Happy Monday! Congress is back — though definitely not better than ever. Speaking of better, Democrats will be racing to finish a scaled-back version of their Build Back Better plan, though that name has been dropped. We’ve seen the new plan referred to as Build Back Manchin, since its success depends on Democratic Sen. Joe Manchin of West Virginia, who scuttled the previous version of the bill last year and has been negotiating a smaller plan with Senate Majority Leader Chuck Schumer (D-NY). But Build Back Manchin sounds too clunky and seems to be trying too hard. Build Back Biden seems more apt, but in the spirit of trying too hard, we’ll suggest Build Back Betterer or, our favorite, Build Back 2: Manchin Boogaloo. Send us your suggestions by emailing yrosenberg@thefiscaltimes.com.
Now on to more substantive matters.
Democrats Race to Finalize Their Scaled-Back Economic Plan
It’s crunch time for Democrats as they look to finalize their budget reconciliation bill with Sen. Joe Manchin (D-WV).
Democrats have made progress on the scaled-back bill in recent days, having submitted two major portions of the package for review by the Senate parliamentarian: a plan to lower prescription drug prices and a tax on high earners that would be used to extend the solvency of the Medicare trust fund by three years. The Congressional Budget Office on Friday said that the drug plan, which would allow Medicare to negotiate the prices of some medications, would cut the deficit by some $287 billion over 10 years.
Now Senate Majority Leader Chuck Schumer (D-NY) and Manchin must nail down the portions of the plan where agreement has proven more elusive.
Schumer and Manchin were reportedly set to meet again early this week, though the majority leader has now tested positive for Covid-19. “The Leader is fully vaccinated and double boosted, and has very mild symptoms,” Justin Goodman, a Schumer spokesperson, said in a statement Sunday evening. “Consistent with the CDC guidance, Leader Schumer will quarantine this week and work remotely.”
The Washington Post’s Tony Romm provides an update on where talks stand: “Plenty remains unresolved, including the fate of a key program that lowers insurance costs for millions of Americans, raising the prospect that the latest round of talks could collapse much as they did before. Adding to the challenge, Republicans have intensified their opposition in recent days, hoping to apply enough political pressure on Manchin that he walks away from the talks again.”
Closing in on climate provisions: Romm reports that Democrats have discussed limiting their proposed penalties on producers of methane gas to a smaller number of energy companies, as Manchin wants. Negotiators reportedly remain divided over proposals to pay the producers of clean energy and provide tax credits to people who buy electric vehicles, with Democratic leaders reportedly looking to scale back those plans as they push to finalize their climate provisions this week.
Trouble with Affordable Care Act tax credits: Increased subsidies for Affordable Care Act insurance plans provided under the 2021 Covid relief law are set to expire this year, potentially leaving some 13 million Americans facing higher premiums. Romm reports that Manchin has rejected Democrats’ initial plans to extend those tax credits “though the two sides have discussed paring back eligibility on the basis of income as a way to lower costs.”
Poll of the Day: 64% of Democrats Don’t Want Biden in 2024
A new poll from The New York Times and Siena College shows just how perilous President Joe Biden’s political standing is — and just how urgent it is for Biden and Democrats to try to turn the tide of public opinion.
The poll finds that 64% of Democratic voters say they’d prefer the party nominate someone other than Biden as its presidential candidate in 2024 — with 94% of Democrats under age 30 looking for a different nominee. Overall, Biden’s approval rating stands at 33%, including a relatively low 70% among Democrats, and just 13% of poll respondents say the country is on the right track.
It’s the economy, stupid: Asked to name the most important problem facing the country today, 20% of voters cited the economy (including jobs and the stock market) while 15% pointed to inflation and the cost of living. Nearly all voters — 96% — said the economy and inflation are extremely or somewhat important to them. But 58% of voters described the current economy as poor, while only 10% called it excellent or good.
At the same time, among those Democrats who prefer a different nominee in 2024, 33% say the 79-year-old president’s age is the main reason they want a new candidate, suggesting that a decline in inflation and an improvement in economic conditions might not be enough to win those voters over.
Also worth noting: Just 1% of voters called health care the country’s most important problem, and fewer than 1% pointed to the coronavirus.
But Biden still beats Trump: Even with the abundance of abysmal numbers for Biden, one polling point should give him and Democrats some reason for optimism: The survey found that if the presidential election was held today, voters would still give Biden the edge over former President Donald Trump, 44% to 41%. In that hypothetical rematch of the 2020 election, 92% of Democrats said they would vote for Biden, though Trump would still enjoy a large edge among Republicans (85%-4%) and a slight edge among independents (39%-37%).
The poll surveyed 849 registered voters from July 5-7, 2022. It has a margin of sampling error of plus or minus 4.1 percentage points.
A Republican Plan to Expand the Child Tax Credit
Democrats are still working to revive the fully refundable child tax credit that expired at the end of 2021, but the pandemic-era program, which temporarily cut child poverty by roughly a third, has an uncertain future. Meanwhile, a group of Republican senators have released their own proposal to expand the tax credit, though in ways that are significantly different from Democrats’ proposal.
