On Thursday, President Biden announced the framework for the Biden Build Back Better agenda. The highly anticipated economic plan aims to rebuild the middle class by implementing social programs, health care expansions and tax reforms. The plan also constitutes the largest effort to combat climate change in American history, with $555 billion invested in initiatives to cut greenhouse gas pollution, reduce consumer energy costs, provide cleaner air and water to future generations and invest in a clean energy economy.
The current framework invests a total of $1.75 trillion in social and climate policies, including the following key programs and benefits:
- Subsidized Childcare. High-quality childcare will be funded for working families based on earnings. The plan will enable states to make high-quality childcare more accessible for more than 20 million children per year.
- Extended Child Tax Credit. The enhanced Child Tax Credit, which affords monthly payments to the majority of American families, will continue through 2022. The Child Tax Credit, originally part of the American Rescue Plan, provides parents with $300 per month for every child under six years old and $250 per month for every child between the ages of six and 17. The plan also includes permanent refundability, meaning America’s poorest families will continue to qualify for the tax credit and receive payments long-term.
- Universal Preschool. The plan will provide access to free universal preschool for more than six million children ages three and four and increase the quality of preschool for many children already enrolled.
- Affordable Care Act Coverage. The plan reduces premiums by an average of $600 per person every year for Americans who buy insurance through the Affordable Care Act Marketplace. Moreover, the plan extends the Affordable Care Act premium tax credits under the American Rescue Plan.
- Medicaid Improvements. The plan will vastly improve Medicaid coverage for high-quality homecare services for the elderly and individuals with disabilities. In addition, the plan will provide health care coverage through Affordable Care Act premium tax credits to up to four million uninsured Americans who have been locked out of Medicaid by their states.
- Hearing Benefits. Medicare coverage is expanded to include hearing benefits.
- Investment in Affordable Housing. The plan invests in the construction, rehabilitation and improvement of more than a million affordable homes. Rental assistance, with the expansion of vouchers to hundreds of thousands of additional families, will be provided as well. The plan also invests in down payment assistance to help first-generation homebuyers purchase a home and redevelopment projects of historically disadvantaged neighborhoods.
- Extended Earned Income Tax Credit. The plan extends the expanded Earned Income Tax Credit under the American Rescue Plan. The tax credit provides low-to-moderate- income, childless workers with tax breaks to keep them above the federal poverty line.
- Increased Access to Higher Education. The plan will make education beyond high school more accessible by increasing the maximum Federal Pell Grant awarded to undergraduate students who demonstrate an exceptional financial need, investing in Historically Black Colleges & Universities and Tribal Colleges and Universities, and providing easier access to higher education for DREAMers.
- Immigration Reform. The plan includes a $100 billion investment in immigration reform that will make the asylum system and border process more efficient and humane.
- Clean Energy Technology. Hundreds of thousands of jobs will be created by ensuring that clean energy technology, including solar panels and electric cars, are built in America with American materials.
- Rebates and Credits for Clean Energy: The plan encourages Americans to transition to clean energy alternatives by expanding existing home energy and efficiency tax credits, creating a new rebate program, lowering the cost of electric vehicles made in America with an electric vehicle tax credit of up to $12,500, and cutting costs of installing rooftop solar for homes. The plan also provides targeted grants and loans to help rural communities embrace clean energy alternatives.
Plan Would Be Funded by Wealthy Americans and Large Corporations
If the plan is passed by Congress, it will be funded by the largest corporations and the wealthiest Americans. The plan imposes a 15% minimum tax on corporations that report profits of over $1 billion and includes a 1% surcharge on corporate stock buybacks. The Biden administration will also enforce a 15% global minimum corporate tax in order to stop rewarding corporations that ship jobs and profits overseas. The wealthiest Americans will pay for the plan with a 5% surtax rate on individual income exceeding $10 million, and an additional 3% surtax rate on individual income exceeding $25 million. Additionally, the Biden administration will ensure that wealthy Americans pay their taxes by assisting the IRS with hiring more auditors, updating technology and expanding its enforcement division.
(See also: Tax Changes May Be On the Horizon: How To Protect Yourself and Your Business)
Bill Downsized From Original $3.5 Trillion Spending Plan
While the finalized version of the plan appears comprehensive, it is merely a fraction of the original proposal of the bill, which included a $3.5 trillion spending budget. Democrats removed various programs and benefits from the bill in an effort to garner approval from two moderate Democratic lawmakers, Senator Joe Manchin of West Virginia and Senator Kyrsten Sinema of Arizona. The plan previously included provisions providing for two years of free community college, encouraging utility companies to transition to renewable energy and guaranteeing twelve weeks of paid family leave. Progressive lawmakers, most notably Senate Budget Committee Chair Bernie Sanders, also supported the expansion of Medicare coverage to include dental, vision and hearing benefits, but only hearing benefits are covered under the current framework.
Progressive and Moderate Democrats Must Agree for Bill To Pass Senate
The preceding months were inundated with disagreements between progressive lawmakers, who favored a higher spending budget, and more moderate lawmakers, who agreed to support the plan only if the spending budget was significantly reduced. An agreement between progressive and moderate Democrats is essential to eventually passing the bill in the evenly divided Senate. Because the plan is not backed by Republican lawmakers, Democrats are trying to pass the bill through a process called budget reconciliation, which would enable the bill to pass the Senate with only Democratic support. Moreover, House Speaker Nancy Pelosi has reiterated that she will only hold a vote on the bill in the House if there is enough support for the bill to pass through Senate Democrats. An agreement amongst Democrats is also critical for the $1 trillion bipartisan infrastructure bill, the other major piece of domestic legislation under the Biden Administration, to pass. Progressive Democrats in the House have refused to vote on the infrastructure bill, which already passed in the Senate, until negotiations over social programs and climate policies were finalized.
Future of Biden’s Plan Remains Uncertain
Although President Biden is confident that his proposed framework will pass both houses of Congress, the future of the plan remains uncertain. The significant spending cuts in the final version are not supported by many progressive lawmakers in the House, and Senate Democrats are still divided over several issues, including Medicare expansion and paid family leave. Furthermore, because the budget reconciliation bill has not actually been written, there still may be some changes to the plan.
KJK will continue to closely monitor any changes or updates to the current framework. For more information or to discuss further, please contact Kevin Lenhard at email@example.com or 216.736.7226.