The deal between House progressives and centrists on the Build Back Better Act (BBB) held, even after a poorly rendered Congressional Budget Office score that showed the legislation adding to the deficit (primarily because the CBO is barred from showing any benefit from dumping $80 billion into tax enforcement). House passage ensued without incident, unless you call Kevin McCarthy ranting for eight hours an incident.
But that was the easy part. The bill now goes to the Senate, where a certain two senators have withheld final approval for months. And this time, the bipartisan infrastructure bill has already been signed into law, with no chance to make a deal that moves both bills together.
Yet most of the work on BBB is really done. The House â€śpreclearedâ€ť nearly all of it with the Senate, and Joe Manchin indicated that he would be comfortable with a vote before the end of the year. Congressional Progressive Caucus co-chair Pramila Jayapal (D-WA), who staked her political future on allowing the infrastructure bill to pass first, stated that she has no worries that Manchin will tank BBB.
That doesnâ€™t mean the bill wonâ€™t change, in some ways significantly, before reaching the finish line. Several key areas will see alterations; nearly all of them will either reduce the billâ€™s price tag or raise its revenue. Either way creates a pool of money that must be put to use to make some of the major elements of BBB permanent or more financially secure. It would be policy malpractice to leave these social policies as sitting ducks for future Congresses to kill.
Iâ€™ve made my views on BBB pretty clear. Itâ€™s the product of a hobbled and often captured legislative process, skimping on its programs while also maximizing the hassle that ordinary users will go through to qualify for them. Despite that crucial context, itâ€™s better than most of what comes out of Congress, with important investments in family care, housing, health care affordability, and cash assistance. But outside of making those too poor to pay taxes eligible for the Child Tax Credit, almost none of BBB is made permanent. (Indeed, the increased dollar amount to the Child Tax Credit is extended only through 2022.)
Whether these programs endure will make the difference between a transformative turn toward social welfare and a flash in the pan. And right now, thereâ€™s no reason to be confident about the former. It is much easier to let programs expire than to affirmatively repeal them. Given the pessimistic outlook for the midterms, and the severe antipathy to social spending within the Republican caucus, BBBâ€™s investments could survive for just a moment in time.
Progressives have assumed that the BBB programs will prove so popular that it would be political suicide to let them go away. That would be a more reliable bet if the programs werenâ€™t such half measures to begin with.
For example, look at the child care and pre-kindergarten programs, which at six years are the most long-term BBB provisions. The income and activity requirements and co-pays in child care will make the program more difficult to access, and potentially cost-prohibitive in the early years for some families. And both programs require state funding to enact. Itâ€™s already a stretch to expect conservative states to assist the Biden agenda, but when the program is temporary and thereâ€™s no guarantee the feds wonâ€™t drop out after six years, that makes states extremely unlikely to adopt the programs.
Weâ€™ve seen throughout U.S. history imperfect social programs perfected over time, from Social Security to Medicare. But from their inception, those programs were permanently in place, creating a virtuous cycle of constant improvement. The BBB programs will have to fight for their very survival, and may not even be in a position to be improved, as the political fight will be around their existence. Furthermore, their design renders them less popular, making extension less likely.
But the Senate can remedy this mistake. As I noted, several elements of the House version of the bill will be changed in the Senate. For example, the immigration provisions, which according to the White House Build Back Better framework cost $100 billion, are not likely to make it past the parliamentarianâ€™s determination of whether they have a substantial budgetary impact, and Democrats have shown little inclination this year to challenge the parliamentarianâ€™s recommendations.
At the last minute, the House added back in a terrible paid leave program, which leaks substantial public money out to private insurance companies, excludes the lowest earners, and would likely prove a supreme nightmare for anyone to access. Manchin has already said he objects to paid leave in the bill; thatâ€™s another $205 billion in outlays, according to the CBO. Reports suggest that Manchin might also object to the expansion of Medicare to cover hearing, a $35 billion program.
It would be policy malpractice to leave these social policies as sitting ducks for future Congresses to kill.
