$555bn in climate action but no new tax on
billionaires: what’s in Biden’s plan?
President’s $1.75tn spending framework includes
investments in childcare and healthcare, but 12 weeks of paid family leave is
out
Lauren
Aratani
Thu 28 Oct
2021 17.15 BST
Joe Biden
on Thursday released the framework of a $1.75tn social and climate spending
proposal after weeks of fraught negotiations with congressional Democrats.
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The
framework includes investments in childcare, climate change mitigation and an
expansion of healthcare, but it is a significantly pared-down version of the
original $3.5tn agenda Biden had proposed.
In a
statement, the White House said the president is confident this framework of
the bill would be able to pass the House and Senate, although it appears
negotiations on the proposal’s specific details will continue.
Here is
what we know so far:
What’s in
the bill?
The bill
includes substantial investment in young children, specifically funding for
childcare and early childhood education. Under the proposal, most American
families will save more than half of their spending on childcare, with
bolstered benefits to working and low-income parents. It also includes
universal pre-school for children aged three and four.
A hallmark
of the proposal’s climate mitigation plan is $555bn to reduce climate pollution
and invest in clean energy. The proposal includes consumer rebates for
Americans who invest in renewable energy, for example installing rooftop solar
panels or buying an electric vehicle.
The bill
also includes incentives to expand renewable energy in the domestic supply
chain, an accelerator program that will fund sustainability projects and
funding for restoration and conservation efforts.
The
framework includes some provisions to bolster healthcare, including reducing
healthcare premiums and tax credits to people who have been locked out of
Medicaid because their state refused to expand Medicaid access. It will also
include investments in affordable housing and an extension of the child tax
credit.
What was
taken out?
A few
provisions that some Democrats were heavily advocating for were left out of the
framework.
Most
notably, the proposal does not include 12 weeks of paid family leave. Senator
Joe Manchin of West Virginia was the primary holdout for the provision. Manchin
has indicated that he believes a reconciliation bill – which would require only
the support of Democrats in the Senate – is “not the place” for “a major
policy”.
Significant
expansions to healthcare were cut out of the framework, including provisions to
have Medicaid cover dental and vision costs, a plan to expand Medicaid to
Americans in states that have refused to expand it themselves under the
Affordable Care Act, and a proposal to empower Medicare to negotiate
prescription drug prices.
Biden’s
plan for free tuition at community colleges was also left out.
The
framework notably does not include the “billionaire tax” that was floated by
some Democrats on Wednesday before it was swiftly killed by centrist holdouts.
The
billionaire tax would have seen a complete shift in the way Americans worth
more than $1bn would pay taxes, targeting the billions of dollars in shares
they own in their companies. Hours after the proposal was unveiled, Manchin
said he would not support such a provision.
How are
Democrats planning to pay for it?
Biden
estimates the framework will cost about $1.75tn, and the White House says the
bill will be funded “by asking more from the very largest corporations and the
wealthiest Americans”.
A central
provision in the bill’s payment plan is shifting the corporate tax rate to 15%
for corporations with more than $1bn in profits. While the current corporate
tax rate is 21%, Democrats have agreed that loopholes allowed corporations to
report lower profits to the Internal Revenue Service (IRS) while boasting lofty
profits to shareholders. The next tax rate will apply to the profit that is
reported to shareholders.
The bill
also includes a surtax on the 0.02% wealthiest Americans and investments in IRS
auditing enforcements.
What’s
next?
The
framework released by Biden on Thursday represents a broad outline of what will
end up in the final bill. Congressional Democrats will need to get to work at
drafting the actual legislation if everyone, particularly the party’s most
progressive and conservative members, can agree on the basic framework. When
that will happen will depend on how quickly everyone says they are on board.
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