Democrats are making big sacrifices to slash the price tag of their social spending bill from $3.5 trillion to roughly $2 trillion as they close in on a deal that can satisfy both the party’s moderate and progressive factions.
Promises like free community college are dead altogether. Dreams of paid leave and expanding Medicare to cover dental, vision and hearing are at risk. Originally permanent expansions of Medicaid and the Child Tax Credit will now run for as little as one year.
Those aren’t the only pieces of Biden’s agenda getting curtailed, thrown out or preserved as Democrats rev their engines toward an agreement as soon this week. The nation’s corporate tax rate probably won’t get hiked. And benefits like paid leave are expected to provide families with less assistance, for fewer weeks, with more strings.
At the heart of the party’s decision to embrace a far slimmer spending package than they first outlined this summer is a bet by top Democrats that even scaled-back versions of their vision will be successful enough to get extended and expanded later on.
“History has shown,” Senate Finance Chair Ron Wyden (D-Ore.) said, “that if you get important reforms that really deliver for communities — like holding down prescription drug costs, clean energy, billionaires paying their fair share of taxes — people look at that and they say: ‘I like that! You can keep building on it.’”
The White House is aiming to reach at least a framework agreement with Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) before the end of the month. But even if a deal is locked in this week, it likely will take weeks to finalize the package.
Here’s where negotiations stand on the major policy points:
Child tax credit
— What they wanted: Democrats dreamed of continuing the expanded credit for four years, well beyond the midterms and through Biden’s first term. They also aimed to keep the boosted credit going for all families making more than $110,000, providing a maximum credit of up to $3,600 per child.
— Where they’re headed: Now the White House is proposing a one-year extension to reduce the initial $450 billion price tag. Even though Manchin wants to impose work requirements and ensure the extra credit goes only to families making $60,000 or less, Biden publicly rejected that idea last week.
Sen. Sherrod Brown (D-Ohio) said voters will pressure lawmakers in both parties to extend the credit further. “Imagine you’re a Republican politician running for office next year, and a voter from Lima, Ohio, comes up and says, ‘That child tax credit has really changed my life and made my life a lot better,’” Brown said. “What are you going to do? Are you going to cancel? I think that speaks for itself.”
Free community college
— What they wanted: Biden campaigned on a promise of covering two years of community college to “keep up with the changing nature of work.” That decadelong, $109 billion plan to nix tuition at the nation’s community colleges was at first one of the White House’s loudest-trumpeted ideas for the social spending plan, particularly since the first lady is a community college professor.
— Where they’re headed: Biden publicly acknowledged last week that the provision is now dead in this package.
The push for free community college ran into opposition from key senators, including Manchin and Sinema, according to Democratic aides. Other sectors of higher education, like four-year universities, also disliked the proposal and urged the White House to focus instead on other education investments, such as increasing Pell grants to help students attend all types of colleges and universities.
— What they wanted: Democrats endeavored to cover dental, vision and hearing care for tens of millions of older Americans enrolled in Medicare, at a cost of about $350 billion over a decade.
Progressives, led by Senate Budget Chair Bernie Sanders (I-Vt.), originally pushed to also lower the age of Medicare eligibility to 60 or 55 years of age, from the country’s current 65-years start. But they settled for the benefits expansion, arguing that it is still a leap forward on the eventual path to Medicare for All.
— Where they’re headed: Biden said last week that including all three new Medicare benefits would be a “reach,” citing opposition from Manchin and Sinema. Speaker Nancy Pelosi also noted on CNN over the weekend that “dental is very expensive” and that Medicare expansion is “part of the negotiation.”
Democrats were already aiming to scale back the dental benefits, the most expensive of the three types of coverage, by turning them into $800 annual vouchers for dental work. Supporters argue that this would both slash the cost and get aid to seniors sooner, given that dental benefits were set to begin in 2028 under House Democrats’ proposal.
— What they wanted: Party leaders aimed for 12 weeks of paid family and medical leave each year for every U.S. worker, even the self-employed or gig workers. The White House wanted to build up to that benefit over more than a decade, and House Democrats crafted a leave plan that would cost almost $500 billion.
— Where they’re headed: If the paid leave plan is included at all, it is sure to be a shorter, narrower program than initially envisioned. The White House has floated a four-week proposal targeted toward lower-income workers that would expire after three to four years. The price tag would cost about $100 billion.
On Sunday, Pelosi was asked on CNN’s State of the Union whether the paid leave policies would be in the final package. “That’s our hope,” the speaker said. “That’s what we’re fighting for.”
— What they wanted: Democrats planned to raise almost $600 billion to help pay for their social spending plan by hiking taxes on corporations and the nation’s highest-earning individuals. Even Manchin, who has snubbed so much of his party’s proposal, is on board with increasing the corporate and highest individual tax rates.
— Where they’re headed: Sinema opposes those hikes, spelling doom for rate increases, but she’s open to raising tax revenue in other ways. So Democrats are trying to build support for more complicated and potentially controversial tax changes, like a yearly tax on the unrealized gains of the wealthy, a corporate minimum tax, and a proposal to crack down on tax cheats by forcing banks and credit unions to give more account information to the IRS.
Wyden, the Senate’s top tax writer, plans to unveil a plan this week that would require people who have more than $1 billion in wealth or earn more than $100 million for three consecutive years to pay taxes on assets they hold, even if they don’t sell them.
