American Families Plan (2021)

Latest story

113 Shares109 Views

Biden Says Spending Bill Will Slow Inflation. But When?

by

The Biden administration has argued that its infrastructure and broader economic package will slow rapid price increases. But that will take time.Rocketing inflation has become a headache for U.S. consumers, and President Biden has a go-to prescription. He says a key way to help relieve increasing prices is to pass a $1.85 trillion collection of spending programs and tax cuts that is currently languishing in the Senate.A wide range of economists agree with the president — but only in part. They generally accept his argument that in the long run, the bill and his infrastructure plan could make businesses and their workers more productive, which would help to ease inflation as more goods and services are produced across the economy.But many researchers, including a forecasting firm that Mr. Biden often cites to support the economic benefits of his proposals, say the bill is structured in a way that could add to inflation next year, before prices have had time to cool off.Some economists and lawmakers worry about the timing, arguing that the risk of fueling more inflation when it has reached record highs outweighs the potential benefits of passing a big spending bill that could help to keep prices in check while addressing other social goals. Prices have picked up by 6.2 percent over the past year, the fastest pace in 31 years and far above the Federal Reserve’s inflation target.Others say that any near-term effect on prices would be small and easy enough for the Fed to offset later with interest rate increases, which can temper demand and cool a hot economy. They argue that potential inflationary risks are not a good reason for the Biden administration to curb its ambitions on priorities like broadening access to child care and easing the transition to cleaner energy sources.“It’s more likely a small positive for inflation in 2022, because it’s preventing a big reduction in spending that would otherwise have happened that year,” said Jason Furman, an economist at Harvard and a former chairman of the White House Council of Economic Advisers during the Obama administration. “The pros and cons of Build Back Better with regard to improvements in climate change and opportunity vastly dwarf any pros or cons on inflation.”Republicans have criticized Mr. Biden on inflation for months, seeking to derail his sprawling proposal to fight climate change, guarantee universal prekindergarten, expand access to health insurance, cap child care costs for low earners and the middle class and extend a lucrative new tax break for parents. They have argued that the bill’s spending, much of which is spread over several years, will push prices higher.Some centrist Democrats have also voiced similar concerns. A key holdout, Senator Joe Manchin III of West Virginia, has questioned whether high and rising prices should persuade lawmakers to tone down their ambitions.“West Virginians are concerned about rising inflation,” he said on Twitter last week. “We cannot throw caution to the wind & continue to pile on debt that our country can’t afford.”The bill remains in legislative limbo, with Democrats preparing to push it to a House vote as early as next week. But timing is uncertain in the Senate, where a vote is likely to be changed or delayed in response to Mr. Manchin’s concerns.The extent to which Mr. Biden’s $1.85 trillion bill exacerbates inflation largely depends on how much it stimulates the economy and whether Americans increase their spending as a result of the legislation — and when all of that occurs.Many economists say it could create a short-term stimulus because the plan is structured to raise money gradually by taxing wealthier Americans, who are less likely to spend each additional dollar they have, and redistribute it quickly to people who earn less and are more likely to spend newfound cash.Because of the difference in timing between when the government spends money and when it starts to bring in more revenue, the bill is expected to pump money into the economy in its early years. Moody’s Analytics — the firm that the White House typically cites when arguing in favor of its legislation — estimates that the government will spend $163 billion more on the package than it takes in next year. And the redistribution could make the money more potent as economic stimulus.“The spending is designed to go to the people who are more likely to spend it than to save it,” said Ben Ritz, the director of the Progressive Policy Institute’s Center for Funding America’s Future. But more than any specific program, “the bigger inflationary issue is the math.”White House economists have countered those arguments. If the bill passes, they say, it would do relatively little to spur increased consumer spending next year and not nearly enough to fully offset the loss of government stimulus to the economy as pandemic aid expires. That the program spends more heavily next year is a feature, they say, because it will partly blunt the economic drag as fiscal help fades. They note that the bill is intended to be offset completely by tax increases and other revenue savings.And they argue that by increasing the economy’s capacity to churn out goods and services, the president’s infrastructure plan and his broader program could both help to moderate costs over time.“If anything, these measures push back on inflationary pressures,” said Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers.Shoppers in New York last month. White House officials say that by increasing the economy’s capacity to churn out goods and services, the president’s plans could help moderate costs over time.Jutharat Pinyodoonyachet for The New York TimesLawrence H. Summers, the Harvard economist who loudly criticized the $1.9 trillion economic aid legislation that Mr. Biden signed this year, has said that he does not see the current plans as an inflationary threat. The infrastructure and broader spending packages are both spread over time and paid for, Mr. Summers has argued.There is less economic or political debate about Mr. Biden’s $1 trillion infrastructure plan, which cleared Congress last week and which the president will sign on Monday. Economists — including conservative ones — largely agree that it is likely to eventually expand the capacity of the economy, and that it is small and spread out enough that it will not meaningfully fuel faster inflation in the near term.Among Democrats, there is widespread support for the economic ambitions contained in the administration’s broader spending bill, which aims to create more equity for low- and middle-class earners and a bigger safety net for working parents. But the measure is drawing more complicated reviews when it comes to its immediate effect on inflation.Economists at Moody’s found in a recent analysis that the administration’s full agenda would slightly increase inflation in 2022, though they did not expect the program to ultimately raise it because of benefits that would later ease supply constraints. It estimates that with the infrastructure bill alone, inflation will be running at a 2.1 percent annual rate by the final quarter of next year. If the larger spending bill also passes, that grows to 2.5 percent.Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