Released by Republican Sens. Mitt Romney (UT), Richard Burr (NC), and Steve Daines (MT) late last month, the Family Security Act 2.0 would provide tax credits of up to $350 a month per child under the age of 6 and $250 a month per child aged 6 to 17, with the credits partially paid in monthly installments.
Currently, the tax credit is worth $2,000 per year per child under the age of 17, with no monthly payments. The White House has proposed raising the maximum value to $3,600 per child under 6 and $3,000 per child from age 6 to 17, while reinstituting monthly payments for the value of the credits. The GOP plan, by contrast, raises the total value of the tax credit to $4,200 per child under 6 and $3,000 per child aged 6 through 17, with partial monthly payments — though it also places new restrictions on which families can receive the full benefit.
The senators say their plan would be “pro-family, pro-life and pro-marriage,” and would be “fully paid-for.” The annual cost of about $92 billion would be covered by reforms to the Earned Income Tax Credit and the elimination of the state and local tax deduction, head of household tax filing status and the child portion of the child and dependent care tax credit.
“The bill consolidates overlapping and often duplicative federal policies into direct support for families,” the senators said in a fact sheet. Here’s an example of how the program would work:
“A married couple with two children, ages four and nine, and earning a combined income of $38,990 (150% of the federal poverty line) would currently receive an end-of-year lump sum tax return of $7,041. Under the Family Security Act 2.0, their annual benefit would increase by $2,318 to $9,359, and they could receive over 75% of their total amount through predictable monthly installments.”
Non-partisan review finds the plan lacking: A recent analysis by the Center on Budget and Policy Priorities finds that the GOP plan, while a welcome expression of bipartisan support for the idea of reviving the refundable child tax credit, falls short in significant ways.
One problem, CBPP says, is Republicans’ proposal to provide the full credit only to families that earned at least $10,000 in the previous year, thereby denying the full value of the credit to millions of children. Another issue is the way the cost of the tax credit is offset by cuts to other aid programs.
“Most notably, while it would increase the credit for most children in the lowest-income families, children in families without earnings in a year would get no credit at all, while millions of other children in families with very low earnings would get only a partial credit,” the analysis says. “And, low- and moderate-income families would have to pay for much of its cost through a large cut in the Earned Income Tax Credit (EITC) and other offsets, leaving millions of children worse off than they would be without the Romney plan.” [Italics in the original.]
Still, CBPP says that the GOP plan does provide some improvements, including a more rapid phase-in of the child tax credit as family earnings rise and the elimination of the cap on the value of the year-end refund a family can receive.
The bottom line: The Republican proposal isn’t going anywhere in a Senate controlled by Democrats, but it does suggest what a bipartisan child tax credit plan could look like in a divided Congress — an increasingly likely political outcome that could define the next two years in Washington.
News
- Schumer Making Last-Ditch Bid to Pass Reconciliation Bill This Summer – The Hill
- Schumer Tests Positive for Coronavirus Amid Wave of New U.S. Cases – Washington Post
- Senate Absences, Including Over Some Virus Infections, Snarl Democrats’ Plans for a Quick Return to Business. – New York Times
- Manchin ‘Shouldn’t Walk the Plank’ on Dems’ Climate and Tax Package, GOP Senator Says – Politico
- House to Vote on Sweeping Government Funding Bills Next Week – The Hill
- White House Expects ‘Elevated’ but ‘Out of Date’ Inflation Numbers for June – The Hill
- Fed’s Bullard: Solid US Economy Can Handle Rising Rates – Associated Press
- A Global Deal to Tax Large Corporations Is Delayed a Year – New York Times
- House GOP Marches Into Deeper Blue Terrain as Dem Prospects Fade – Politico
- New Republican Plan Calls for Renewing Monthly Child Tax Credit Payments — But There Are ‘Significant’ Trade-Offs, One Report Finds – CNBC
- House, Senate to Grill IRS Chief Over audit of Trump’s Enemies – Washington Post
- As the BA.5 Variant Spreads, the Risk of Coronavirus Reinfection Grows – Washington Post
- The U.S. Government Will Buy 3.2 Million Doses of Novavax’s Covid Vaccine. – New York Times
- Biden Says He’s Weighing Calls for Public Health Emergency on Abortion – Washington Post
- States With Abortion Bans Risk Losing Their Economic Edge – New York Times
- Drugmaker Seeks Approval for First Nonprescription Birth Control Pill in U.S. – Washington Post
- World Population to Reach 8 Billion by November Even as Growth Slows – Washington Post
Views and Analysis
- Cancel August Recess: We Must Do Our Job – Rep. Rob Wittman (R-VA), The Hill
- How Republican Leaders Broke Americans’ Confidence – Dana Milbank, Washington Post
- International Tax Reform Proposals Would Limit Overseas Profit Shifting, End “Race to the Bottom” – Samantha Jacoby, Center on Budget and Policy Priorities
- One Strong Global Minimum Tax Beats Two Weak Ones – Thornton Matheson, Tax Policy Center
- The Republican War on the Common Good – Michael Tomasky, New Republic
- Americans Are Talking Themselves Into a Recession – Jare Dillian, Bloomberg
- A Mystery: More Jobs Filled, but Lower Output – Peter Coy, New York Times
- Presidents Aren’t Kings. Remember That, Democrats – Jonathan Bernstein, Bloomberg