What's in Democrats' $1.75 trillion social spending and climate bill?
Washington – After protracted negotiations between congressional Democrats and President Biden over the details of his domestic policy agenda, the White House on Thursday rolled out a revamped framework that aims to expand the nation's social safety net and combat climate change.
The cost of the package has been whittled down from its original $3.5 trillion price tag to $1.75 trillion over a decade. Despite the drop in cost, it is opposed by Republicans, so Democrats are trying to enact the plan through a budgetary process called reconciliation, which would allow it to clear the Senate solely with Democratic support.
Democratic leaders have spent weeks haggling with their colleagues over the size and scope of the package, working to bridge the gaps between a pair of moderate Democratic Senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, and progressives in the House.
But after releasing the trimmed-down framework, President Biden expressed confidence it would win support from all Democrats. Whether the plan does, indeed, garner the backing from all corners of the Democratic Party remains to be seen, as cut from the framework were key priorities for some lawmakers.
Here are some of the major items in the framework for the bill, according to the White House, as well as some initiatives that have been dropped over the course of talks. This list will be updated as negotiations continue.
What's in the Build Back Better Act framework
- Fighting climate change
Combating climate change and slowing the rate at which Earth warms will mean transitioning away from fossil fuels, the major source of greenhouse gas emissions. The new framework unveiled by the White House contains $555 billion for climate and clean energy investments.
As written, the plan would cut more than a gigaton of greenhouse gas emissions by 2030 — a roughly 50% reduction compared to 2005 levels, according to the White House.
The legislation would provide tax credits to Americans buying new electric vehicles that could provide up to $12,500 in incentives to some families to drop gas-guzzling vehicles. New tax incentives designed to encourage the installation of solar panels on American homes will also be offered.
Manchin objected to a $150 billion "clean electricity performance program" contained in the original proposal, which would pay utility companies that increase their renewable energy supplies by 4% per year and fine companies that don't hit this benchmark. He has argued that companies are already doing this, so there's no need to incentivize them to augment their use of renewables. However, climate advocates say private enterprise isn't moving quickly enough, and this provision would speed up the transition away from fossil fuels.
- Child care and universal pre-K
Mr. Biden's framework includes $400 billion for child care and preschool through programs funded for six years. In addition to expanding access to universal preschool for all 3- and 4-year-olds, the plan also limits child care costs for some families to no more than 7% of income. Parents must adhere to work requirements to qualify.
- Medicare expansion
This heavily debated provision would expand Medicare to cover hearing services, but the framework eliminated a proposal for Medicare to also include dental and vision benefits, a key priority for Senator Bernie Sanders.
Manchin believes the program's solvency should be addressed before it is expanded.
- Extended child tax credit
Democrats expanded the child tax credit for 2021 in their $1.9 trillion COVID-19 relief plan and wanted to extend it through 2025. But Mr. Biden's updated framework extends the child tax credit for one year, for 2022, which the White House said will provide more than 35 million households up to $3,600 in tax cuts per child.
Under the enhancement, families receive $3,600 per child under age 6, and $3,000 per child ages 6 to 18. Most families receive monthly payments of either $250 or $300 per child.
The full expanded child tax credit is available to individuals making up to $75,000 or married couples making up to $150,000.
- 4 weeks of paid family and medical leave
It was in the bill, then removed — and it's back in again, for now, in the version that will receive a vote in the House this week. Democrats originally had 12 weeks of paid family and medical leave in the measure but were forced to remove it because it was too costly. But the provision was championed by a number of women lawmakers in the House and Senate, and they succeeded in restoring a more limited version that would give qualifying Americans four weeks of paid leave.
Although Manchin supports paid leave in principle and has even introduced a paid leave bill, he says that this bill, passed under reconciliation with only the votes of Democrats, is the "wrong" way to legislate it. He argues paid leave must be in a separate bill and should be written to attract bipartisan support, which will make it less susceptible to repeal or other challenges.
