On Friday, November 19, the House on Friday passed the roughly $2 trillion bill “human” infrastructure budget reconciliation package, known as the Build Back Better (BBB) Act. This package is the third stool of President Biden’s broader economic agenda to rebuild America, along with the American Rescue Plan, and the Infrastructure Investment and Jobs Act. If passed, all three pieces of President Biden’s agenda would total roughly $4.5 trillion in economic stimulus from the government.
The House passed the BBB 220-213 along party lines, losing only one member of the Democratic party Rep. Jared Golden (D-ME). There was no Republican support in the House. The legislation will likely undergo several more changes to garner the support of all 50 members of the Senate Democratic caucus and to comply with the chamber’s complicated rules to avert a filibuster.
There are several provisions that would impact taxes, childcare, labor, and climate change. Here’s what’s in the House’s bill, which again is likely to see many changes from Senators, including Kyrsten Sinema (D-AZ), Joe Manchin (D-WV), and Bernie Sanders (I-VT). Of note, Senate Parliamentarian Elizabeth MacDonough has not determined whether a similar parole proposal drafted by Senate Democrats complies with reconciliation rules. Due to this stipulation, Democrats are likely to see massive changes in the following weeks, as a budget reconciliation package cannot create new programs.
TAX PROVISIONS
Corporate Taxes
The bill imposes a 15% minimum corporate levy on companies that have traditionally been able to pay little-to-no taxes because they were eligible for a long list of credits and deductions. It also includes a 1% excise tax on companies when they buy back their own stock. The 21% corporate rate is left untouched, maintaining a key part of President Donald Trump’s 2017 tax law.
International Tax Changes
A 15% global minimum tax on corporations’ foreign profits is set — implementing a key portion of a deal made with approximately 140 countries earlier this year. There is also a series of changes that would increase taxes on companies that shift their profits offshore.
Levies on High Earners
A millionaire surtax would place a 5% levy on individual incomes in excess of $10 million and an additional 3% tax on those over $25 million. There’s a 3.8% investment income tax for high earners who own businesses and a limit on how business owners can use losses to reduce their taxes. The plan puts a $10 million cap on individual retirement accounts, after concerns that some wealthy individuals were using these tax-advantaged vehicles to skirt IRS bills.
SALT Deductions
The bill includes and increase for the cap on the federal deduction for state and local taxes, or SALT, to $80,000 from the $10,000 imposed by Republicans in 2017. The higher cap would be in place through 2030, and then revert to $10,000 in 2031.
This is likely to undergo changes in the Senate, where key members, including Bernie Sanders of Vermont and Bob Menendez of New Jersey, said they prefer to focus on limiting the universe of people able to claim the SALT deduction to those earning under a certain amount — potentially around $400,000 a year.
IRS Enforcement
The bill would give the Internal Revenue Service an additional $80 billion to hire more auditors, improve customer service and modernize technology. Democrats hoped to pull in an additional $400 billion in new revenue from cracking down on tax cheats and increasing compliance. But CBO concluded IRS enforcement would raise $207.2 billion over a decade, or $127.2 billion after subtracting the $80 billion in additional funding for the agency, according to a footnote in the estimate. However, it is not included in the official tally because of certain budget estimating rules.
Other Tax Provisions
The measure would:
- Impose a new excise tax on nicotine that’s been extracted, concentrated, or synthesized.
- Reinstate a tax on crude oil and imported petroleum products at 16.4 cents per barrel to fund Superfund cleanups of hazardous sites.
- Delay until 2026 changes to the research and development tax credit under the 2017 tax law.
- Allow same-sex couples to claim refunds or credits related to a change in marital status before 2010.
- Allow as much as $250 in union fees to be claimed as an above-the-line deduction.
- End the employer tax credit for paid family and medical leave in 2024 instead of 2026.
CHILDCARE AND FAMILY
Child Tax Credit
The bill would extend through 2022 the extra $250-to-$300 monthly payments per child that parents earning up to $150,000 are now getting. The legislation also makes the tax credit permanently refundable.
Childcare
The bill approves funding for children under five, as well as increases in wages for childcare workers. The amount parents pay for childcare would be capped, to ensure that no family pays more than 7% of their household income.
