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After six months of wrangling, the Biden White House has released a framework for the Build Back Better Act.
A couple of days ago, I took to The New York Times to lay out a concept for thinking about the Build Back Better Act. We had a pandemic that exposed real cracks in our social policy, in areas like health care, family care, housing, and cash assistance in an emergency. We showed ourselves unprepared for a crisis, with another slow-motion crisis—our warming planet—looming on the horizon. So the imperative was to reduce these vulnerabilities for Americans with simple, meaningful, permanent programs, in ways that could earn back the trust of the nation.
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After six months of wrangling, we have a framework from the White House on the Build Back Better Act. It’s unclear whether this includes everything that will be in the final bill (in particular, drug prices and the state and local tax deduction are big wild cards), when the final bill text will be produced, and whether all 50 Democratic senators are on board (neither Joe Manchin nor Kyrsten Sinema has actually said that they would vote for this). It seems pretty clear that a framework, by itself, won’t be enough to get the House to pass the bipartisan infrastructure bill, although that’s what will be asked of progressives today; in fact, that appears to be the purpose of this announcement.
But this is close enough to the final tally for the Biden agenda that we can assess it. There will be a lot of focus on what didn’t make the cut; paid family and medical leave and Medicare negotiation of prescription drug prices are the biggest omissions. But what about what’s in here? Does it cohere to this standard of building back better?
You cannot improve conditions for Americans if they don’t have a sustainable planet to live on. There is $555 billion, around 30 percent of this bill, earmarked for climate investments, though that stretches the definition. The clean-energy tax credits, which last throughout the ten-year budget window, will stand alongside still-extant tax credits for fossil fuels, which Manchin demanded stay in place. The $320 billion tax credit framework is modeled on the Clean Energy for America Act, which includes production tax credits for anything carbon-neutral. That can include nuclear and carbon capture facilities, which have either been too cost-prohibitive to build or exist only on paper. Other credits are for home energy, energy efficiency, and electric vehicles. We’re going to hope Americans take up the opportunity to green their lives at a somewhat cheaper cost.
There’s $105 billion for resilience projects, which fight the effects of climate change rather than mitigate its presence. Sadly, that’s probably where we are as a species. The Civilian Climate Corps slots in here, with the investment folding into AmeriCorps, a not-very-well-run program. There’s a $110 billion industrial policy piece here, emphasizing the jobs component of the climate crisis by investing in domestic supply chains for wind turbines, solar panels, steel, cement, and aluminum. (Supply chain bottlenecks are raising costs for clean energy as we speak.) The Clean Energy and Sustainability Accelerator, sometimes called a climate bank, is designed to invest in green projects while leveraging private capital, an inroad for the financial sector to involve itself in the transition.
The family care and cash assistance piece is tenuous. The Child Tax Credit becomes fully refundable permanently, which by itself is a nice boost for low-income families. But the expanded credit, up to $3,600 for children under 6 and $3,000 for children between 6 and 17, only goes forward for another year. The expanded Earned Income Tax Credit for families without children also extends for just one year. (This sets up for an interesting lame-duck session next year.)
Because Manchin implemented universal, free pre-kindergarten in West Virginia, that’s the only universal, free program left in the bill, though the child care subsidies are only cut off at 250 percent of the state median income, a pretty high threshold, thanks mostly to Matt Bruenig of the People’s Policy Project making a big fuss about it. However, child care and pre-K are still time-limited, lasting only six years. There will be fights to extend them beyond 2027, and all the energy will be spent on those fights, not on the design of the programs themselves.
For example, while universal, the pre-K program is funded as a federal/state partnership. In the House-passed version, the feds picked up the cost for the first three years and then it went down to a 60-40 federal/state split by year seven; there is no year seven here, so it’s unclear what that split drifts down to. Still, as we saw with Medicaid expansion, ideologically conservative legislatures aren’t going to institute the policy even if it makes financial sense. Child care is also funded this way, as a 90-10 split after year three, so you could see the same lack of take-up. Moreover, child care includes an “activity test” (a soft work requirement), an asset test (you can’t have more than $1 million in assets to qualify for subsidies), and a co-payment (up to 7 percent of income for higher-wage families, free or near free at the median state wage).
