Democrats in the House appear on the verge of advancing President Joe Biden’s $1.85 trillion-and-growing domestic policy package alongside a companion $1 trillion infrastructure bill in what would be a dramatic political accomplishment — if they can push it to passage.
Happening now
The House scrapped votes late Thursday but will be back at it early Friday, and White House officials worked the phones to lock in support for the president’s signature proposal. After months of negotiations, House passage of the big bill would be a crucial step, sending to the Senate Biden’s ambitious effort to expand health care, child care and other social services for countless Americans and deliver the nation’s biggest investment yet to fight climate change.
Alongside the slimmer roads-bridges-and-broadband package, it adds up to Biden’s answer to his campaign promise to rebuild the country from the COVID-19 crisis and confront a changing economy.
But they’re not there yet.
House Speaker Nancy Pelosi worked furiously into the night at the Capitol Thursday and kept the House late to shore up votes. The party has been here before, another politically messy day like many before that are being blamed for the Democrats’ dismal showing in this week’s elections. On and off Capitol Hill, party leaders declared it’s time for Congress to deliver on Biden’s agenda.
“We’re going to pass both bills,” Pelosi insisted at a midday press briefing.
Pelosi’s strategy now seems focused on passing the most robust bill possible in her chamber and then leaving the Senate to adjust or strip out the portions its members won’t agree to. The House Rules Committee processed final revisions including to a state-and-local tax deduction in a brief meeting late Thursday in preparation for floor votes.
With a flurry of late adjustments, the Democrats added key provisions in recent days — adding back a new paid family leave program and work permits for immigrants. Late changes Thursday would lift a $10,000 cap on state-and-local tax deductions to $80,000.
Who pays?
Much of the package’s cost would be covered with higher taxes on wealthier Americans, those earning more than $400,000 a year, and a 5% surtax would be added on those making over $10 million annually. Large corporations would face a new 15% minimum tax in an effort to stop big businesses from claiming so many deductions that they end up paying zero in taxes.
Where things stand
Half the size of Biden’s initial $3.5 trillion package, the now sprawling 2,135-page bill has won over most of the progressive Democratic lawmakers, even though it is smaller than they wanted. But the chamber’s more centrist and fiscally conservative Democrats continued to mount objections.
Democrats have been working to resolve their differences, particularly with holdout Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who forced cutbacks to Biden’s bill but championed the slimmer infrastructure package that had stalled amid deliberations.
Manchin has panned the new family and medical leave program, which is expected to provide four weeks of paid time off after childbirth, for recovery from major illness or for caring for family members, less than the 12-week program once envisioned.
Overall the package remains more far-reaching than any other in decades. Republicans are fully opposed to Biden’s bill, which is called the “Build Back Better Act” after the president’s 2020 campaign slogan.
Why it matters
The package would provide large numbers of Americans with assistance to pay for health care, raising children and caring for elderly people at home.
There would be lower prescription drug costs, limiting the price of insulin to $35 a dose, and Medicare for the first time would be able to negotiate with pharmaceutical companies for prices of some other drugs, a long-sought Democratic priority.
Medicare would have a new hearing aid benefit for older Americans, and those with Medicare Part D would see their out-of-pocket prescription drug costs capped at $2,000.
The package would provide some $555 billion in tax breaks encouraging cleaner energy and electric vehicles, the nation’s largest commitment to tackling climate change.
Following are the highlights of what’s in the package, based on summaries provided by the White House and the House.
Tax breaks
- An expanded child tax credit would continue for another year. As part of a COVID relief bill, Democrats increased the tax credit to $3,000 per child ages 6-17 and $3,600 per child 5 and under. Households earning up to $150,000 per year get the credit paid to them on a monthly basis. Budget hawks worry that a one-year extension is a budgetary tool that will lower the cost of the program on paper, but mask its true costs since lawmakers tend to continue programs rather than let them expire.
- The expanded Earned Income Tax Credit that goes to 17 million childless, low-wage workers would continue for one year.
Education
- Universal prekindergarten would be established for all 3- and 4-year-olds and child-care subsidies would be provided for poorer and middle-income Americans. But the programs are funded only for six years.
