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Washington Watch: What’s in — and not in — Democrats’ big social-spending bill, as billionaire tax hits resistance

Negotiations are intensifying among Democratic moderates and progressives over President Joe Biden’s “Build Back Better” plan, a sweeping proposal targeting “human infrastructure,” climate change and other party priorities.

Biden and other top Democrats had been aiming for a $3.5 trillion social-spending package that would move in tandem with a bipartisan infrastructure

bill, but objections from moderates in the party may cut the bill to around $1.75 trillion.

Biden spoke Monday at a transit-maintenance complex in Kearny, N.J., on his economic agenda, calling it about a choice between “competitiveness versus complacency.” Adding urgency to the negotiations, the president is set to depart for meetings in Europe later this week. Lawmakers are furiously haggling over issues including how to pay for the bill, with some Democrats criticizing a billionaires’ tax that appeared to be gaining steam only days ago.

See: So what exactly is a billionaires’ tax — and how would it work?

House Speaker Nancy Pelosi told CNN on Sunday, “We have 90% of the bill agreed to and written. We just have some of the last decisions to be made.” As the party aims to reach agreement by Oct. 31, below are key proposed categories for the spending.

Extended child tax credit: Expanded child-tax-credit payments began in July, stemming from March’s $1.9 trillion stimulus law, but they’re due to fade away next year. The Democratic-run House Ways and Means Committee supports extending the new CTC payouts (up to $300 a month per child) through 2025, but some moderate Democrats want stricter income limits for recipients. Biden has told progressives that the new CTC payouts may be extended for just one year, Politico reports.

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 $450 billion on universal pre-K and lowering the cost of childcare, according to the House Education and Labor Committee. As a result, most families would not pay more than 7% of their income on childcare, Democrats say.

Paid family medical leave: Top Democrats have been aiming to give all workers in the U.S. up to 12 weeks of paid family medical leave, but Biden in a CNN town hall on Thursday night confirmed the proposed program has been cut to four weeks in negotiations. In touting the need for addressing this area, Democrats have emphasized that just 23% of Americans have access to paid family leave, with lower-wage workers the least likely to have access. Paid leave of 12 weeks would increase families’ incomes by more than $28 billion, they say.

Expand on Obamacare: Democrats want to make permanent an increase in Affordable Care Act subsidies that were passed early this year as part of March’s $1.9 trillion stimulus law. House leaders are reportedly leaning toward prioritizing the subsidies, as well as closing the Medicaid coverage gap in states where the program wasn’t expanded. Yet focusing on those two provisions at the expense of expanding Medicare would risk alienating Sen. Bernie Sanders of Vermont, the independent who usually votes with Democrats, making health care one of the thorniest negotiations.

Medicare expansion: 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 on Thursday night said a Medicare expansion to include vision, hearing and dental benefits would be a “reach” due to opposition from two key moderate Democratic senators whose votes are crucial given the Senate’s 50-50 split — West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema.

Read: Democrat? Republican? ‘I don’t know where in the hell I belong,’ Manchin jokes.

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 on Thursday night. “What I think we can get done is we can significantly increase the amount of money by 500 bucks a payment for Pell Grants,” he said. “It’s not going to get us the whole thing, but it is a start.” 

Let Medicare negotiate drug prices: Biden and other top Democrats have pushed for having the Build Back Better Act include provisions that would lead to Medicare negotiating the price it pays for prescription drugs
but it’s not clear that will happen. The House Energy and Commerce Committee rejected that proposal last month following opposition from three moderate Democratic lawmakers. “These negotiations are going to take time, and it remains to be seen if there is any version of ‘direct negotiation’ that can get 50 votes in the Senate,” said Capital Alpha Partners analysts in a recent note.  

Clean-electricity performance program: This program — which would provide grants to utilities that increase their use of clean electricity — appears all but dead. Manchin, the key moderate Democratic senator, is opposed to the $150 billion provision, and other Democrats are crafting separate climate measures — such as making buildings more energy-efficient — with the expectation this program will be dropped, the Wall Street Journal reported.

See: ‘U.S. will look ridiculous if they show up with nothing’: Biden could be weakened at Glasgow as clean energy likely cut from budget bill

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; Tesla not invited to EV event because it focused on 3 biggest employers of UAW members

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 that proposal hit a wall as Arizona’s Sinema opposed increases in those rates. On Sunday, top Democrats said a new annual tax on billionaires’ unrealized capital gains is likely to be included in the massive social-spending bill. Yet that proposal quickly met criticism from other Democrats, including House Ways and Means Committee Chairman Richard Neal of Massachusetts, who called implementation “a bit more challenging.”

Pelosi also said IRS tax enforcement is another potential way to pay for Democrats’ priorities. Sinema, meanwhile, appears open to an excise tax on stock buybacks and a 15% minimum corporate tax rate, the Wall Street Journal reports.

Now read: Biden revises proposal to have IRS monitor bank accounts more closely. Here’s how it would work

This is an updated version of a report first published on Oct. 18, 2021.

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