WASHINGTON : President Biden released a new framework on the Democrats’ $1.75 trillion social-spending and climate package Thursday aimed at winning support of congressional Democrats locked in talks over his agenda.
Senior administration officials pitched the plan as a transformative step forward on expanding early childhood education and healthcare coverage and combating climate change, among other programs, but it also marks a scaling back of the administration’s agenda, with key tax increases and a plan to create a national paid leave program out of the framework. A plan to allow Medicare to negotiate drug prices wasn’t included in the White House plan, but aides said they expect some provisions to be added during further congressional negotiations.
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Mr. Biden will address House Democrats Thursday morning to provide an update on the spending package and a parallel bipartisan infrastructure package that has been held up by progressives in the House. Mr. Biden will then deliver remarks from the White House, and one of the people familiar with the matter said he would provide a path forward on his economic agenda before departing for Italy.
“The president believes this framework will earn the support of all 50 Democratic senators and pass the House," a senior administration official said, adding that the White House would defer to House Speaker Nancy Pelosi (D., Calif.) on the specific timing of House votes on both pieces of legislation.
Whether the major policy concessions Mr. Biden made to centrists will be acceptable to progressive Democrats remains unclear. Mr. Biden is expected to tell Democrats that he trusts Sens. Joe Manchin (D., W.Va.) and Kyrsten Sinema (D., Ariz.), two pivotal centrists in the talks, according to a person familiar with the plans. He is also expected to ask the House Democrats to vote later Thursday for a separate infrastructure package that progressives have balked at supporting until they can secure passage of the social welfare and climate bill, the person said.
Democrats have been honing their mammoth spending legislation for weeks, seeking to both slim the package as well as find revenue to pay for new programs, which is expected to include funding for expanded health coverage, housing, universal prekindergarten and child care, and climate programs, among other provisions.
The plan includes a one-year extension of the expanded child tax credit through 2022, plus a provision making that break permanently available to low-income families that don’t pay income taxes. It funds six years of universal prekindergarten, six years of child-care subsidies, and $150 billion to support long-term care for elderly and disabled Americans.
The framework also sets aside $555 billion for climate-related provisions, including $320 billion in 10-year expanded tax credits for utility-scale and residential renewable energy, transmission, electric vehicles and clean energy manufacturing.
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The party can afford to lose no votes in the 50-50 Senate, and can lose no more than three Democratic votes in the House in the face of unified Republican opposition. And wrangling all factions of the party behind a particular set of ideas has proven challenging, especially as congressional leaders and the administration have jettisoned some of progressives’ favored proposals in the face of objections from moderates.
House Democratic leaders formally notified members of Mr. Biden’s visit early Thursday morning, and the committee that sets the rules for bringing legislation to the House floor was planning to meet on the text of the legislation, multiple aides said.
On Wednesday, Democrats abandoned plans to include a paid-leave program in the bill, according to people familiar with the talks, while prospects for a billionaires’ levy to help fund the package faded and a potential surtax on high-income Americans’ income gained traction.
The surtax will be 5% on adjusted gross income above $10 million and another 3% on AGI over $25 million, senior administration officials said. Those taxes would effectively raise the top tax rate on ordinary income to at least 45% and raise the top capital-gains rate to 31.8%. It would also apply a 3.8% investment-income tax to active business income, hitting high-income owners of many closely held businesses.
Those levies would hit high-income people but wouldn’t address key targets of Democrats’ tax-raising aims—billionaires who are seeing their wealth increase without reporting much taxable income.
The plan will also include a 15% minimum tax on profitable corporations, higher taxes on U.S. companies’ foreign income and money to increase the Internal Revenue Service enforcement staff. It will also include a 1% excise tax on corporate stock buybacks.
The tax plans do focus on high-income households and corporations, but other revenue-raising ideas proposed by the administration and by congressional Democrats appear to lack enough support for now. Those include a tax on billionaires’ unrealized capital gains, a rule requiring banks to report account flows to the IRS, changes to estate and gift taxes and higher corporate tax rates.
The White House has been pushing for Democrats to come together around the bill by the end of the week, in part to unlock possible passage of the bipartisan infrastructure package.
President Biden leaves Washington later Thursday for Rome and is set to attend the Glasgow climate conference next week, and the White House eager to show progress on his agenda. Democrats have struggled to put together an outline on the social spending plan, thanks to complex negotiations on the overall price tag, spending measures and tax plans.
Paid leave is just the latest party priority Democrats have removed from the bill because of opposition from their centrist members. Democrats have dropped free community college, a program aimed at pushing utilities to generate more clean energy and a series of top marginal-tax-rate increases in recent days.
A senior administration official said a provision that would aim to reduce the cost of prescription drugs by allowing Medicare to negotiate prices lacked enough votes and wouldn’t be included in the proposal. “We’re going to keep fighting to get this done and deliver lower drug prices," the official said.
The proposal would provide $35 billion to broaden Medicare benefits to cover hearing, but it wouldn’t include dental and vision benefits, the officials said.
The proposal released by the White House Thursday would extend expanded Affordable Care Act subsidies through 2025, down from Democrats’ original hopes of making them permanent.
The framework would also make people currently without healthcare coverage in the 12 states that didn’t expand Medicaid eligible for those expanded subsidies through 2025 if they would have qualified for the program in other states. But it doesn’t include a new federal Medicaid program.
The White House did note it expected to repeal a Trump-era rule to curb the rebates worked out between drugmakers and third parties that manage benefits for Medicare.
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