More stories

  • 138 Shares199 Views

    in Economy

    Democrats Push for Agreement on Tax Deduction That Benefits the Rich

    by

    Lawmakers are coalescing around a deal to suspend a $10,000 cap on state and local tax deductions that was imposed during the Trump administration.WASHINGTON — Democrats were readying an agreement on Tuesday that would repeal a cap on the amount of state and local taxes that homeowners can deduct as part of a broader $1.85 trillion spending bill, a move that could amount to a significant tax cut for wealthy Americans in liberal states.But some liberals quickly balked at the emerging agreement, which would suspend a $10,000 cap on the so-called SALT deduction for five years, removing a limit that Republicans included in their 2017 tax package as a way to pay for cuts for corporations and the rich. The suspension would kick in for deductions related to property taxes and state and local income taxes accrued in 2021 and would run through 2025.If it passes, the deal would be a major concession to a handful of Democrats from high-income states like New York and New Jersey who have insisted on lifting the cap, in order to win their votes for President Biden’s social policy and climate change package.But liberal Democrats have scoffed at the push to include the costly proposal in the domestic policy package, particularly as party leaders have curtailed or eliminated other spending priorities as they pare down a $3.5 trillion blueprint to appease moderate and conservative-leaning Democrats.Senator Bernie Sanders of Vermont, the chairman of the Budget Committee, blasted the repeal on Tuesday as a giveaway to the rich that went against the Democrats’ priorities.“I think there is a compromise to be reached here, a middle ground, which says that for families earning less than $400,000, they can take a complete exemption, but not families earning more than that,” said Mr. Sanders, who had released a blistering statement criticizing the agreement. “What exists is unacceptable, and one way or another it will be dealt with.”It remains unclear whether the agreement would apply broadly or if Democrats planned to impose an income cap to prevent the wealthiest Americans from receiving what amounts to a tax cut.A straight repeal of the cap for every household that claims the deduction would siphon huge amounts of revenue from the federal government: about $90 billion per year, according to budget experts.To get around that, the five-year suspension assumes that the cap is reinstated in 2026 for another five years, allowing Democrats to use a budget sleight of hand to show its removal as revenue neutral in the traditional 10-year window that lawmakers look to when considering a bill’s impact on the federal deficit.Three people with knowledge of the emerging agreement described it on the condition of anonymity and cautioned that discussions were continuing. Details of the talks were first reported by Punchbowl News.With Republicans opposed to Mr. Biden’s domestic policy plan, Democrats must win the support of all 50 senators who caucus with the party and all but three House lawmakers for the plan to become law. That effort is further complicated because Democrats are using an arcane process known as budget reconciliation, which shields fiscal legislation from the 60-vote filibuster threshold in the Senate.Those restrictions mean that any lawmaker, particularly in the Senate, could effectively tank the legislation over his or her priorities, including insisting that the bill repeal SALT. Democrats from the high-income states that have been most affected by the limit have spent the past five years searching for an opportunity to roll it back for their constituents, despite complaints that it would largely benefit the wealthy.House Democrats including Representatives Tom Suozzi of New York, Mikie Sherrill of New Jersey and Josh Gottheimer of New Jersey have made clear that they will not support the broader spending package without a SALT repeal. Mr. Gottheimer wore a large button emblazoned with the words “no SALT, no dice” to votes on Capitol Hill on Tuesday. Senator Chuck Schumer of New York, the majority leader, has also voiced support for getting rid of the cap.