House Democratic leaders are pressing forward with President Biden's smaller plan for a domestic policy bill that sweeps up some of his top priorities.
After months of infighting, and a stinging loss in Virginia's gubernatorial race, there is a new sense of urgency to show the party can deliver. But the revised bill faces hurdles in the Senate, where several Democrats say they have issues with the new version, and the process to get to a final deal is expected to drag out through the fall.
Biden announced a $1.75 trillion framework last week — a scaled-back version of his initial $3.5 trillion "Build Back Better" plan.
Democrats are using a budget process known as reconciliation to get around a GOP filibuster in the Senate, so they need all 50 senators who caucus with the Democrats on board with the framework. Opposition from two key Senate moderates — Sen. Joe Manchin, D-W.Va., and Sen. Kyrsten Sinema, D-Ariz. — forced leaders and the president to trim programs, and lower expectations for those on the left.
House Speaker Nancy Pelosi, D-Calif., abandoned a pledge to moderates that they would not vote on a bill unless they had full agreement with the Senate. Instead, Pelosi decided to add items that her members viewed as top priorities — even though it's unclear some of them will pass muster with Senate rules limiting what can be included in a budget measure and which Manchin has already said he opposes, including paid leave.
Here's a snapshot of Biden's latest plan, with more details on the fate of major policy proposals below:
Here's what's currently in the plan
Here's what's out
Taxes that would help pay for the plan
A deeper look at key provisions
The expanded child tax credit that was enacted as part of this spring's coronavirus relief package has been credited with dropping child poverty rates. Democrats view it as a key policy achievement. Biden had hoped to extend it for four more years.
The president's framework extends the child tax credit and the earned income tax credit for one year.
House Speaker Nancy Pelosi told reporters earlier she preferred a permanent extension, but said "it is called the Biden child tax credit. So if it's acceptable to him, in light of the bill, it's acceptable to me."
Many Democrats believe the popularity of the policy and the immediate impact will make it tough for Republicans to roll it back if they take control of one or more chambers in the 2022 midterm elections.
Universal pre-K programs are expected to remain in the proposal, and Pelosi linked them to the child care and family leave proposals as a comprehensive effort to support working parents, and as critical "human infrastructure."
Paid family leave was dropped from the president's framework because of opposition from Manchin. But Pelosi told reporters, "We can afford it. It's universal. It's a compromise" from the original 12 weeks many Democrats wanted. Other Democrats acknowledged it would likely be stripped out in the Senate, but because the provision was popular, many House Democrats wanted the opportunity to vote for it.
The president had touted the Clean Energy Performance Program (CEPP), which provides incentives for utility companies to switch to greener technologies and fines those who don't, as the centerpiece of his climate agenda. He saw it as a tool that could achieve his goal of reducing greenhouse gas emissions by 50% by 2030. But the program has been dropped because Manchin, who represents a state heavily reliant on coal production, doesn't support it.
House Speaker Nancy Pelosi downplayed that concession, and insisted there are other ways to get to that goal.
"It isn't about a particular plan. It's about reaching our goals and how we do it. I feel very satisfied the path we're on to do that," she said recently.
Biden, Pelosi and other congressional Democrats traveled to the COP26 climate change conference in Scotland around the time the framework was unveiled, so negotiators had to find various other proposals that Manchin can back — a mix of tax credits and other programs — and that can show world leaders the U.S. is making good on its climate goals. The White House is also discussing some administrative actions they can take that wouldn't require congressional approval.
There are three main health care programs that Democrats say they intend to keep in a final deal: the Affordable Care Act, Medicare and Medicaid. But as the number for the overall for the package shrank, the challenge became how to structure these plans.
Pelosi, who steered the Affordable Care Act through the House and views it as a legacy issue for her, has pushed to make subsidies for the program permanent. But the scaled-back plan included an extension of these tax credits only through 2025.
Budget Committee Chairman Bernie Sanders, I-Vt., proposed to expand Medicare to cover vision, hearing and dental procedures. The costs for all three could prove too expensive in this smaller package. Biden said it would be a "reach" to get all three. The president's framework includes coverage for hearing care, but not for dental or vision — something Sanders said was still concerning to him.
The bill also expands Medicaid coverage, funds home care programs for those seniors who want to live independently.
