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Biden makes $1.75T sales pitch to House Democrats

Administration says the measure would be fully offset

President Joe Biden arrives at the Capitol with Speaker Nancy Pelosi and House Majority Leader Steny H. Hoyer, left, for a meeting Thursday with the House Democratic Caucus on the reconciliation package.
President Joe Biden arrives at the Capitol with Speaker Nancy Pelosi and House Majority Leader Steny H. Hoyer, left, for a meeting Thursday with the House Democratic Caucus on the reconciliation package. (Tom Williams/CQ Roll Call)

President Joe Biden presented House Democrats with a $1.75 trillion reconciliation framework Thursday morning, which senior administration officials said he’ll ask them to support when it’s written and ready for a vote, along with a separate Senate-passed bipartisan infrastructure bill.

The reconciliation bill would be fully paid for and potentially reduce the deficit, based on $2 trillion worth of offsets the president has identified. The revenue total is the administration’s estimate and has not yet been scored.

Biden’s framework, which provides proposals for scaling back climate change and social spending proposals in the original $3.5 trillion-plus House reconciliation package, will need the support of virtually every Democrat to pass the House and Senate.

It’s based on the president’s weekslong negotiations with key Democratic lawmakers, including centrist Sens. Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona. They opposed the original $3.5 trillion price tag and many policies in the bill that have been cut in Biden’s framework, including paid leave and prescription drug price negotiation.

The senior administration officials wouldn’t speak to whether specific lawmakers had signed off on the framework, but said: “We are confident that this will earn the support of every Democratic senator and that it will pass the House.”

House Democratic leaders have been hoping to get a bicameral “framework” deal on reconciliation this week in hopes of getting the votes of progressives who’ve been holding up passage of the bipartisan infrastructure bill until the reconciliation bill is done.

Progressives have said they wouldn’t feel comfortable voting for the infrastructure bill based solely on a framework, however, and want a vote on both bills at the same time. Democratic leaders are preparing for potentially quick passage of the reconciliation package by beginning the House Rules Committee process Thursday in order to amend the House bill with the text of the scaled-back package before it comes to the floor.

The Rules Committee was set to meet at noon, according to Chairman Jim McGovern, D-Mass. It wasn’t yet clear whether that meeting would turn into a markup of the rule for floor debate on a revised bill, which McGovern said would take time to write. “You know, anything is possible, but it’s going to take a while to draft all this stuff,” he said.

Biden will defer to Speaker Nancy Pelosi to schedule the votes on each bill that he’ll lobby lawmakers to support. Current surface transportation programs are set to expire Sunday without an extension. The bipartisan Senate-passed infrastructure measure, which would extend and boost funding for those programs for five years, would go to Biden’s desk for his signature after House passage.

House Majority Leader Steny H. Hoyer, D-Md., said in a schedule update that the House on Thursday “may consider” the infrastructure bill, which was debated on the floor late last month. But progressives suggested that they weren’t quite ready to vote on the infrastructure package without assurances that the reconciliation framework would be turned into legislative text both chambers would support.

The White House announcement “will show tremendous momentum, but we want to see the actual text because we don’t want any confusion, misunderstandings. My understanding is that the framework is very general,” Congressional Progressive Caucus Chair Pramila Jayapal, D-Wash., said Thursday. “It’s very difficult to make a decision on anything without seeing what’s in it.”

Spending details

Nearly a third of the spending in the framework, $555 billion, is directed at initiatives to combat climate change and promote clean energy production. That includes $320 billion in energy tax incentives, with the rest divided up as follows:

  • $110 billion to create new domestic supply chains and technologies, like solar, batteries and advanced materials and support clean manufacturing in existing industries, like steel, cement and aluminum.
  • $105 billion to bolster resiliency from extreme weather events like wildfires, droughts and hurricanes, address pollution and establish a Civilian Climate Corps.
  • $20 billion for government procurement of new technologies like long-duration storage, small modular reactors and clean construction material.

The next biggest piece is $400 billion for universal prekindergarten for 3- and 4-year-olds and child care subsidies to provide day care for kids under 6 who are not enrolled in pre-K. Both programs would be funded for six years. That’s higher than the $350 billion that was being discussed for both programs earlier this week and not a substantial cut from the roughly $450 billion that the House bill would provide.

The day care subsidies, available for families earning up to 250 percent of state median income, would limit out-of-pocket costs for parents so they don’t pay more than 7 percent of their income on child care.

The framework calls for a one-year extension of an expanded child tax credit enacted in the March coronavirus relief law that would otherwise expire at the end of this year. The expanded credit would continue to provide advanced monthly payments for households earning up to $150,000 a year, which total $3,000 per child or $3,600 for children under 6.