“We’ve been fighting for this for years,” Mr. Gottheimer said on Tuesday, adding that reinstating the full deduction would amount to giving “tax relief to families that deserve it and who got hosed in 2017.”Delaying the cap for five years in a 10-year window could effectively allow lawmakers to claim that the proposal would not have an impact on the package’s cost. Yet some Democrats appeared confident that lawmakers would act again in five years to prevent the cap from going back into effect.“It’ll be pretty clear when they get tax relief, it’s going to be hard to take that back,” Mr. Gottheimer said, referring to families in his district.The SALT limit resulted in tax increases for wealthier Americans beginning in 2018, particularly higher earners from high-tax states, and helped Democrats capture some House seats that Republicans previously held in New Jersey, California and elsewhere.The deduction is largely used by wealthy homeowners who itemize their deductions and live in states and cities with high taxes, which tend to be led by Democrats. Democrats accused Republicans of using the cap to pay for other tax cuts for the rich and to penalize liberal states.“My guess is the majority of Americans with a net worth of $50 to $300 million would get a tax cut under the Build Back Better plan with a full repeal of SALT,” Jason Furman, an economist at Harvard who was the chairman of the White House Council of Economic Advisers under President Barack Obama, said on Twitter on Tuesday. “The bill would do more for the super-rich than it does for climate change, childcare or preschool. That’s obscene.”But several lawmakers in the New York and New Jersey delegations have warned that their votes for the domestic policy package hinged on the inclusion of the provision, and Democrats have haggled for months over a possible solution.“We’re still going at it over it,” said Representative Richard E. Neal of Massachusetts, the Democratic chairman of the Ways and Means Committee, who joked on Tuesday that he had earned “a Ph.D. in the SALT deduction because it’s been argued from every perspective I can think of.”The Committee for a Responsible Federal Budget described the repeal of the SALT cap as a “regressive” tax cut, estimating that it would cost $90 billion a year in lost government revenue. The wealthiest would make out the best, with a SALT cap repeal distributing more than $300,000 per household in the top 0.1 percent of earners and only $40 for a middle-income family over the first two years.“With the SALT cap repealed and current tax rates retained, in fact, the reconciliation package might actually offer a net tax cut for most high-income households,” the group said.The right-leaning Tax Foundation estimated that repealing the cap would increase after-tax income of the top 1 percent of earners by 2.8 percent, while the bottom 80 percent would get minimal benefit.Republicans seized on the agreement on Tuesday, accusing Democrats of hypocrisy for backing an “anti-progressive” handout.“First Democrats cut out paid leave,” J.P. Freire, a spokesman for Republicans on the House Ways and Means Committee, said on Twitter. “Now they’re shoveling money to the rich.” More