- Immigration
The bill under consideration by the House includes an additional $100 billion to reform the nation's immigration system, which, if included, would raise the price tag from $1.75 trillion to $1.85 trillion. But previous attempts to tuck immigration reform into the package were knocked down by the Senate parliamentarian, who is tasked with ensuring the legislation's provisions comply with the rules governing the reconciliation process.
It would allow the Department of Homeland Security to give an estimated 7 million unauthorized immigrants — including Dreamers, coronavirus-era essential workers and farm workers — work permits and temporary protection from deportation, similar to Deferred Action for Childhood Arrivals (DACA), an Obama-era initiative. The CBO will offer its analysis, and then the provision would be subject to the ruling of the Senate parliamentarian.
- Housing and health care provisions
Mr. Biden's framework includes $150 billion to build or improve more than 1 million new affording housing units and help with rental and down payment assistance.
It also makes investments in maternal health, community violence initiatives, Native communities and supply chain resilience.
For health care, the plan would lower premiums by an average of $600 per person for more than 9 million Americans who purchase insurance through the Affordable Care Act's marketplace, and provide coverage for up to 4 million Americans who are currently uninsured.
What was cut from the bill?
- Two free years of community college
While Mr. Biden's domestic policy proposal initially included two years of free community college for all students regardless of income, the plan was dropped from the framework unveiled by the White House.
Instead, the measure increases the maximum Pell Grant for more than 5 million students by $550 and expands access for "Dreamers," the name given to millions of undocumented immigrants who came to the U.S. as children, according to a fact sheet from the White House.
- Cutting prescription drug prices
A key provision in a bill from House Democrats was aimed at helping to slash prescription drug prices. Americans on average pay two to three times as much as people in other countries for prescription drugs, according to the White House. Among other things, the legislation would have allowed Medicare to negotiate drug prices, but the new framework did not include this proposal. Medicare is currently prohibited by law from negotiating for the best deal.
The White House believes the taxes in BBB will raise more than $1.99 trillion to cover the $1.75 trillion Build Back Better agenda over 10 years without raising taxes on small businesses or those making less than $400,000 a year. We'll know soon whether the CBO agrees with the administration's assertions when its analysis comes out this week.
How Democrats plan to pay for it
The taxes: Under Mr. Biden's proposal, a 15% minimum tax will be imposed on corporate profits that large corporations report to shareholders, as well as a 1% surcharge on corporate stock buybacks. Those provisions would raise $450 billion in new revenue, according to the White House.
The framework also calls for a global minimum tax and new surtax on the wealthiest Americans' income, as well as bolstered IRS enforcement. The bill would impose a 5% tax rate above those with an income over $10 million, and another 3% surtax on income over $25 million. The White House estimates the new surtax would raise an additional $230 billion from the nation's highest earning taxpayers.
Chasing tax cheats: The biggest revenue-raiser in the bill amounts to more aggressive pursuit by the IRS of tax cheats. The administration wants $80 billion for the IRS to hire more specialized agents to root out tax evasion and modernize the agency's technology. The White House thinks this would help bring in an additional $400 billion over the next ten years.
SALT tax cap: This provision would actually put a sizable dent in the revenues by partially restoring a generous tax deduction that was reduced by Republicans during the Trump administration. The State and Local Tax deduction (SALT) cap, which limits the amount of state and local taxes that individuals can deduct from their federal taxes, would be raised by the social spending bill being considered by the House. The cap, which largely affects wealthier Americans in coastal Democratic-dominant states, would rise from $10,000 up to $80,000 through 2031 and then drop back to $10,000 after that. Currently, the SALT cap, which was put in place by the Republican tax cut enacted in 2016, is scheduled to expire in 2026.
This would be one of the most expensive provisions in the bill, costing about $400 billion for the five years it would be in effect, and, as the Center on Budget and Policy Priorities points out, it would mostly benefit Americans who make over $200,000 per year.
Sarah Ewall-Wice, Jack Turman, Cara Korte, Ed O'Keefe and Sara Cook contributed to this report.