- $40 billion would be provided for higher education and workforce development. This includes raising the size of Pell Grants and providing funding for historically Black colleges and universities as well as institutions that largely serve Hispanic students or tribal communities.
Health care
- Medicare would be expanded to cover hearing aids, costing an estimated $35 billion over 10 years.
- Expanded tax credits for insurance premiums tied to the Affordable Care Act would be extended through 2025. The White House says that would help 3 million uninsured people gain coverage.
- $150 billion for a Medicaid program that supports home health care, helping to clear a backlog and improving working conditions.
- $90 billion for investments that would include funding maternal health, community violence initiatives, disadvantaged farmers, nutrition and pandemic preparation.
- Out-of-pocket Medicare Part D costs for older Americans would be capped at $2,000 and the price of insulin reduced to no more than $35 a dose.
- A Medicare drug negotiation program would be established. Each year, the secretary of Health and Human Services would identify 100 brand-name drugs that lack price competition and from that list negotiate the price of up to 10 drugs in 2025, 15 in 2026 and 2027, and 20 thereafter. Insulin products must also be negotiated. A drug selected for negotiation would continue to be included in the program until competition enters the market.
Child care
- Biden’s plan says parents earning up to 250% of a state’s median income should pay no more than 7% of their income on child care. Parents must be working, seeking a job, in school or dealing with a health issue to qualify.
Housing
- $150 billion would be committed toward housing affordability with a goal of building more than 1 million new rental and single-family homes. The goal would be to reduce price pressures by providing rental and down payment assistance.
Environment
- Clean energy tax credits would receive $320 billion worth of funding. These credits over 10 years would help businesses and homeowners shift to renewable energy sources for electricity, vehicles and manufacturing.
- $105 billion would be directed toward investments that would improve communities’ ability to withstand extreme weather caused by climate change. The funding would also create a Civilian Climate Corps that focuses on conserving public lands and bolstering community resilience to flooding, drought and other weather emergencies.
- $110 billion would help develop new domestic supply chains and develop new solar and battery technologies. Support would also be given to existing steel, cement and aluminum industries.
- $20 billion would be allotted for the government to become the buyer of clean energy technologies as part of its procurement process.
- $9 billion would be allocated for lead remediation projects, such as the replacement of water lines or the replacement of school drinking water fountains that may contain lead.
Taxes
- Biden’s plan bolsters the IRS to improve collections and close the gap between taxes owed and taxes paid.
- A 15% minimum income tax would be applied to large corporations, along with a 1% surcharge on corporate stock buybacks. The U.S. would also be aligned with an agreement reached by more than 100 countries designed to deter multinational companies from stashing profits in low-tax countries.
- The bill would create a new surtax on multimillionaires and billionaires and close a provision that allows some wealthy taxpayers to avoid paying the 3.8% Medicare tax on their earnings.
- A $10,000 cap on state and local tax deductions would be raised to $72,500. Tax analysts say the change would largely benefit high-income households. Democrats are still arguing over this plan partly to do away with the $10,000 limit that particularly hits high-tax states and was enacted as part of the Trump-era 2017 tax plan. While repeal of the so-called SALT deduction cap is a priority for several Northeastern state lawmakers, progressives wanted to prevent the super-wealthy from benefiting. Under the revised plan, the $10,000 deduction cap would be lifted to $80,000 for nine years, starting with the 2021 tax year.
Immigration
- Those who entered the United States prior to Jan. 2, 2011, and have continuously resided there since would be eligible for renewable parole grants for five years after paying an administrative fee and completing security and background checks. The parole status gives recipients authorization to travel and work in the U.S. and deems them eligible for a Real ID-compliant driver’s license or a state identification card.
- Senators are likely to strip out a just-added immigration provision that would create a new program for some 7 million immigrants who are in the country without legal standing, allowing them to apply for permits to work and travel in the U.S. for five years. It’s not clear that addition would pass muster with the Senate parliamentarian under special budget rules being used to process the package.
Paid family and medical leave
- Eligible workers would receive up to four weeks of paid leave to reimburse them for time taken to care for a new child or other family members or to recover from illness. Biden had initially proposed 12 weeks of paid family leave.
Left out of the bill
- A proposal to expand Medicare to cover dental and vision care is out because of concerns about the cost.
- A proposal to allow for up to two years of free community college is out.
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