  • 163 Shares199 Views

    in Economy

    Biden’s Plans Raise Questions About What U.S. Can or Cannot Afford to Do

    by

    Democrats are debating whether doing nothing will cost more than doing something to deal with climate change, education, child care, prescription drugs and more.WASHINGTON — As lawmakers debate how much to spend on President Biden’s sprawling domestic agenda, they are really arguing about a seemingly simple issue: affordability.Can a country already running huge deficits afford the scope of spending that the president envisions? Or, conversely, can it afford to wait to address large social, environmental and economic problems that will accrue costs for years to come?It is a stealth battle over the fiscal future at a time when few lawmakers in either party have prioritized addressing debt and deficits. Each side believes its approach would put the nation’s finances on a more sustainable path by generating the strongest, most durable economic growth possible.The debate has shaped a discussion among lawmakers about what to prioritize as they scale back Mr. Biden’s initial proposal to dedicate $3.5 trillion over 10 years to programs and tax cuts that would curb greenhouse gas emissions, make child care more affordable, expand access to college and lower prescription drug prices, among other priorities. The smaller bill under discussion could increase the total amount of government spending on all current programs by about 1.5 percent to 2.5 percent over the next decade, depending on its size and components. Mr. Biden has proposed fully paying for this with a series of tax increases on businesses and the wealthy — including raising the corporate tax rate, increasing taxes on multinational corporations and cracking down on wealthy people who evade taxes — along with reducing government spending on prescription drugs for older Americans.As the negotiations continue, Democrats are considering cutting back or jettisoning programs to shave hundreds of billions of dollars off the final price to get it to a number that can pass the House and Senate along party lines. One key part of Mr. Biden’s climate agenda — a program to rapidly replace coal- and gas-fired power plants with wind, solar and nuclear energy — is likely to be dropped from the bill because of objections from a coal-state senator: Joe Manchin III, Democrat of West Virginia.The discussions have focused attention on Washington’s longstanding practice of using budgetary gimmicks to make programs appear to be paid for when they are not, as well as opening a new sort of discussion about what affordable really means.The debate about what the United States can afford used to be pegged to its growing budget deficits and warnings that the government, which spends much more than it brings in, could saddle future generations with mountains of debt, sluggish economic growth, runaway inflation and enormous tax hikes. But those concerns receded after no such crisis materialized. The country experienced tepid inflation and low borrowing costs for a decade after the 2008 financial crisis, despite increased borrowing for economic stimulus under President Barack Obama and for tax cuts under President Donald J. Trump.In its place is a new debate, one focused on the long-term costs and benefits of the government’s spending decisions.Many Democrats fear the United States cannot afford to wait to curb climate change, help more women enter the work force and invest in feeding and educating its most vulnerable children. In their view, failing to invest in those issues means the country risks incurring painful costs that will slow economic growth.“We can’t afford not to do these kinds of investments,” David Kamin, a deputy director of the White House National Economic Council, said in an interview.Take climate change: The Democratic think tank Third Way estimates that if Congress passes an aggressive plan to reduce greenhouse gas emissions, U.S. companies will invest an additional $1.3 trillion in the construction and deployment of low-emission energy like wind and solar power and energy-efficient technologies over the next decade, and $10 trillion by 2050. White House officials say that if the country fails to reduce emissions, the federal government will face mounting costs for relief and other aid to victims of climate-related disasters like wildfires and hurricanes.“Those are the table stakes for the reconciliation and infrastructure debate,” said Josh Freed, the senior vice president for climate and energy at Third Way. “It’s why we think the cost of inaction, from an economic perspective, is so enormous.”But to some centrist Democrats, who have expressed deep reservations about spending $2 trillion on a bill to advance Mr. Biden’s plans, “affordable” still means what it did in decades past: not adding to the federal debt. The budget deficit has swelled in recent years, reaching $1 trillion in 2019 from additional spending and tax cuts that did not pay for themselves, before topping $3 trillion last year amid record spending to combat the coronavirus pandemic.Mr. Manchin says he fears too much additional spending would feed rising inflation, which could push up borrowing costs and make it harder for the country to manage its budget deficit. He has made clear that he would like the final bill to raise more revenue than it spends in order to reduce future deficits and the threat of a debt crisis. Mr. Biden says his proposals would help fight inflation by reducing the cost of child care, housing, education and more.A few economists agree with Mr. Manchin, warning that even fully offsetting spending and tax cuts could fuel inflation. Michael R. Strain, a centrist economist at the conservative American Enterprise Institute who supported many of the pandemic spending programs, said in an interview this year that additional spending that stoked consumer demand would “exacerbate pre-existing inflationary pressures.”President Biden visited the Capitol Child Development Center in Hartford, Conn., on Friday. He has warned that if Congress does not act to invest in children, the United States will face slower economic growth for generations to come.Sarahbeth Maney/The New York TimesRepublicans, who have vowed to fight any version of the spending bill, argue that the national economy cannot afford the burden of taxes on high earners and businesses that Democrats have proposed to help offset their plans. They say the increases will chill growth when the recovery from the pandemic recession remains fragile.“The tax hikes are going to slow growth, flatten out wages and both drive U.S. jobs overseas and hammer small businesses,” said Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee. “There will be a significant economic price to all this spending.”U.S. Inflation & Supply Chain ProblemsCard 1 of 6Covid’s impact on supply continues. More

