Washington Watch: Here’s what’s in and out of Democrats’ big social-spending bill — for now

United States

House Democrats are moving ahead with their $ 1.75 trillion social-spending bill, with votes on the sweeping measure possible as soon as this week even as parts of it face resistance in the Senate.

Smarting from election results including a loss in Virginia’s gubernatorial contest, members of President Joe Biden’s party have added into the bill items like paid family and medical leave and a sharp increase in the $ 10,000 cap on the state and local tax deduction — or SALT, for short. Biden, speaking to reporters on Wednesday, said “people want us to get things done.”

Also read: Democrats now will ‘circle the wagons and pass’ spending bills — analysts react to Virginia, N.J. elections

“That’s why I’m continuing to push very hard for the Democratic Party to move along and pass my infrastructure and bill and my Build Back Better bill,” the president said after an event hailing approval of the COVID-19 vaccine for young children.

Biden and top Democrats had been aiming for a $ 3.5 trillion environmental and social-services package that would move in tandem with a bipartisan infrastructure PAVE, +0.87% bill. But objections from moderates in the party — such as West Virginia Sen. Joe Manchin and Sen. Kyrsten Sinema of Arizona — have slashed the bigger measure in half. Manchin, a holdout on the family leave provision, said in a CNN interview on Thursday that he supports Biden, but argued that Democrats “can’t go too far left.”

Asked Thursday if her chamber would vote later in the day on the two bills, House Speaker Nancy Pelosi said “I’ll let you know as soon as I wish to.” Earlier in the day, she reportedly told fellow Democratic lawmakers that she was hoping for voting to occur Thursday and Friday.

Here are the key proposed categories for spending, as well as how Democrats would pay for their plans.       

What’s in

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 backed extending the new CTC payouts (up to $ 300 a month per child) through 2025, but the latest plan is for them to get extended for just one year.

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 $ 400 billion on universal pre-K and lowering the cost of childcare, according to a framework released by Biden on Oct. 28. As a result, most families would not pay more than 7% of their income on childcare, the framework says.

Paid family and medical leave: While top Democrats had been aiming to give all workers in the U.S. up to 12 weeks of paid family and medical leave, Biden in a CNN town hall last month said the proposed program had been cut to four weeks in negotiations. Then paid leave was dropped entirely in Biden’s framework. House Democrats on Wednesday put the program back in their latest version of the Build Back Better Act, even as Manchin said he still opposes including paid leave. In touting the need for addressing this topic, Democrats have emphasized that just 23% of Americans have access to paid family leave, with lower-wage workers the least likely to have access.

Expand on Obamacare: Biden’s framework proposes a reduction in premiums for more than 9 million Americans who buy insurance through what’s known as the Affordable Care Act Marketplace, saying more than 3 million people who would otherwise be uninsured will gain health insurance. Democrats have been wanting to make permanent an increase in ACA subsidies that was passed as part of March’s $ 1.9 trillion stimulus law.

Medicare expansion only for hearing: The Democratic social-spending measure currently features an expansion of Medicare to offer hearing benefits — but not dental or vision coverage. 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 last month said a Medicare expansion to include vision, hearing and dental benefits would be a “reach” due to opposition from Manchin and Sinema, whose votes are crucial given the Senate’s 50-50 split.

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

And see: Manchin, drawing flak for holding up Biden’s agenda, says Democrats should ‘elect more liberals’ if they want bigger spending

Let Medicare negotiate drug prices: Democrats on Tuesday reached a deal on the issue of cutting the cost of prescription drugs PJP, -0.93% for older Americans, including lowering the price of insulin. Medicare officials would be able to negotiate prices for high-cost prescription drugs including meds that seniors get at the pharmacy counter (through Medicare Part D), and drugs that are administered in a doctor’s office (through Medicare Part B), as one MarketWatch column puts it.

SALT relief: Democrats have compromised on a plan partly to do away with the $ 10,000 limit on state and local tax deductions that hits high-tax states and was enacted as part of Republicans’ 2017 tax plan, the Associated Press reports. A $ 10,000 cap on SALT deductions would be lifted to $ 72,500 for 10 years, starting with the 2021 tax year.

Now see: SALT deduction, disliked on both sides, may live another day as Congress debates $ 1.75 trillion social-spending 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 TSLA, +1.85%, 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

Immigration changes: Biden’s framework shows spending that would total $ 1.75 trillion, then an additional $ 100 billion for immigration. That $ 100 billion for immigration would help with “reducing backlogs, expanding legal representation, and making the asylum system and border processing more efficient and humane,” the White House said. But the Senate parliamentarian must rule on this issue, as the Democratic social-spending bill is expected to advance through a process known as budget reconciliation.

What’s out

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 last month. Biden said boosts for Pell Grants are “what I think we can get done,” saying that’s “a start.” His framework proposes increasing the maximum Pell Grant by $ 550 for more than 5 million students. 

Clean-electricity performance program: This program — which would provide grants to utilities that increase their use of clean electricity — was strongly opposed by Manchin. Biden’s framework, meanwhile, contains $ 555 billion in clean energy and climate programs.

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 some of those hikes have been opposed by Arizona’s Sinema. She appeared open to an excise tax on stock buybacks and a 15% minimum corporate tax rate, so those are in the latest plan.

Boosting tax enforcement by the Internal Revenue Service is another way that Democrats plan to find funding for their priorities. In addition, the wealthiest U.S. households would face a 5% added tax for income above $ 10 million, and, once income reaches $ 25 million, they’d pay an 8% added tax. That would affect 0.02% of Americans, according to the White House.

Top Democrats at one point said a new annual tax on billionaires’ unrealized capital gains was likely to be included in their social-spending package, but that proposal quickly met criticism from other Democrats. An excise tax on tobacco and nicotine products also has been left out, along with a proposal to increase the extent to which banks tell the IRS about cash flows in customers’ accounts.

See: Corporate rates left alone, stock buybacks targeted — what’s in Biden’s tax plan

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