Democrats can limit social programs in reconciliation bill



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WASHINGTON – Democrats face tortuous choices about which social programs to cut or eliminate altogether as they will have to cut $ 1 trillion, or even $ 2 trillion, from their social spending bill.

While the numbers at the top of the page have attracted a lot of attention, there has been little public discussion of what the halving of the Build Back Better Act actually looks like: abandoning unwanted programs and reforms by the progressives and the centrists.

Are you giving up on the child tax credit that cut child poverty in half, or the country’s first universal paid family leave program? Are you removing preschool subsidies or expanding medicare to cover vision, hearing and dental care? What if you could afford to invest in green energy or expand the Affordable Care Act, but not both?

After winning the White House and Congress, Democrats launched an ambitious plan to comprehensively reform America’s social safety net and tackle climate change with massive investments in green energy. The total price, including tax credits, has been set at $ 3.5 trillion over 10 years. Now they’re looking at something about half of that.

Democratic Senators Joe Manchin and Kyrsten Sinema are pushing their party to drastically reduce the size of their Build Back Better Act. The final figure is not clear, but estimates range from $ 1.5 trillion – Manchin’s proposal – to President Joe Biden’s counter-offer of somewhere over $ 2 trillion.

One of the top Democratic priorities is universal paid family and medical leave, allowing people to take paid time off due to illness, having a baby, or caring for a sick family member. Estimates put it at around $ 550 billion. (All figures are 10-year projected costs, this is how Congress calculates the price.)

Take that policy and add a few hundred billion dollars to move the country towards green energy, plus about $ 800 billion to make permanent the Universal Child Tax Credit, temporarily enacted earlier this year, which gives parents up to $ 3,600 per year for each child. At this point, you’ve pretty much hit your budget cap.

But this hypothetical bill does not include such things as expanding the Affordable Care Act to provide health insurance for over 2 million people, long-term care for the elderly, a universal preschool. for 3- and 4-year-olds, funding for schools and many other popular progressive ideas. To add any of these, you need to either remove something else or reduce it.

Democrats have two choices: They can either cut the main boards of the bill or gut every program, making them lighter and temporary to fit into the budget. If you only extend the child tax credit for five years and bet that in 2026 the government of the day will extend it again, that brings the price down dramatically. But if you bet badly, the tax credit ends.

“If you configure programs to automatically expire, it creates the risk that they actually expire,” said Ben Ritz, director of the Progressive Policy Institute. “I think it’s very problematic for Congress to create a new advantage that people rely on, and then a few years later it goes away.”

Ritz pointed to the Affordable Care Act permanently enacted by President Obama. Republicans have failed to actively repeal the ACA despite years of promises to do so. But it would be a very different calculation if they could just do nothing and let it expire on its own.

Ritz put in place a framework of what a $ 2,000 billion Build Back Better Act could look like. He understands:

  • 800 billion dollars to make the child tax credit permanent.

  • 600 billion dollars green investments, including public transit funding, energy grid upgrades, and industry subsidies for utilities switching to green energy.

  • $ 425 billion expand ACA grants and Medicaid eligibility to provide health insurance to 2.2 million low-income people.

  • 175 billion dollars for preschool, plus funding for vocational training.

No estimate of what a $ 2 trillion plan would look like has been released by Congress, as the party is still fighting over the bill. Senator Bernie Sanders recently called on Manchin and Sinema to stop hiding behind the numbers and say exactly what policies they want to remove from the bill.

“We have 48 senators supporting $ 3.5 trillion. We have two that don’t, ”Sanders said. “It’s wrong, it’s really not fair, that one or two people think they should be able to stop what the 48 members of the Democratic caucus want, what the American people want, what the President of the United States.”

But with the Senate split 50-50, any Democratic senator has the power to defeat the bill. Manchin has expressed his willingness to compromise, but not come close to a $ 3.5 trillion bill. Sinema has spoken even less of his demands, at least publicly.

Democrats may have to decide to remove a series of smaller programs from the Build Back Better Act. Funding for affordable housing ($ 332 billion), increasing student financial assistance ($ 111 billion), nutrition programs for children such as free school meals ($ 35 billion) and the modernization of Veterans Affairs facilities ($ 18 billion) are among the least discussed. elements that flesh out the invoice. Many or all of them may need to be dumped.

Again, it comes down to the choice of making the bill do a few things well – and permanently – or a lot of things with less funding and on a temporary basis.

Ritz argued that Democrats will have an easier time spending a few big, hard-hitting programs, potentially allowing them to spend more in the future.

“It makes sense to have a bill that we can send out, say that’s the purpose of the bill: to have an inclusive recovery and focus on the future,” Ritz said. “By trying to do 50 different programs I think it will become a progressive wishlist and the goal will be lost. “

Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, said honest political debates have yet to begin as progressive and centrist Democrats are taking a stand. “It would be great to have the details of what we’re actually talking about,” she said.

His group does not take a position on which policies should be included, but they have made an exception by opposing a contentious tax break to which the shortcut SALT refers.

A group of Democrats and Republicans, calling themselves the SALT Caucus, are pushing to increase the state and local government tax deduction cap (hence the acronym), allowing tax filers to save on their federal tax on income if they pay high taxes to their local governments. . The most vocal Democrats who support politics tend to come from California, New York and New Jersey, where voters would benefit the most.

Lifting the SALT cap offers only a small benefit to middle-income earners, but can greatly benefit filers with incomes over $ 1 million. On the fiscal side, it could cost up to $ 100 billion a year.

This is in stark contrast to the rest of the Build Back Better Act. The bill could end up bringing in around $ 2 trillion in tax revenue to big business and wealthy Americans, depending on what the final text looks like. Even Manchin supports raising taxes on the rich to pay for social programs.

SALT would do the opposite, cutting money from social programs to push through a tax cut that disproportionately benefits the rich.

A group of House Democrats vow not to support the reconciliation bill unless the SALT relief is included. This is one of the many sticking points that have no obvious solution, and with the size and content of the evolving bill, no one knows the prospects for its entry. But of all the Build Back Better proposals, SALT relief is among the most repulsive.

“This is the most regressive tax cut you can imagine,” MacGuineas said. “In a comprehensive package designed to help families who need it most, there isn’t a single rationale for this one.”

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