  • 125 Shares189 Views

    in Economy

    Funding Fight Threatens Plan to Pump Billions Into Affordable Housing

    by

    A federal voucher program is at risk of being sharply scaled back as the White House seeks to slash its social policy package to appease two centrist senators.SAN FRANCISCO — Audrey Sylve, a retired bus driver, has spent 13 agonizing years on a waiting list for a federal voucher that would help cover rent for an apartment in one of America’s most expensive housing markets.This summer it seemed that help was finally on the way.In late July, congressional Democrats introduced a $322 billion plan to bolster low-income housing programs as part of the $3.5 trillion social spending plan embraced by President Biden. At its center is a $200 billion infusion of aid for the country’s poorest tenants, which would allow another 750,000 households to participate in a program that currently serves two million families.Affordable-housing advocates saw it as a once-in-a-generation windfall that would allow local governments to move thousands of low-income tenants like Ms. Sylve, 72, off waiting lists and to expand aid to families at the highest risk of homelessness.But optimism has given way to anxiety. Low-income housing, and the voucher program in particular, are among those most at risk of being sharply scaled back as the White House seeks to slash the package to accommodate the demands of two centrist Democrats, Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, according to several people involved in the talks.Congressional negotiators are seeking to cut the overall size of the 10-year package, in coordination with the White House, to between $1.9 trillion and $2.3 trillion. Housing is just one of several high-price priorities on the chopping block in the negotiations.Yet proponents say no other proposal is likely to have as immediate an effect on the lives of the country’s most vulnerable as the increase in rental assistance because it addresses a foundational problem: securing an affordable place to live when rents everywhere are outpacing earnings.“I’m all for funding early childhood education, child care and the expansion of health care with education, but we cannot be successful with any of that unless people have safe and secure housing,” said Representative Maxine Waters, a California Democrat who leads the House Financial Services Committee, which drafted the original plan.Supporters of the expansion say every penny is required to begin addressing a crisis that threatens to undermine recent gains in the fight to reduce poverty. They fear it will be elbowed aside by other programs, such as universal child care, that enjoy broader political support because they benefit middle-class, and not just poor, people.“Better health care or increased educational access doesn’t do much for families sleeping in their car or under a bridge, or for the millions more on the verge,” said Diane Yentel, president of the National Low Income Housing Coalition, which is pressuring the White House to fund the program as it was drafted. “There are no ‘savings’ to be had here.”The financial services industry, which puts together the complex public-private financing packages used to build most affordable developments, has already factored in a significantly scaled-back congressional compromise.“Much of the proposed $400 billion in housing-related grants and tax subsidies is likely to be cut from the reconciliation bill,” analysts from Goldman Sachs wrote in an email last week. That figure bundled the $332 billion package, which also includes increases for public housing authorities and an affordable housing construction fund, with a smaller package of tax breaks in the bill.White House officials say they have made no decisions. Ms Waters and her counterpart in the Senate, Sherrod Brown, a Democrat of Ohio, said they would not accept any deal that cut the housing plan more than any other proposal.“We’re not going to scale back. We’re not going to lose our way on this,” Mr. Brown, chairman of the Banking Committee, said in an interview. “And we’re not going to compromise the mission of transforming the fight on poverty.”The White House is looking for ways to win support for its package from Senators Kyrsten Sinema and Joe Manchin III.Stefani Reynolds for The New York TimesOver the past two decades, the federal government has stopped bankrolling construction of government-run public housing projects. Instead, it has shifted resources to voucher programs, which bridge the financial gap between what a poor tenant can afford to pay and what a landlord might reasonably expect to get on the open market.Demand far outstrips supply: One recent study found that the federal government has provided funding for only a quarter of the vouchers needed to help house eligible families — and many housing authorities have simply stopped taking names to avoid leaving