After months of negotiations, House Democrats passed a $1.75 trillion social policy and climate change bill Friday morning, advancing a key piece of President Joe Biden’s economic agenda.
The bill passed by a vote of 220-213, mostly along party lines, with one Democrat voting against it.“We have a Build Back Better Bill that is historic, transformative and larger than anything we have ever done before,” House Speaker Nancy Pelosi said before the vote.“We are building back better.If you are a parent, senior, child, worker, American — this bill is for you.”
It was all but inevitable it would pass the House after the nonpartisan Congressional Budget Office released its final cost projection of the legislation on Thursday evening, estimating the sweeping spending package was unlikely to add a significant amount to the deficit after accounting for revenue that could be generated through Democrats’ plan to beef up IRS enforcement to go after wealthy tax evaders.
But that didn’t stop Republicans from attempting to delay the vote.As Minority Leader of the House, Rep.Kevin McCarthy was entitled to speak as long as he wanted before the vote could commence.In a scathing 8 hour and 42 minute speech, McCarthy called the legislation “the single most reckless and irresponsible spending bill in our nation’s history.” He was booed by Democrats for his searing remarks, to which he replied: “That’s all right, I’ve got all night.”
The Build Back Better package now heads to the Senate, where lawmakers in the upper chamber will continue negotiating elements of the bill .The Senate can then pass it with a simple majority through a budget mechanism called reconciliation, but Democrats can’t afford any defections from their 50-member caucus.
That means moderate members of the party like West Virginia Sen.Joe Manchin and Arizona Sen.Kyrsten Sinema wield enormous power to alter the text of the bill.
If the Senate makes any amendments to the text, the bill will be sent back to the House for reconsideration.But Thursday’s House vote marked a major step forward for Biden’s signature social spending package.
Here are seven of the current bill’s most significant provisions.
$555 billion to fight climate change The biggest sum of money in the bill is set aside for climate-related provisions, which the White House hopes will allow Biden to deliver on his goal to halve carbon emissions by 2030.
The bulk of clean energy spending—$320 billion—comes in the form of tax credits for companies and consumers that install solar panels, improve the energy efficiency of buildings and purchase electric vehicles.The Biden Administration says the tax breaks could cut the overall cost of installing rooftop solar panels by around 30%, as well as lower the cost of electric vehicles by $12,500.
The bill also provides financial incentives for U.S.manufacturing of clean energy technologies, with the goal that more wind turbines and solar panels will be made domestically through a combination of grants, loans and tax credits.Spending also goes towards the creation of a Civilian Climate Corps that would provide some 300,000 jobs to restore forests and wetlands and guard against the effects of rising temperatures—similar to the New Deal-era Civilian Conservation Corps , which was championed at the time as an economic development and environmental plan, but criticized by organized labor groups.
$400 billion for universal pre-K The bill directs money to providing free universal preschool for all three and four year olds, which the White House has dubbed the largest expansion in education programs since the creation of public high school.
Under the universal preschool plan, parents will be able to send their children to a public school or childcare program of their choice.
The effort is part of Biden’s larger plan to ease the financial burdens facing millions of American families, particularly low-income parents with children.Families that earn less than $300,000 annually, for instance, will pay no more than 7% of their income on child care for kids under age six, according to the bill.
$200 billion for child tax credits The bill grants a one-year extension of the pandemic-era child tax credit, which provides parents with $300 every month per child under age six and $250 every month per child ages six to 17.Families that do not earn enough money to qualify for income tax liability will be eligible to continue receiving the full child tax credit beyond the one-year period.
$200 billion for 4 weeks of paid leave The bill creates a permanent, comprehensive national paid leave program that gives employed workers—including those who are self-employed—four weeks of paid family and medical leave, which can be used for caregiving or personal illness.If this provision becomes law, workers who request paid leave starting in 2024 will receive a percentage of their income starting at about 90% and scaling down for higher earners.
Currently, the U.S.is one of few industrialized nations without a national paid leave program for new parents.
According to the Bureau of Labor Statistics, as of March 2021, just 23% of civilian workers in the U.S.had access to paid family leave and 89% had access to unpaid family leave.
Although the paid leave provision passed the House, it faces an uphill battle in the Senate against Sen.Manchin, a key centrist who said he opposes passing a major policy like this through a spending bill.
$165 billion on healthcare spending Touted by the White House as the biggest expansion of affordable health care in a decade, the spending bill reduces health care premiums under the Affordable Care Act and expands Medicare coverage to include hearing benefits.
Premiums for those who buy insurance through the Affordable Care Act marketplace will be around $600 less per person each year, so that a family of four earning $80,000 annually would save roughly $246 per month on health insurance premiums, the White House says.
Officials hope the savings will make it easier for those who are currently uninsured to gain health insurance.The spending plan also closes the Medicaid coverage gap, allowing uninsured people whose states have locked them out of Medicaid to receive health care coverage without paying a monthly premium.
The Build Back Better bill also delivers a compromise for taking on Big Pharma over rising drug prices: It would restrict how much drugmakers can increase their prices each year and set an annual limit on out-of-pocket spending, but only after those drugs have been on the market for about a decade.
That means drug companies could still charge an enormous amount for new drugs, with price regulation taking effect nine years later for most common medications and 13 years later for more complicated drugs.Out-of-pocket costs for insulin—a protein hormone used to treat diabetes—would be capped at $35 for a 30-day supply, significantly lower than current costs, starting in 2023.
$150 billion to expand affordable home care The plan provides funding for a Medicaid program that supports in-home health care, helping to reduce a backlog of people waiting to receive subsidized home care and improve wages for providers.Thousands of seniors and disabled Americans have been unable to receive care they need, including more than 800,000 on state Medicaid waiting lists, the White House says.
Many home care issues have been exacerbated by the COVID-19 pandemic.
$150 billion for affordable housing Increased spending on housing affordability will go towards building more than 1 million new rental and single-family homes.The bill aims to reduce cost pressures by providing rental and down payment assistance through an expanded voucher program.
According to the National Low Income Housing Coalition , around 70% of all extremely low income families pay more than half their income on rent, and over 580,000 Americans currently experience homelessness.
Where is all this money coming from? Democrats say the spending package will be paid for by tax increases on high earners and corporations, but the nonpartisan Congressional Budget Office found on Thursday that this will only raise around $1.5 trillion over 10 years—just short of the $1.75 trillion in 10-year spending.
The CBO findings are at odds with the White House’s pledge to fully pay for the Build Back Better bill, which is now expected to increase the federal budget deficit by $160 billion over the next 10 years.
Still, the White House maintains that the bill “will be more than fully paid for” since CBO budget estimates came in roughly $50 billion below their own cost estimates.
The largest source of revenue stems from a new 15% tax on large corporations with over $1 billion profits, as well as a 1% surcharge on companies that perform stock buybacks—part of the President’s ongoing effort to address how some companies paid zero dollars in taxes last year.The spending bill will also be funded through a new tax surcharge on the wealthiest Americans, applying a 5% rate on income above $10 million and an additional 3% surtax on income above $25 million.
The White House initially hoped to raise additional money by increasing tax rates further for corporations and wealthy individuals, but opposition from Sen.Sinema and other moderate Democrats led the Biden Administration to modify that plan.
The bill also does not include a billionaire’s income tax, proposed by Oregon Sen.Ron Wyden, that would generate increased funding from the roughly 700 American billionaires, such as Amazon founder Jeff Bezos..