Finally, thereâ€™s the state and local tax (SALT) deduction provision. The House bill widened the deduction cap, currently at $10,000, to allow households to take $80,000 in state and local taxes as a deduction. Anyone who pays that much in taxes is quite rich. It is politically radioactive to make one of the largest elements in a social-policy bill a tax cut for millionaires, and enough senators know that to ensure changes.
The Bernie Sanders/Robert Menendez compromise on SALT, which would repeal the SALT cap for incomes up to $400,000 and phase out the deduction completely above that level, removes at least some of the terrible optics of tax cuts for millionaires. (To be clear, itâ€™s still a distasteful policy that shouldnâ€™t move forward, but it appears to be the price of BBB passage for some Democrats.) Something like this will likely be the final deal. And because Sanders/Menendez extends beyond 2025, when the SALT cap was supposed to go away entirely, it will save money in the budget window, roughly $100 billion more than the House version.
Put that all together and suddenly youâ€™re talking about real money: conceivably as much as $440 billion. There are a couple of other possible Senate changesâ€”not applying the savings in the drug pricing reform to private insurance, or eliminating a tax on nicotine that made it into the bill at the last minuteâ€”but the budget impacts of those changes are negligible. Letâ€™s say theyâ€™re done, and the Medicare hearing piece is kept intact (Iâ€™d certainly hope so): If so, you can round down the total savings to $400 billion.
Under Manchin and Sinemaâ€™s artificial spending cap that has governed this bill, thatâ€™s $400 billion you could apply to shoring up the surviving parts of BBB, particularly by making some of them permanent.
Note that extending their lifespan does not change a single policy around the bill. If Manchin and Sinema are comfortable with child care and pre-K under the current terms, those would not change by just adding more years to them. And you could easily make both of those programs permanent for less than $400 billion.
Based on the CBO score of the Education and Labor title, if you just extend out the funding level in 2027 on both child care and pre-K for another four years (you only have to extend through the ten-year budget window to make a program permanent), adjusting for inflation, a back-of-the-envelope estimate puts the approximate cost at $270 billion.
That investment would lock in those two programs, and create that virtuous cycle of consistent improvement in future Congresses. You could use the other $130 billion to add back funding to housing or long-term care; thereâ€™s not enough money allotted to the latter to attract enough workers and improve access. Or you could increase the funding for the first three years of pre-K, so states might actually want to participate.
Whether these programs endure will make the difference between a transformative turn toward social welfare and a flash in the pan.
This would be a far better outcome than including a weak and potentially harmful paid leave program or a historically tone-deaf SALT change, especially considering that those donâ€™t have enough support to pass the Senate. It would be great to fix the immigration system, but Biden could do plenty under his own authority, and the parliamentary obstacles are in reality a convenient cover for the fact that not all 50 Democratic senators want to move forward on immigration.
While using savings to make BBB programs permanent is totally realistic, I fear that it wonâ€™t be done. Progressives arenâ€™t pushing for permanence, and without such a push, Manchin and Sinema might just demand that the windfall $400 billion be applied to deficit reduction. Or they could weaken the already weak surtaxes on multimillionaires, wasting the opportunity to impose a popular tax on the rich and take strides on reducing inequality.
That may even be a likely scenario. But even if paid leave and immigrationâ€”important priorities for the partyâ€”have to go to hit the Manchin Sinematic Universeâ€™s artificial spending number, the $100 billion extra on the SALT deal is found money. And the House bill, with paid leave and immigration in, was already effectively offset. The price for eliminating the other measures should be making a couple of programs permanent.
This is the endgame opportunity for Build Back Better. Itâ€™s a chance to at least ensure some enduring legacy from the legislation, without having to fight tooth and nail against a political system that through structural disadvantages is more likely to produce Republican majorities. I donâ€™t understand why every non-Manchin/Sinema Democrat wasnâ€™t screaming to make more of the bill permanent. Now thereâ€™s one last chance. Democrats shouldnâ€™t squander it.