November 19, 2021
House Passes Build Back Better Act
Senate Outlook Unclear
Following weeks and months of negotiation, as well as last night’s record-breaking “filibuster” by House Minority Leader Kevin McCarthy, the House passed the Build Back Better Act (BBBA) by a vote of 220-213. After analyzing the bill, the Congressional Budget Office (CBO) said it would increase the deficit by more than $367 billion over 10 years. However, that estimate does not include the revenue that could be generated by increasing IRS enforcement, which the CBO suggested would be about $207 billion. This “scoring” of the legislation was a key request of several House moderates as they weighed whether they would support the bill.
Here’s what is in the $1.75 trillion bill, among other provisions:
- Free universal pre-school programs for all three- and four-year olds
- Four weeks of paid family and medical leave
- Extends the expanded Child Tax Credit and Earned Income Tax Credit
- Increases the maximum Pell grants by $550 and expands access to DACA recipients
- A combined $300 billion for home and community based services, as well as construction of new housing
- Workforce development and supply chain investments
- Provides State ad Local Tax deduction (SALT) relief
- Allows Medicare to negotiate the cost of prescription drugs, establishes a $35 out-of-pocket maximum for insulin, and creates a new $2,000 out-of-pocket limit for seniors’ expenses in Medicare Part D
- Extends the expanded Affordable Care Act Premium Tax Credit
- Permanently extends the Children’s Health Insurance Program (CHIP)Expands Medicaid coverage to cover hearing services
- Provides support for environmental and climate justice policies
- Provides $21.5 billion for grants and loans in electric vehicle investments, as well as approximately $300 billion in clean energy tax credits
Here’s how it is being paid for:
- International and other business reforms
- 15% minimum tax on the largest corporations
- Adjusted Gross Income Surtax for Multi-Millionaires
- Medicare tax loophole for high earners
- Limit business losses for high earners
- IRS Investments in compliance, IT, and taxpayer services
The biggest caveat is that this bill will likely change dramatically in the Senate. Already, Sen. Joe Manchin (D-WV) has expressed skepticism on several of the provisions, including paid family and medical leave and some of the organized labor requirement mandates for certain building projects. Other potential changes include modifying the SALT tax cap provisions and changing provisions related to immigration. In terms of timing, observers have prognosticated that the Senate will likely consider the bill in mid- to late-December, as other priorities must take their attention. This includes raising the debt ceiling and passing a stopgap government funding legislation – both of which expire December 3. Additionally, the Senate parliamentarian needs to go through the reconciliation bill before bringing it to the floor, making sure none of the language runs afoul of the bill’s protections from a Republican filibuster. It should be noted that a Senate-passed bill must then come back to the House, where they will have to vote on that measure.