Fri, January 21, 2022


White Houses new $1.8 trillion families plan reflects ambitions - and limits - of Biden presidency

WASHINGTON - The White House is preparing to unveil a roughly $1.8 trillion spending and tax plan this week that includes many of President Joe Bidens campaign promises but also reflects the daunting challenges facing the administration as it tries to transform the U.S. economy.

The "American Families Plan," set to be released ahead of the president's joint address to Congress on Wednesday, calls for devoting hundreds of billions of dollars to national child care, prekindergarten, paid family leave, and tuition-free community college, among other domestic priorities. It will be at least partially funded by about a half-dozen tax hikes on high-income Americans and investors, proposed changes that are already provoking fierce opposition in Congress and on Wall Street.

White House officials spent much of last week making a series of refinements to the plan, showing the enormous pressure they are under to include or discard key items as they attempt to satisfy a range of competing voices.

In a potential last-minute change, White House officials as of Friday were planning to include about $200 billion to extend an increase in health insurance subsidies through the Affordable Care Act exchanges, according to three people who spoke on the condition of anonymity to reveal internal discussions.

Despite pressure from Democratic leadership, White House officials are also prepared to table a measure they had included in earlier drafts aimed at reducing consumer and government spending on prescription drugs, a measure fiercely opposed by the pharmaceutical industry, the people said. Aides stressed discussions were preliminary and subject to change. The overall price-tag of the measure could also wind up being lower than $1.8 trillion.

The proposal will represent the second part of Biden's "Build Back Better" agenda, following the $2.3 trillion jobs and manufacturing proposal the White House released several weeks ago. Combined, the approximately $4 trillion in new spending would amount to among the most ambitious government overhauls of the economy in decades. But the administration's coming proposal also shows the limits constraining Biden's ambitions, with the White House set to jettison campaign pledges and demands from key allies in the face of countervailing political pressures.

"It is an important moment; it is an opportunity to lay out his agenda. But it will not represent the totality of every proposal he wants to achieve during the course of his presidency," White House press secretary Jen Psaki said on Thursday when asked whether the prescription drug change had fallen out of the measure.

The legislative challenges in passing the bill could also be among the most difficult the White House has so far faced. Many congressional Republicans have said they will be fiercely opposed to new spending measures - and tax increases - as Biden tries to navigate his proposals through Congress.

Biden's first major effort through Congress - the $1.9 trillion stimulus package - was accelerated by pandemic crisis and widespread calls for additional federal funds to fight it. The infrastructure plan is just beginning to work its way through Congress, but congressional Republicans and corporate America have long acknowledged the need to make large investment to rebuild the nation's roads, bridges, and other infrastructure. Certain Republicans have indicated they favor a scaled-back infrastructure plan, roughly one-quarter the size of Biden's proposal.

This new package to be unveiled this week, by contrast, moves the administration onto potentially more fraught legislative terrain - attempting to approve largely Democratic priorities with the narrowest of margins in the House and Senate. It is unclear whether the White House will seek to pass the jobs plan first through Congress or attempt to package both efforts together.

Even if they try to pass the measures through the Senate by a simple majority vote - something at least one Democrat has raised concerns about - they would have to keep virtually all members of their party satisfied with the legislation.

"I'm not sure anyone knows how this is going to play out," said Jim Manley, who served as an aide to former Senate Majority Leader Harry Reid, D-Nev. "Getting the infrastructure provisions done is going to be hard enough because Republicans may not want to play ball. But getting the other domestic spending plans over the finish line is going to be a heck of a lot tougher."

On both the taxing and spending provisions, the White House's emerging package aligns largely with what Biden ran on a presidential candidate in 2020 even as some important details have changed.

The key components of the plan consists of roughly $300 billion in education funding, the biggest pot of which includes funding to make two-year community colleges tuition-free; $225 billion in child care funding; $225 billion for paid family and medical leave; $200 billion for prekindergarten instruction; and $200 billion to extend more enhanced Affordable Care Act subsidies, according to three people briefed on the plan who spoke on the condition of anonymity. The plan would also extend a more robust Child Tax Credit until 2025, the people said, a measure that could cost as much as $400 billion, as well as extending a more robust tax credit for workers. Aides repeatedly stressed that the details of the plan were subject to change and final decisions had not yet been made.