Ultimately, whether Biden is a consequential president hinges not only on the success and durability of these programs, but also on how he supplements them.
The subsidies ramp up over the first three years, leaving any household making above the median wage out of subsidies in year one and those at 130 percent out in year three. The claim is this will give time to increase child care supply, but it’s just a fact that we’ll go through two elections with middle-class and upper-middle-class families getting no child care benefits.
Home and community-based care is funded at $150 billion; advocates said repeatedly that there’s no way to meet the twin goals of affordable access to at-home care and higher wages for care workers for less than $250 billion. It’s unclear whether that investment is enduring.
On health care, the premium tax credits in the Affordable Care Act, added to get rid of the kind of income cliffs we’ll see in child care in the first three years, only extend to 2025. These tax credits also extend to people eligible for Medicaid in states that haven’t expanded it. Instead of covering dental, vision, and hearing, Medicare will just cover hearing, an interesting choice considering that the FDA just authorized over-the-counter hearing aids that will bring the cost down without a Medicare benefit. If dental was too pricey, it seems like vision would have been the more out-of-reach need for seniors, but hearing is cheaper to administer.
Housing was initially funded at $327 billion, with investments across the spectrum for building more homes, eliminating the public-housing repair backlog, down payment assistance, added rental vouchers, and innovations like community land grants. It got more than cut in half back to $150 billion, and instead of focusing on a couple of programs, it just scaled back everything so the impact of each piece is blunted. Tuition-free community college is gone, but there’s a minor $40 billion to increase the maximum Pell grant and help out certain colleges serving at-risk communities. A grab bag of other stuff costs out to $90 billion, including pandemic preparedness, child nutrition, “supply chain resilience,” and Native investments.
I wrote about the tax plan earlier today. The Trump tax cuts are kind of firmly in place, but the corporate minimum, global minimum, and stock buyback taxes are combined with a surtax on multimillionaires and extending the net investment income tax to partnerships and S corporations. Combined with some undefined IRS enforcement investments, the claim is that this gets you $2 trillion in offsets, more than covering the $1.75 trillion in spending.
The Easter eggs here will be interesting. There’s a supposed deal on drug prices that looks like Rep. Scott Peters’s exceedingly modest reform, which would only allow negotiation on off-patent drugs through Medicare Part B, which is not what patients get at the pharmacy counter (it’s drugs through hospitals, basically). And there are assurances of some short-term repeal of the state and local tax deduction cap. You could see those as linked; savings on drug prices will be eaten up by SALT cap repeal. If, as expected, the barely mentioned immigration piece, subject to an unlikely agreement from the Senate parliamentarian, gets dropped, that would be another $100 billion for SALT repeal to soak up. SALT is an unjustified giveaway to richer families that could be swallowed down as the price of a good bill. But does this meet that standard?
In the end, I don’t see how you can say this meets the test of simple, permanent, and meaningful. Almost nothing is permanent. The child care piece in particular is going to be a huge pain in the ass for families. And other scaled-back investments are unlikely to be very meaningful.
That said, if you believe that the bill would actually decarbonize the country and help it withstand the ravages of baked-in climate change, that would make it worthwhile. Six years of free pre-kindergarten for all (in states that allow it) is a solid investment. And the Child Tax Credit could prove one of those “tax extenders” that gets advanced year after year.
Ultimately, whether Biden is a consequential president hinges not only on the success and durability of these programs, but also on how he supplements them. Biden has dozens of options to bring meaningful relief to the public through executive action. With his agenda cut in half—he wanted $4 trillion in new investments, and this bill combined with the infrastructure packages gets to about $2.25 trillion—he needs to use his own authority on things like prescription drug reform and student debt forgiveness, which could be used to realize tuition-free college. Manchin and Sinema aren’t barriers here. If Biden wants to be the next FDR, he has to follow FDR’s lead and execute the laws to their full ability.