Pre-School
The bill includes funding for states to start or grow free universal pre-kindergarten for three- and four-year-old children. States would be directed to begin rolling out the programs in high-need and low-income areas first before expanding to other areas.
Paid Leave
A last-minute addition to the House package provides four weeks of paid parental and medical leave, starting in 2024, for workers who don’t receive such a benefit from their employers. The House had dropped the measure last month but reinstated it after pressure from lawmakers and the public. The idea is likely to continue being debated in the Senate, where Senator Joe Manchin, a West Virginia Democrat and crucial swing vote, has said he is concerned about the cost.
CLIMATE CHANGE/CLEAN ENERGY
Renewable Energy Benefits
Some $300 billion — by far the largest component of the climate spending in the package — would go to expanding a slew of tax credits for renewable power, electric vehicles, biofuels and energy efficiency. The credits could accelerate investments in both utility-scale and residential clean energy as well as electricity transmission, power storage and clean-energy manufacturing. The bill also ensures that clean energies will be built in the United States.
New Bans, Methane Fees
Plans would block oil drilling in most U.S. offshore waters and Alaska’s Arctic National Wildlife Refuge. Oil and gas companies would be forced to pay for excess methane leaking from wells, storage sites and pipelines for the first time. That methane provision could be watered down in the Senate, however, according to analysts.
EV Tax Credit
Under the bill a $7,500 consumer tax credit would be made refundable and expanded by $4,500 for cars assembled domestically by plants represented by unions. An additional $500 bonus would be added for vehicles that use batteries made in the U.S for a total of $12,500. The legislation also creates a new $4,000 tax credit for the purchase of used electric vehicles.
Conservation Funds
The package includes $6 billion to the National Oceanic and Atmospheric Administration for coastal and marine conservation and restoration grants and contracts, with a focus on resiliency and responding to the effects of climate change. Also, $1.25 billion for the Interior Department for projects for conservation and to improve resiliency on federal lands and an additional $750 million for ecosystem and habitat restoration. And $1 billion to NOAA for activities to protect the habitat of Pacific salmon.
HEALTHCARE
Drug Prices
The bill would empower the government to negotiate with pharmaceutical companies on drugs that have been on the market for at least seven years, or longer for more complex medicines. Drugmakers would be required to rebate the government for raising the price of their product above the pace of inflation, starting in 2023. This bill would also ensure that Americans with diabetes will not pay more than $35 per month for insulin.
ACA Premium Tax Credits (Obamacare Extension)
The package represents a massive investment in bolstering the Affordable Care Act to make good on the health law’s promise of reasonably priced insurance coverage. It would extend boosted premium subsidies into 2025 and offer a new tier of low-cost plans to people in the 12 states that have declined to expand their Medicaid programs under the ACA. The larger credits for those with household income between 100% and 400% of the federal poverty level (FPL) and expanded eligibility to those above 400% of the FPL are scheduled to expire after 2022. It would also continue allowing those who receive unemployment compensation to be eligible through 2022 for premium tax credits for those at 150% or less of the FPL.
Cost-Sharing Subsidies
The package would increase the ACA’s cost-sharing reductions for beneficiaries earning as much as 138% of the poverty line so that the insurer’s share is 99% of total costs for 2023 through 2025. The bill would provide such sums as necessary for HHS to reimburse insurers for 12% of total allowed costs in those years. The plan includes additional benefits to those populations in 2024 and 2025, including non-emergency medical transportation and family planning services. Also, the package would extend cost-sharing reductions for unemployment compensation through 2022.
Medicaid Boost
One of the largest investments the package makes is in Medicaid’s home- and community care programs. Democrats are proposing to inject states with $150 billion to give more elderly and disabled Americans the opportunity to get long-term care at home as well as to boost pay for home care workers.
Medicare Expansion
For the first time, Medicare would cover hearing services for seniors if the bill were enacted into law. Progressive Democrats had pushed for a much wider expansion of Medicare benefits, including dental and vision services, but were blocked by party moderates like Manchin. Sanders has said he still wants dental and vision benefits to be added back.