Those programs all largely reflect ideas that have moved into the Democratic mainstream, brought to the fore by the changes caused by the pandemic. America is the only wealthy nation with no federally-provided paid maternity leave, as well as only one of about five with no paid paternity leave and one of two without general paid sick leave, according to Vicki Shabo, a paid leave expert at New America, a think tank. The Organization for Economic Co-operation and Development has ranked America one of the worst in the world in terms of spending on families, with parents particularly stressed by the high cost and lack of access of child care during covid.

"We found very early on in the campaign that there was a tremendous receptivity in people's minds, particularly with women voters, for these kinds of investments," said Celinda Lake, a Democratic pollster who advised Biden's presidential campaign. "But with covid people have even more awareness of it and support for it."

Potentially more contentious are the White House's coming tax proposals - measures that aides also cautioned had not yet been finalized.

Biden and White House officials have been adamant their tax hikes would not hit anyone earning under $400,000 per year. The key tax changes are expected to include increasing the top tax rate from 37% to 39.6%; taxing investment gains from capital income at ordinary wage rates for those earning more than $1 million; and imposing higher tax on assets when they are transferred at death, among other provisions, the people said.

Republicans have attacked the tax plans, just as they have assailed the more than $2 trillion in corporate tax hikes Biden has proposed for his jobs package. Wall Street tumbled on reports of the higher capital gains rate, with the Dow Jones industrial average falling by more than 300 points. White House officials are prepared to emphasize how few people would pay the tax, with Chief of Staff Ron Klain on Friday saying the change would affect less than .05% of Americans.

"It's an enormous deal to tax capital like labor, and we'd be pushing the tax rate on capital gains to the highest level ever," said Donald Schneider, who served as chief economist to Republicans on the House Ways and Means Committee.

But the proposal in other ways reflects the limits of the White House's ambitions as well.

The "families plan" is not expected to include a push from Senate Finance Chair Ron Wyden, D-Ore., and Sen. Michael Bennet, D-Colo., to revamp the nation's unemployment system, two people familiar with the matter said. Wyden and Bennet have pushed the White House to overhaul unemployment systems nationwide after the pandemic showed their inability to accommodate a surge in jobless claims.

The measure is also set to only propose expanding an enhanced child benefit through 2025, although many Democratic lawmakers and Biden himself have called for making the provision permanent. That move would dramatically increase the overall cost of the package, and it is not clear if the White House is becoming skittish about embracing daunting spending figures given the rising national debt. But as a result of those fears, "you become a slave to scoring and a bottom-line number," said Jim Kessler, executive vice president of Third Way, a centrist think tank urging the White House to make the credit permanent. It is also unclear if the funding levels proposed by the administration will be sufficient to ensure every American can afford child care.

If ultimately including the $200 billion in expanded subsidies for Obamacare materializes in the final package, the White House would be backing calls from House Speaker Nancy Pelosi, D-Calif. Those expanded subsidies were initially approved in the $1.9 trillion stimulus approved by Congress in March. Senate Budget Chair Bernie Sanders, I-Vt., and other lawmakers have called for the "families plan" to expand Medicare, an approach the administration is set to reject.

The White House is also set to scrap a plan included in earlier drafts of their proposal to include as much as $500 billion in savings from the prescription drug industry. Speculation was rampant last week among congressional Democrats and advocates close to the White House as to why the administration would reject the measure to allow the government to force the pharmaceutical giants to lower their prices. Pelosiis lobbying the White House to include the measure. The White House declined to comment.

"This issue was the dominant issue in the Democratic primary . . . It was the number one issue in Democrats retaking the House in 2018 and arguably the number two issue in the Georgia Senate campaigns," said Eliot Fishman, senior director of health policy at Families USA, a health advocacy organization that recently met with White House officials to discuss the measure. "There were campaign commitments around this issue through all of that."

Published : April 25, 2021

By : The Washington Post · Jeff Stein