Lowering prescription costs
— What they wanted: The bill House Democrats crafted would empower Medicare to bargain down the cost of hundreds of drugs and make those lower prices available to people on private insurance. It included hefty penalties to compel pharmaceutical companies to comply and pegged prices to those paid by other developed nations that have long bargained the cost of medicines.
Democrats said the policy would fulfill their campaign-trail promises to tackle health costs and raise upwards of $700 billion.
— Where they’re headed: Democrats have been at an impasse for weeks as a small handful of House and Senate centrists continue to push back on the planned sweeping system for negotiating drug prices. Now lawmakers acknowledge they will end up with a far narrower drug pricing bill, if they can secure one at all.
Fallback plans include negotiating a smaller set of drugs under Medicare Part B, which covers drugs people usually wouldn’t self-administer, like vaccines and IV fluids. Lawmakers are considering leaving out drugs covered under Medicare Part D, which covers other prescriptions. They are also mulling negotiation only for the cost of drugs with expired patents and setting prices based on a U.S. standard, rather than an international baseline.
Other options for scaling back the plan include applying the lower prices in Medicare and not private insurance plans, or phasing in the changes more slowly to give corporations time to adjust.
— What they wanted: Democrats laid out $450 billion for universal Pre-K and a separate, multibillion-dollar program to bolster the child care industry and make it more affordable for parents.
Party leaders dreamed of giving states money over three years to expand child care options and subsidize care for families. In the fourth year, the plan would help build out an entitlement program to cover child care costs, with states shouldering 10 percent and the federal government paying 90 percent.
The proposal is among the most popular in the bill. Nearly 8 in 10 voters said in a September poll that they support it.
— Where they’re headed: Lawmakers were already considering changes in hopes of bringing down the program’s multibillion-dollar price tag. Then business lobby opposition rose this week, spurred by an unlikely critic: a left-leaning think tank.
An analysis by the People’s Policy Project predicted that the plan could jack up child care prices by more than $13,000 a year for families making more than their state’s median income, which ranges from about $45,000 in some states to $85,000 in others.
Democrats are still considering an expiration date for the program. Child care advocates warn, however, that an end date might discourage states from participating and stop short of the investment needed to remedy the nation’s child care shortage.
— What they wanted: Biden campaigned on a plan to transition the United States to clean power production, while creating “good-paying” jobs and weaning the nation off fossil fuels. He called for a long-term extension of key tax credits that boost clean energy, plus a clean electricity standard to cut down on emissions from the power sector.
— Where they’re headed: Manchin’s opposition has all but killed the clean electricity program Democrats envisioned to penalize utilities that don’t increase their use of renewables and pay those that do.
Lawmakers are now looking at a host of other options to cut emissions, including grants to encourage states to ratchet up clean energy resources, as well as expanded tax credits for clean energy.
Health insurance credits
— What they wanted: Democrats originally aimed to pack nearly all of their health care agenda into the bill, aware that they may not have another chance to enact such sweeping changes for years, if not decades. Party leaders made plans for a permanent extension of beefed-up Obamacare subsidies that are set to expire in 2022, keeping tax credits flowing to help people cover the cost of their health insurance premiums.
— Where they’re headed: Pressure to cut the overall package’s cost split Democrats into two opposing camps, with Pelosi and moderates insisting they choose among their health care priorities and do fewer programs permanently, while progressives and the White House pushed for short-term continuation of all the programs. So far the White House has won, and Democrats are now weighing just three or four years of Obamacare subsidies.
Medicaid in red states
— What they wanted: Top Democrats hoped to permanently provide Medicaid to roughly 2 million people stuck in the safety net’s “gap” in a dozen Republican-run states that have refused to expand coverage to low-income residents under Obamacare. Proposals in both the House and Senate would have created a new federal program for people in those holdout states, and provided free Obamacare plans to that population in the years it would take to set up the program.
Sen. Raphael Warnock (D-Ga.) and other vulnerable red-state Democrats have championed those plans and are expected to campaign on the issue next year.
— Where they’re headed: Instead of closing the Medicaid gap for good, the majority party is now eyeing a three-year expansion to cover people left out in those red states.
Short-term extensions of all of the health care benefits are giving Democrats agita, particularly the prospect that Republicans will win the House in 2022 and refuse to act when the help expires.
“We’ve all seen the ongoing attacks from Republicans on the Affordable Care Act and the uncertainty that has caused,” said Rep. Suzan DelBene (D-Wash.), who leads the moderate New Democrats caucus. “So to the people who say things will automatically get renewed: That’s not a safe assumption.”
— What they wanted: House Democrats signed off last month on more than $300 billion in housing aid. That included $80 billion for public housing repairs and $75 billion for housing vouchers that help low-income families, older Americans and people with disabilities pay rent for housing on the private market, rather than in public housing units.
— Where they’re headed: Democrats are considering cutting housing funding to $175 billion. They’re driving down the initial figure by trimming investments in programs like grants for community development projects and helping states provide affordable housing to low-income residents.
— What they wanted: Biden called for a $400 billion boost to home care services for older people and those with disabilities. That money would shrink the more than 800,000-person list of those waiting for home-care support and raise wages for the industry’s workers, who are overwhelmingly women of color.
— Where they’re headed: House Democrats have approved less than half of the funding Biden wanted for at-home care, and that number could go even lower.
Sen. Bob Casey (D-Pa.), who is leading the effort in the Senate, has said Democrats are also still negotiating how long the expansion would last.
Bernie Becker, Michael Stratford, Eleanor Mueller, Kelsey Tamborrino and Katy O’Donnell contributed to this report.