9/11 Health
The Build Back Better Act provides $2.86 billion in funding for the World Trade Center Health Program to address projected shortfalls in coverage for the program.
Public Health Infrastructure and Workforce
The Build Back Better Act invests $9.5 billion in public health infrastructure and workforce to support the construction and modernization needs of health centers; to expand capacity for training the next generation of primary health care providers; to provide additional resources and supports for mental and behavioral health needs and suicide prevention; to promote palliative care and hospice education and training; and for additional purposes.
Pandemic Preparedness
The Build Back Better Act provides $10 billion for pandemic preparedness, including providing $7.0 billion in funding to support core public health infrastructure activities to strengthen the public health system through grants to state, territorial, local, or Tribal health departments, and expanding and improving activities of the Centers for Disease Control and Prevention (CDC), providing $1.4 billion in funding to support renovation, improvement, expansion, and modernization of state and local public health laboratory infrastructure; enhance the capacity of the laboratories at CDC; and enhance the ability of CDC to monitor and exercise oversight over the biosafety and biosecurity of state and local public health laboratories, providing $1.3 billion in funding to the Assistant Secretary for Preparedness and Response to prepare for and respond to public health emergencies, including shoring up the Strategic National Stockpile, strengthening our supply chains, and supporting domestic and global manufacturing of vaccines, among other purposes, providing $300 million for improving infrastructure at the Food and Drug Administration (FDA), including technological infrastructure (including through the development of integrated systems and interoperability of IT systems) and laboratory and related facilities infrastructure.
CHIP
The package would permanently authorize the Children’s Health Insurance Program (CHIP) and require states to extend continuous CHIP and Medicaid coverage to all pregnant and postpartum individuals for one year after birth.
Other Drug Provisions
The measure would also:
- Cap the out-of-pocket cost of prescription drugs under Medicare Part D for beneficiaries at $2,000 a year starting in 2024.
- Block the drug rebate rule published in November 2020.
- Require coverage of vaccines with no cost-sharing under Medicare Part D.
- Require pharmacy benefit managers to report on the details of their prescription drug benefits to group health plans twice a year.
HOUSING
Affordable Housing
The legislation spends $170 billion on housing assistance for lower-income Americans. Roughly $65 billion will go to rebuild and repair public housing. About $25 billion will go to federal housing vouchers to help low-income tenants afford rent, which could help reduce homelessness. The housing trust fund program, aimed at expanding the stock of affordable housing for low-income families, will get an additional $15 billion.
The bill would also provide $5 billion for lead-based paint hazard control.
Permanent Low-Income Housing Tax Credit
The bill would provide a permanent 50 percent basis boost for Low-Income Housing Tax Credit (LIHTC) properties that restrict the rent of at least 20 percent of their residential units to 30 percent of the area median income or the federal poverty line, whichever is greater. States must allocate at least 8 percent of their housing credit allocation to these properties.
Flood Insurance
The package would wipe out $20.5 billion in debt owed by the Federal Emergency Management Agency for money it borrowed to pay claims through the National Flood Insurance Program. Also, the bill would provide $600 million for flood mapping and $600 million for FEMA to offer flood insurance discounts to policyholders with household incomes that aren’t more than 120% of area median income.
LABOR
Workforce Development
The bill would provide $4.5 billion for Workforce Innovation and Opportunity Act (WIOA) Title I programs within the U.S. Department of Labor (DOL), broken down as $2 billion for Dislocated Workers Worker Employment and Training Activities, $1 billion for Adult Worker Employment and Training Activities, and $1.5 billion Youth Workforce Investment Activities
Enhances Reentry Employment Opportunities
The bill would provide $500 million for DOL’s Reentry Employment Opportunities program. Of this total, $125 million would be reserved for competitive grants to national and regional intermediaries for activities that prepare justice-involved young adults and those that have dropped out of school for employment.
Industry Grant Program
The bill would establish a new $5 billion competitive grant program, administered by DOL, to expand employment and training activities for high-skill, high-wage or in-demand industry sectors or occupations. Of the funding provided, $250 million is reserved for state and local boards to support partnerships in local areas with high unemployment rates, percentages of dislocated workers or levels of individuals with barriers to employment.
