A Big Win for Biden and Pelosi

President Joe Biden and his fellow Democrats took a big step toward enacting their economic agenda on Friday morning as the House narrowly approved the $1.7 trillion Build Back Better Act, the party’s sweeping package of climate, education and health care programs financed by higher taxes on some corporations and top-earning individuals.

The massive bill, running nearly 2,500 pages long, represents the most significant bolstering of the nation’s social safety net in years — including a health care expansion and measures to lower drug prices alongside provisions for universal pre-kindergarten, child care, elder care, paid leave and more.

"We have a Build Back Better bill that is historic, transformative and larger than anything we have ever done before," House Speaker Nancy Pelosi (D-CA) said in a speech before the vote, adding, "If you are a parent, a senior, a child, a worker, if you are an American, this bill – this bill is for you."

The vote came after weeks and weeks of often tense and tenuous negotiations between Democratic centrists and progressives — and it could be followed by more of the same, as the bill now heads to the evenly divided Senate, where it may still undergo substantial changes as Sen. Joe Manchin (D-WV) or others exert their leverage and Democrats try to lock in the support of all 50 of their members.

Democrats have already pared back what started out as a $3.5 trillion plan, scrapping or downsizing proposals to provide two years of free community college, add dental and vision coverage to Medicare and extend an expanded Child Tax Credit for four years. They also did away with plans to raise the corporate tax rate and top marginal rates on individuals, among other proposals, instead turning to a 15% minimum corporate tax and surtaxes on individuals making more than $10 million a year.

Yet for all the intraparty drama surrounding the legislation in recent months, the 220-213 vote in the House saw only one Democrat, Rep. Jared Golden of Maine, vote against the package.

Republicans, meanwhile, remained unified in opposition. Democrats had intended to hold the vote Thursday evening, but they were forced to delay it until the morning after House Minority Leader Kevin McCarthy (R-CA) held the floor with a rambling, record-setting eight-and-a-half-hour speech blasting the Democratic bill as "the single most reckless and irresponsible spending in the history of this country" and veering off into a variety of other topics that The New York Times said "sounded like a Mad Libs of Republican attacks."

What’s next: The Build Back Better bill still has a long way to go, and some of its most popular provisions — such as the expansion of paid family and medical leave — could still be stripped out by the Senate. The House plan to temporarily raise the annual cap on the deductibility of state and local taxes from $10,000 to $80,000 also faces pushback, and an immigration reform proposal could be ruled out by the Senate parliamentarian. Senate changes would the require the revised bill to again pass the House.

The bottom line: Democrats should have a path to eventual final passage, which would mark another landmark legislative achievement for Biden. Then he and his party will still have to sell the American public on their accomplishments. "I hope the Senate passes this very quickly. But then the big work is to get out there and get it done, actually implement it and talk about it and let people know what's coming," said Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus.

Even then, because many of the provisions in the bill were made temporary as part of efforts to reduce their official cost, lawmakers may still be dealing with them and debating their reauthorization for years to come.

What’s in the Build Back Better Bill Passed by the House

The roughly $2 trillion bill the House passed Friday will almost certainly be reshaped in the coming days and weeks, and the final product could end up being significantly different than the document the lower chamber is sending to the Senate. But it’s still worth highlighting some key elements of the House bill, if only because it will serve as a starting point for Senate Democrats to work on — and many of the provisions may survive intact after all is said and done.

First, a quick review of the topline numbers. You may see different tallies being reported due to different interpretations about how the spending, tax credit and revenue provisions will play out. Here’s an overview of the basics:

* $1.68 trillion: the total increase in federal spending over 10 years, according to the Congressional Budget Office, without subtracting offsets;

* $367 billion: the net increase in spending after offsets, according to the CBO, which for technical reasons did not include revenue increases from more stringent IRS enforcement;

* $160 billion: the net increase in deficit spending, including the CBO’s unofficial estimate of revenues produced by increased IRS enforcement;

* $113 billion: surplus revenue from the bill over 10 years (and thus a reduction in the deficit) according to more optimistic estimates from the White House on how much revenue enhanced IRS enforcement could produce.

In terms of revenue, the bill would increase tax revenues from corporations by $830 billion over 10 years, according to estimates from the Committee for a Responsible Federal Budget, with provisions including a 15% minimum corporate income tax that applies to both domestic and foreign earnings, and a 1% tax on stock buybacks. Taxes on wealthy individuals would produce an estimated $640 billion, and include a surtax of 5% on individual incomes over $10 million per year, bumped up by another 3% for those over $25 million, and an expansion of the net investment tax.

Digging into the specific programs, here’s what’s actually in the bill:

Universal pre-K: The bill would provide $400 billion for states to create or enhance universal pre-kindergarten for all three- and four-year-old children and establish an affordable child care program, with both programs funded for six years.

Child tax credits: The pandemic-era program providing enhanced and fully refundable child tax credits would be extended by one year, at a cost of $200 billion. And refundability, which enables the IRS to provide payments to families who fall short of income reporting requirements, would become permanent.

Paid leave: The House bill would create a new program to provide four weeks of paid family and medical leave, beginning in 2024 at a cost of $200 billion. This may not survive Senate revisions.

Enhanced health care: The bill would provide $165 billion to reduce Obamacare premiums and expand Medicare coverage to include hearing benefits. It would also set price limits on some drugs covered by Medicare and cap the cost of insulin at $35 per month starting in 2023.

Home care: In-home health care through Medicaid would receive $150 billion in funding.

Affordable housing: Democrats want to fund the construction of more than 1 million new homes for buyers and renters, at a cost of $150 billion.

The bill also includes an increase in the cap on the federal deduction for state and local taxes, lifting it from the current $10,000 to $80,000 until 2030, after which it would revert to the lower level. Amid widespread concerns that cap increase would provide an enormous tax break for high-income households, this provision is expected to be revised in the Senate to limit its use by wealthy taxpayers.

• House Passes Budget Package After Cost Concerns Abate – Roll Call
• House Passes the Largest Expenditure on Climate in U.S. History – New York Times
• Dems’ $1.7T Spending Bill Clears House, but Senate Changes Loom – Politico
• A Guide to All the Ways the House Spending Bill Would Affect America – Washington Post
• Everything in the House Democrats’ Budget Bill – New York Times
• The Surprise Winners From Biden’s $2 Trillion Spending Bill: Wall Street and Tobacco Companies – Wall Street Journal
• ‘Whole Different Ballgame’: Dems Vow They’ve Learned Obamacare Lessons in Messaging $1.7T Megabill – Politico
• A Popular Tax Trick for Savers, the Mega ‘Back Door’ Roth IRA, Is Eliminated in House Bill – Wall Street Journal
• Sinema Praises Infrastructure, Questions Spending and Inflation in Wide-Ranging Interview – Washington Post
• Senate Punts Defense Bill Until After Thanksgiving as Debate Hits Roadblock – Politico
• CDC Unanimously Backs COVID-19 Boosters for All Adults– Politico
• Fed May Discuss Taper Pace at December Meeting, Clarida Says – Bloomberg
• Two Senate Democrats Urge Biden Not to Renominate Powell – Bloomberg
• Get These 2021 Tax Breaks Before They’re Gone – Wall Street Journal