Build Back Better: The challenge of selling a hybrid on Capitol Hill

Associated Press

A slimmed-down version of Build Back Better passed the House in November and currently faces an uphill climb in the Senate. It is unclear what will happen to numerous proposals affecting families with children, the elderly, and the environment. As all sides consider their options, let’s take a closer look at how Build Back Better has been designed.

In the realm of social policy, Build Back Better is an unusual hybrid. It combines the financing of public assistance programs with the widely available benefits of social insurance programs. It relies on wealthy individuals and corporations to pay more in income taxes. But instead of using that money to assist low-income Americans—which is how we pay for Medicaid, cash “welfare,” public housing, etc.—Build Back Better promises to help a wide range of people, from the poor to the upper-middle class. That’s closer to Social Security than welfare.

Politically, this hybrid may seem like a winner: take money from a relatively small number of rich taxpayers and distribute it to millions and millions of potential voters. But this unique approach does not fit with our usual understanding of how social policy should be made. So far advocates have not explained why the country should adopt a new approach to social policy. While Americans don’t usually want to know all the programmatic details, they would like to understand the general principles.

We know how public assistance works. These programs redistribute from the haves to the have-nots. People get help from government because they need it badly. This practice can be justified in a variety of ways including self-interest (i.e., the rich want to prevent riots and revolutions) and humanitarianism. And as a practical matter, we tax the affluent to pay for these programs because increasingly they have most of the money.

If Build Back Better used this approach, then it might keep its current financing and target spending more narrowly. Head Start and Medicaid’s long-term services and supports might expand, but not enough to help the middle class. The total cost of the package would be lower.

One obvious problem with this approach is that many middle-class Americans legitimately feel stressed by the high costs of child carelong-term care, and prescription drugs. Targeting benefits narrowly would ignore their needs and could trigger their resentment. To liberals, this approach is bad policy and bad politics.

The United States often relies on social insurance programs to address problems that cut across class lines, such as unemployment and sickness. These programs are financed much differently. Social insurance relies heavily on payroll taxes, which are paid by almost all workers. People thus develop a sense that they have earned their benefits and are entitled to help when they need it.

If Build Back Better used this approach, then it would shift the main revenue source from income taxes to payroll taxes. This is how many European countries finance paid parental leave. A payroll tax for long-term care could be combined with existing payroll taxes for Medicare, Social Security, or Disability Insurance.

Liberals, however, have hesitated to support payroll tax increases for decades. The Affordable Care Act tapped just about every possible revenue source except higher payroll taxes on average workers. That’s because liberals view payroll taxes as a heavy burden on workers with average and below-average incomes. Income taxes are more progressive and thus more appealing.

Given how different Build Back Better’s current funding structure is from our usual setup, advocates should explain why we should give significant benefits to a wide range of Americans if they don’t have to work for them.

Two answers come to mind. Advocates could try using the language of rights to justify why everyone should be eligible for certain benefits, much like we do for K-12 education. Or, they could argue that Americans can earn their benefits in other ways besides being employed and paying taxes. Caring for children, individuals with disabilities, and senior citizens should entitle people to some financial help. Socially valuable work should be recognized, even if it doesn’t involve a paycheck.

Hybrid cars are quite popular these days, but hybrid social programs might be a tougher sell. President Biden and his allies need to recognize the unusual nature of Build Back Better and help Americans understand why it is necessary. Otherwise, they may have trouble generating enough support to pass a meaningful piece of legislation.

Christopher Howard is the Pamela C. Harriman Professor of Government and Public Policy at the College of William & Mary and a member of the Scholars Strategy Network. His book, Who Cares: The Social Safety Net in America, will be published later this year by Oxford University Press.

Tags Build Back Better Income tax in the United States Joe Biden payroll tax social welfare

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