Direct Care Workforce Grant
The bill would establish a direct care workforce grant program, administered by DOL, which would provide competitive grants to provide competitive wages, benefits and other supportive services to direct care workers. The grants could also be used to develop and implement recruitment, retention and training programs for direct care workers. Local workforce development boards and area agencies on aging would be eligible to apply for funding under the program.
Labor Violations
The package addressed civil penalties for various labor violations, including to authorize penalties for employers that commit unfair labor practices under the National Labor Relations Act, and for health insurer violations of the federal mental health parity law. Also, the bill would increase penalties for violations related to workplace safety, child labor, and minimum wage.
IMMIGRATION
The House measure would offer parole status to an estimated 6.5 million undocumented immigrants who entered the U.S. before 2011, offering deportation protections and work permits if they meet certain requirements. It’s a big step away from the pathway to citizenship initially sought by Democrats in both chambers, but the Senate parliamentarian has twice rejected proposals in that chamber that would do that — arguing that they aren’t budget-oriented enough to qualify for the so-called reconciliation process that bypasses a Senate filibuster.
RURAL AMERICA
Rural America Investments
The bill provides $97 million through FY 2031 for rural water and wastewater grants in persistent poverty localities through the U.S. Department of Agriculture (USDA), an additional $970 million through FY 2031 to replace lead service lines under the Rural Development program through USDA, $200 million through FY 2031 as loans for the Rural Energy Savings Program in persistent poverty localities through USDA, and $9.7 billion through FY 2031 in loans and loan guarantees for Rural Electric Cooperatives, which includes counties that have been a Rural Utilities Service Electric Loan Borrower through USDA
Rural America Partnership Program
The bill would establish a new Rural Partnership Program through USDA, which aims to enhance rural communities’ access to federal community and economic development funding by providing flexible grants and technical assistance to a range of entities, including county governments. The competitive grant program targets micropolitan areas with populations between 10,000-50,000 residents.
EDUCATION
Pell Grants
The package increases the maximum Pell grant by $550 and extends eligibility for Pell Grants and other financial aid programs to those under the Deferred Action for Childhood Arrivals policy or other temporary protected status, through 2030.
HBCUs
The package includes $6 billion to support historically Black colleges and universities and minority-serving institutions over five years. Also, it includes $3 billion for a grant program for HBCUs and MSIs to improve research and development infrastructure.
ENERGY ON FEDERAL LANDS
The package would direct the Interior Department to award leases for wind generation and transmission in offshore areas in the Atlantic Ocean and the eastern Gulf of Mexico, as well in offshore areas near U.S. territories. The bill also would set the length of new coal leases at 10 years, or five years if commercial quantities aren’t being produced.
Methane Fee
The measure would establish a fee on methane emissions from the oil and gas industry. It would apply to emissions from onshore and offshore production, processing, transport, and storage operations that exceed thresholds for each segment of the industry as defined in the bill. The fee would start at $900 per ton of methane exceeding the relevant threshold in calendar year 2023. It would increase to $1,200 per ton in 2024 and $1,500 per ton for subsequent years. The bill would provide $775 million for Environmental Protection Agency costs to implement the fee, including for grants, loans, and other support for monitoring, compliance, and reducing emissions.
AGRICULTURE
The package would provide several billion dollars through the Commodity Credit Corporation for environmental quality and stewardship incentives and “such sums as are necessary” for payments to farmers and landowners who adopt cover crop practices during the 2022 through 2026 crop years. Also, the package would provide:
- $14 billion to reduce hazardous fuels in National Forest System lands near developed areas, $4 billion of which could be used in other areas in certain circumstances. More than $3 billion in additional funds would be available for grants to reduce wildfire risks on nonfederal land.
- $9.7 billion for assistance to rural electrical cooperatives to promote resiliency, reliability, and affordability and for carbon capture and storage projects.
- $3.75 billion for competitive grants to promote conservation and tree planting by state, local, and tribal governments and nonprofit organizations.
- $2.88 billion for rural electrification loans, including for energy storage projects, that would be forgiven if certain conditions are met.
- $1.02 billion to pay off all or part of Farm Service Agency loans to economically distressed farmers and ranchers.