democrats propose to “recapture” hundreds of thousands of unused green cards from the last several decades and make them available to applicants waiting in line, the Journal reported. Those proposals from the House come after Biden’s framework last month showed “Build Back Better” spending that would total $1.75 trillion, then an additional $100 billion for immigration. That $100 billion for immigration would help with “reducing backlogs, expanding legal representation, and making the asylum system and border processing more efficient and humane,” the White House said. But the Senate parliamentarian must rule on whether any immigration proposals meet strict criteria that govern the Senate budget process, as the Democratic social-spending bill is expected to advance through budget reconciliation.
Free community college: Biden, whose wife, Jill Biden, is a community-college professor, campaigned on making two years of community college tuition-free, and the proposal has been among the major parts of the Build Back Better agenda. But the plan is getting left out after opposition from “Manchin and one other person,” the president said last month. Biden said boosts for Pell Grants are “what I think we can get done,” saying that’s “a start.” His framework proposes increasing the maximum Pell Grant by $550 for more than 5 million students.
Clean-electricity performance program: This program — which would provide grants to utilities that increase their use of clean electricity — was strongly opposed by Manchin. Biden’s framework, meanwhile, contains $555 billion in clean energy and climate programs.
Paying for it
Democrats had been aiming to get wealthy Americans and companies to pay higher tax rates, which would fund the social-spending package — but some of those hikes have been opposed by Arizona’s Sinema. She appeared open to an excise tax on stock buybacks and a 15% minimum corporate tax rate, so those are in the latest plan.
Boosting tax enforcement by the Internal Revenue Service is another way that Democrats plan to find funding for their priorities. In addition, the wealthiest U.S. households would face a 5% added tax for income above $10 million, and, once income reaches $25 million, they’d pay an 8% added tax. That would affect 0.02% of Americans, according to the White House.
Top Democrats at one point said a new annual tax on billionaires’ unrealized capital gains was likely to be included in their social-spending package, but that proposal quickly met criticism from other Democrats. An excise tax on tobacco and nicotine products also has been left out, along with a proposal to increase the extent to which banks tell the IRS about cash flows in customers’ accounts.
See: Corporate rates left alone, stock buybacks targeted — what’s in Biden’s tax plan
This is an updated version of a report first published on Oct. 18, 2021.