(Trends Wide) — Free community college. Universal preschool. Dental benefits for the elderly. Paid maternity leave.
Which ones will survive?
President Joe Biden and Congressional Democrats now face the daunting task of reducing their $ 3.5 trillion budget reconciliation plan, which contains all of these measures and more, to appease the moderate wing of their party.
The depth of the cutouts is unknown. Sen. Joe Manchin of West Virginia said his limit is $ 1.5 trillion, though he acknowledged Tuesday that he would not rule out going as high as $ 1.9 trillion or $ 2.2 trillion. Biden now targets that range.
But that is still too low for the Speaker of the progressive House of Representatives, Pramila Jayapal, of Washington state, who wants a budget of between $ 2.5 and $ 2.9 trillion.
Whatever the maximum number, Democrats can reduce the cost of the package in three main ways: remove items from their huge wish list, delay the start date of measures or end them after a few years, or reduce the eligibility or generosity of programs.
“I don’t think choosing any of these options is feasible,” said Marc Goldwein, Policy Director for the nonprofit Committee for a Responsible Federal Budget, who argues that the true cost of the package it’s closer to $ 6 trillion. “They will have to make all these choices.”
Discard provisions
One way to lower the cost of the package is to remove some of the provisions entirely, but that won’t be easy to do, as most, if not all of them have been on the Democrats’ to-do list for a long time.
Although the Congressional Budget Office has yet to release its assessment of the House bill, the White House included many similar measures in its American Family Plan proposal, which it published in April.
In it, the president requested $ 200 billion for universal preschool and $ 109 billion for two years of free community college. Biden wants to invest $ 225 billion in childcare programs and the same amount in a national paid family and medical leave program, although some experts say paid work permits could end up costing twice as much.
The House bill also contains a series of tax breaks that would help boost Democratic equity, health care and climate programs. The child tax credit would be extended until 2025 and made permanently refundable, at an estimated cost of $ 556 billion, according to the Committee for a Responsible Federal Budget.
Climate-related tax breaks, aimed largely at renewables, total $ 273 billion, according to the budget monitoring group.
Meanwhile, making the Affordable Care Act premium subsidies permanent would cost $ 200 billion, according to the White House.
When deciding what to drop, lawmakers could consider which programs are most feasible to implement and administer and which have some bipartisan support so that they can survive a change in administration, said Jason Fichtner, chief economist at Bipartisan. Policy Center.
Adjust the calendar
Another method lawmakers use to downsize legislation is to make the measures temporary – that’s why all the individual tax cuts in the Republican law of 2017 expire after 2025, for example.
Democrats can use the same trick on the budget reconciliation bill, which they did last spring in the $ 1.9 trillion American Rescue Plan, which bolstered the one-year child tax credit and subsidies for Affordable Care Act premiums for two years.
Already in the budget reconciliation package, lawmakers are extending the child tax credit only through 2025, although many would like to make it permanent.
The hope is that the temporary provisions will become so popular that it will be difficult not to eventually extend them, said Don Schneider, an economist at Cornerstone Macro, an investment research firm, and a former chief economist on the House Ways and Means Committee when they are released. Republicans controlled Congress.
This is Jayapal’s preferred method. She said in a call with members on Tuesday that if budget cuts were necessary, lawmakers should look at reducing the years of funding for some programs rather than cutting entire policies or basing eligibility on income, according to a source familiar with what was said in the call.
Congress can also lower the price by delaying the implementation of benefits. In the House bill, for example, dental benefits would not be added to Medicare until 2028, to minimize the financial impact of the provision. Vision coverage would begin next October and hearing services a year later.
The Congressional Budget Office estimated in 2019 that dental coverage would cost $ 238 billion over 10 years, compared to $ 89 billion for hearing services and $ 30 billion for vision.
Limit the scope
Part of the reason the reconciliation bill is so expensive is that it would expand the nation’s safety net to a much broader swath of Americans.
Some moderates don’t want it to be so generous.
Manchin, for example, is pushing to base eligibility for certain programs on income. He has discussed the possibility of lowering the thresholds for the enhanced child tax credit, but also requires parents to work and earn an income to qualify for it.
Sen. Angus King, an independent from Maine who is part of the Democrats, told Trends Wide that he supports the child tax credit, but has “some reservations about what the income levels are and who it is for.”
Manchin and other moderate Democrats have also raised limiting new Medicare benefits to those below a certain income threshold, marking the first time that the program’s coverage has been linked to income.
The White House has not ruled out the possibility of reducing eligibility.
“Some programs in the Build Back Better plan [Reconstruir mejor] They have income limits, as you know, for eligibility, like the child tax credit and child care, “Deputy Press Secretary Karine Jean-Pierre said Tuesday.” We are open to addressing other programs as well. “
The sums of benefits could also be cut or other restrictions added. For example, Democrats could offer a child tax credit of up to $ 1,800 for those under 6, instead of keeping the $ 3,600 credit in effect this year. They could reduce the maximum monthly benefit for sick leave to be more in line with Social Security.
In addition, Medicare could charge a premium for its new coverage, reducing the annual cost from $ 81 billion to $ 63 billion, according to the Committee for a Responsible Federal Budget.
“The bottom line is that they are going to get rid of things, they are going to have to do a socio-economic policy study, they are going to have to find ways to make things cheaper, and they are probably not going to be satisfied with their numbers,” Goldwein said. .
Annie Grayer, Manu Raju and Kate Sullivan contributed to this report.