The White House and Democratic leaders announced a deal that will lower the cost of some prescription drugs for seniors. The plan would allow Medicare Part B and Part D programs to negotiate prices for specific medications directly with drug companies.
It would also cap the out-of-pocket costs for seniors to $2,000 per year — significantly less than the current cap of $6,500 per year. The proposal penalizes drug companies that increase their prices at rates higher than inflation.
This compromise was negotiated with a small group of Democrats opposed to a broader plan for Medicare to negotiate directly with drug manufacturers on the prices for prescription drugs.
Democrats initially planned to include a pathway to citizenship for 8 million immigrants in the reconciliation package, but the Senate parliamentarian, who determines what policies are permitted under the rules for the budget process, determined would not be allowed. Sen. Dick Durbin., D-Ill., also tried to craft a plan to expand an existing registry for immigrants to allow them to reside in the U.S., but that plan was also ruled out of order by the parliamentarian.
House Democrats added provisions to their bill that gives work permits for those undocumented workers who have been in the U.S. since 2011. Their revised bill also includes making available work and family visas that have not been used yet. It also has resources to reduce the immigration backlog. But it is possible that these provisions will be stripped out in the Senate.
Brings back the state and local tax deduction
The 2017 Trump tax bill limited the deduction homeowners could deduct on their tax returns. House Democrats want to repeal the cap.
The new maximum deduction on the so-called SALT limit would be $80,000 a year through 2030. The cap would return to $10,000 in 2031. Many progressives preferred this provision wasn't included and say it will end up helping the same wealthy Americans they campaigned were already not paying their fair share in taxes. But many House Democrats from New York and New Jersey, which has high housing costs, argued the elimination of the credit amounted to an unfair targeted tax that hit many families.
This change was designed to secure the votes from lawmakers from states affected by the elimination of the deduction, but it is also likely to be changed in the Senate, where Sen. Bernie Sanders, I-Vt., wants to limit the deduction to those making below a certain income.
The Democrats' original bill included a plan for two years of free community college, but it is one item that both progressives and moderates said was not going to make it into a final deal. The president noted to lawmakers that the proposal was a personal priority for the first lady, who still teaches at a community college in northern Virginia. But the idea was not able to get broad support in his meetings.
Democrats do plan to include some funding for Pell grants and vocational programs in their reconciliation package.
Democrats campaigned on rolling back the 2017 Trump tax cuts on corporations and the wealthy and planned to use the significant revenue from those tax changes to pay for this package, but Sinema opposed changes to rates and instead negotiated some new tax provisions that would still target new taxes on some ultra rich Americans and companies that have avoided paying large tax bills.
The revised bill includes a 15% corporate minimum tax, a surtax on the ultra wealthy, and changes to international tax provisions. It also calls for stepped up efforts by the IRS to go after non-compliance b individuals and companies.
Pelosi touted a report from the Joint Committee on Taxation that shows that these tax increases raise almost $1.5 trillion over 10 years and argued that the prescription drug plan and plans to toughen IRS enforcement will cover the remaining cost of the bill. Leaders do not expect a final cost analysis from the non-partisan Congressional Budget Office until later this month.
Final deal could take weeks, months
Pelosi has little room to maneuver in the House with only a three-seat vote margin. After months of saying she wanted a deal with the White House and Senate Democrats, she reversed course and agreed to include some provisions that already are opposed by Manchin and potentially others.
This means that even if the House reconciliation package is approved, it is all but certain to change in the Senate, and the House will have to vote on another version later this fall.
President Biden urged Congress to move quickly to approve his agenda and the window for passing major legislation is traditionally the end of the year. Once 2022 begins and the focus intensifies on the midterm elections, it is tougher to pass any significant bills — and this proposal would be the largest domestic spending bill Congress has passed in decades.
Sen. Sherrod Brown, D-Ohio, who chairs the Senate Banking Committee, told reporters recently about the challenge in an evenly divided Senate, "It's hard to keep 50 people together with different constituencies."
Right now Brown is focused on another issue for the package: investments in public housing and help for first-time home buyers. "It will greater supply of housing and more affordable housing." He said the package will be "the biggest investment" n housing that will span urban, suburban and rural areas.
Still, it's an example of why getting to an agreement on a final framework may be difficult. There are many issues Democrats want to see in this bill, while staying under $2 trillion.