Part of the expansion from the March law would also make the child tax credit fully refundable so that lower-income families who do not normally owe taxes can claim the benefit. That piece would be made permanent.

In total, the child tax credit pieces, along with an extension of the expanded earned-income tax credit from the March law, would cost around $200 billion.

The framework calls for extending the March law’s expansion of premium tax credits for subsidizing health insurance premiums through 2024 and making those credits available to roughly 4 million uninsured people in states that did not expand Medicaid. This is estimated to cost $130 billion.

The measure would spend $35 billion to establish a Medicare hearing benefit for seniors. But it would not expand Medicare to include vision or dental benefits, which progressives had sought.

Prescription drugs, home health

Proposed prescription drug price savings would be substantially whittled down, from $700 billion in some estimates to $145 billion. Language that would force drugmakers to negotiate lower prices with the government would be dropped, and only a provision to repeal a Trump administration rule estimated to boost drug spending would remain.

The framework also calls for $150 billion for home health care, $150 billion for affordable housing and $40 billion for higher education and workforce development. The amounts are all less than advocates say is needed to address funding shortages in those areas.

An additional $90 billion would be spent on a variety of smaller spending initiatives to address matters such as maternal health, community violence, disadvantaged farmers, nutrition and pandemic preparedness.

Those pieces make up the $1.75 trillion total, but a White House fact sheet on the framework also included $100 billion for immigration provisions.

That line item, however, was italicized, suggesting that it may not be in the package because the Senate parliamentarian has not yet accepted any of the immigration proposals Democrats have presented as in compliance with the Byrd rule, which requires that provisions in reconciliation have a more than merely incidental impact on the budget.

Senate Judiciary Chairman Richard J. Durbin, D-Ill., said Thursday he expects a decision “this week” from Senate Parliamentarian Elizabeth MacDonough on revised immigration language.

A new federal paid family and medical leave benefit was dropped at the insistence of key centrists including Manchin. “I think it’s outrageous it’s not in the package,” Rep. Rosa DeLauro, D-Conn., said Thursday morning.

Tax increases

The framework does not call for raising the top individual or corporate tax rates, because of Sinema’s opposition to those provisions. Nor would it include higher estate taxes or changes to “carried interest” tax treatment for investment fund managers, as in the earlier House bill. A new “billionaires’ income tax” on unrealized gains, backed by Senate Finance Chair Ron Wyden, D-Ore., didn’t make the cut, either.

In place of those items, a high-income “surcharge” would apply to the top 0.02 percent of earners, which would raise $230 billion. The measure would levy a new 5 percent tax on income above $10 million, with an additional 3 percent tax on income over $25 million. That would take the top ordinary income tax rate on the richest households up to 45 percent, with the rate on lower-taxed long-term capital gains hitting 31.8 percent.

A new 15 percent minimum tax on the largest corporations’ “book” income, or profits reported to shareholders on financial statements, would raise $325 billion. An additional $125 billion would come from a 1 percent surcharge that would be levied on corporations when they buy back shares of their own stock.

International tax provisions, including raising the global intangible low-taxed income rate to 15 percent to comply with an agreement among OECD countries to implement global minimum tax rates at that percentage, would raise $350 billion.

As in the House bill, the framework would expand a current 3.8 percent investment income tax to the profits of active business owners, generating roughly $250 billion. And limits on deductions for such “pass-through” business owners’ losses would be extended, raising an additional $170 billion.

The biggest piece of revenue is $400 billion expected to come from increased tax enforcement from additional funding for the IRS. The White House has previously proposed giving the IRS an extra $80 billion, but the fact sheet did not specify an amount in the framework.

The Congressional Budget Office, based on its past scoring practices, is not expected to count the tax enforcement revenue as official savings.

A controversial new provision that would require banks to report information on customers’ accounts to the IRS was dropped due to opposition from centrist Democrats and numerous business groups.

Whither SALT?

One notable absence from the Biden framework was a suspension of the $10,000 cap on state and local tax, or SALT, deductions imposed in the 2017 tax law. Lawmakers from high-tax states like New York and New Jersey have been lobbying hard to repeal the cap, set to expire after 2025.

Recent iterations floated include a two-year suspension, paid for by extending the existing cap into future years. Rep. Tom Malinowski, D-N.J., said he wasn’t too worried about the lack of a mention in the White House release.

“Whether it’s in the documents you see this morning, I’m very comfortable with where we’re going to end up,” Malinowski said.

Jennifer Shutt, Laura Weiss, Jessica Wehrman, David Lerman and Paul M. Krawzak contributed to this report.

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