Democrats' reconciliation bill breaks Biden's middle class tax pledge
Democrats must discuss 'Build Back Better's' content, not just its cost
Sen. Joe Manchin (D-W.Va.) reportedly will not support President Biden's "Build Back Better" bill if it costs more than $1.5 trillion. Sen. Bernie Sanders (I-Vt.) won't accept anything less than $3.5 trillion. "We ought not to be talking about these numbers," Rep. James Clyburn (D-S.C.) advises. "Let's talk about what needs to be done, put forward our proposals to address those needs ... and then we can make some informed decisions."
Clyburn is right.
Debates about the top line number should follow, not precede, a compelling case that investing in human infrastructure and clean energy now will produce enormous dividends in the future. And that a "pause" is not an option.
Here are provisions of Build Back Better that make that case:
An annual tax credit (granted to all households in 2020 and set to expire at the end of 2021) of $3,600 for every child under 6 and $3,000 for every child age 6-18, half of it paid in advance to assist low-income families. The largest anti-poverty program in a half century, a permanent expansion of this tax credit would increase after-tax income of the bottom quintile of families by 14.5 percent in 2022. According to the Urban Institute and Brookings, it is likely to reduce child poverty in the United States by 40 percent-50 percent.
Two years of Universal Pre-K for 3- and 4-year-old children. With states and the federal government providing the funding, this program will serve 5 million children, about 40 percent of whom are not now enrolled in school. A study conducted by the National Bureau of Economic Research of Boston's pre-school lottery (1997-2003) concluded that children who were provided one year of half-days of Pre-K were significantly more likely to graduate from high school, enroll in college, and less likely to be on welfare, unemployed, or get arrested. Nobel Laureate James Heckman's study of a different pilot program found a 7-10 percent return per year for every dollar invested in pre-K. When medical check-ups and nutritious meals were added, Heckman indicated, the return was 13 percent.
Free tuition for all students at community colleges. Tennessee, which has provided free tuition since 2014, now has more skilled workers and more community college graduates subsequently earning degrees at four-year institutions of higher education. The Federal Trade Commission calculates that the plan will increase enrollment in community colleges by 26 percent, and graduation by 20 percent. And the plan is likely to pay for itself in increased state and federal government tax revenues.
Dental, vision, and hearing benefits to Medicare recipients.
Twelve weeks of paid family and medical leave for working men and women.
Address global warming by cutting carbon emissions in half within a decade through alternative energy and electric vehicle tax credits; a methane gas fee; funds for rural electricity corporations and agriculture and forestry carbon capture initiatives; payments to utilities that substantially reduce greenhouse gas-emitting electricity sources; and electrification of federal government vehicles and buildings.
Conservation programs to prevent or mitigate the impact of droughts and wildfires.
To pay for these reforms, the Biden administration proposes to raise capital gains taxes from 20 percent to 25 percent, less than they were between 1945 and 2017, while defining the top bracket as $450,000 for joint filers; reduce the exemption for estates to $6,020,000; impose a 26.5 percent tax on corporate income over $5 million; and increase the top bracket personal income tax rate to the pre-2017 rate of 39.6 percent. The Biden plan would raise about $2.1 trillion in revenues between 2022 and 2031 (the period covered by Build Back Better). According to the Tax Foundation, tax credits will boost the income of the bottom quintile of income earners by 14.5 percent in 2022; the top 1 percent will experience a 5 percent decline in after-tax income.
Given opposition from every Republican in Congress, a slim Democratic majority in the U.S. House of Representatives, and a 50-50 split in the Senate, progressive and moderate Democrats must compromise to pass this massive, multi-faceted bill under budget reconciliation.
Some provisions "may have to be cut down in size - maybe," White House Chief of Staff Ron Klain recently acknowledged. "Maybe they have to be shortened in duration - maybe."
That said, it is far more likely that Democrats will agree on a bigger number if they are convinced that the provisions in Build Back Better address pressing needs, are fair, good for the country, supported by a majority of Americans, and long overdue.
Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University. He is the co-author (with Stuart Blumin) of "Rude Republic: Americans and Their Politics in the Nineteenth Century."