tenants in the lurch.Even if the voucher increase somehow makes it past Mr. Manchin and Ms. Sinema, it would represent only a down payment on an enormous unmet need for housing aid exacerbated by rocketing real estate values in most major cities.California’s estimated share of the new aid would bankroll only a fraction of the new vouchers needed to meet the demand, said Matthew Schwartz, president of the California Housing Partnership, a nonprofit that works with community groups to finance low-income housing projects.But it would be a significant improvement, Mr. Schwartz said, particularly on top of a $22 billion affordable-housing plan that Gov. Gavin Newsom signed into law this summer.Joseph Villarreal, executive director of the housing authority of Contra Costa County, outside San Francisco, is less concerned about the future than fulfilling the promises he has made in the past. He saw the new cash in personal terms, as a way to fulfill a commitment more than a decade in arrears.“It would be horrible if any, much less the majority, if this voucher money gets cut from the proposal,” he said.Mr. Villarreal’s organization, which serves as a pass-through for federal funding, maintains 51 separate waiting lists for the vouchers — some for specific developments, others for targeted demographic groups, with 47,000 families in limbo. “It weighs on me,” he said of the lists.Ms. Sylve, who said she was scraping by on a small pension and Social Security, was one of 6,000 chosen from 40,000 qualified Contra Costa County applicants in a lottery to be added to the slow-moving queue for the program, which is still known by its historical name, Section 8.A few years ago she was told that a voucher was about to become available, but that fell through, and she has spent much of the past 13 years hopping from apartment to apartment. Last spring, Ms. Sylve moved in with her daughter across the bay in San Francisco, because the neighborhood around her apartment had become too dangerous.“They give you hope, and that’s the hardest part,” Ms. Sylve said. “But you keep hoping, year after year after year.”A survey of 44 large housing authorities across the country conducted by the Center on Budget and Policy Priorities, a left-leaning Washington think tank, painted a grim picture of the voucher program. A total of 737,000 people were on waiting lists, and 32 of the authorities are refusing to take new applications, with a few exceptions for particularly vulnerable populations.The situation on the West Coast was especially dire, with eight times as many people lingering on waiting lists as receiving aid in San Diego, where the list has topped 108,000. Long waiting lists are also a staple in Washington, Philadelphia, Houston, Honolulu, Little Rock, Ark., and New York, which closed its list years ago.Will Fischer, director for housing policy for the center, said bolstering the voucher program was the most important single move the federal government could make to address the homelessness crisis.“Look, the public housing money is urgently needed — but it would be for existing units, for families who already have a place to live,” he said. “And most of the other funding in the proposal actually serves people a little bit higher up the income scale.”Representative Ritchie Torres, a Bronx Democrat whose district is among the poorest in the country, said housing always seemed to be listed as the third, fourth or fifth priority of many liberal lawmakers.When House Democrats peppered Mr. Biden with questions about the social spending package at a meeting in the Capitol this month, Mr. Torres — a former chairman of the New York City Council housing committee — was stunned when he realized no one had asked the president about rental aid, and spoke up.Mr. Biden responded by promising he would “protect” housing, without elaborating, Mr. Torres said. More

  • 138 Shares99 Views

    in Economy

    As Democrats Trim Spending Bill, Some Americans Fear Being Left Behind

    by

    President Biden had an ambitious agenda to remake the economy. But under the duress of negotiations and Senate rules, he has shelved a series of proposals, some of them indefinitely.WASHINGTON — Democrats in Congress are curbing their ambitions for President Biden’s economic agenda, and Jennifer Mount, a home health care aide, worries that means she will not get the raise she needs to pay more than $3,000 in medical bills for blindness in one eye.Edison Suasnavas, who came to the United States from Ecuador as a child, has grown anxious about the administration’s efforts to establish a pathway to citizenship, which he hoped would allow him to keep doing molecular tests for cancer patients in Utah without fear of deportation.And Amy Stelly wonders — thanks to a winnowing of Mr. Biden’s plans to invest in neighborhoods harmed by previous infrastructure projects like highways that have harmed communities of color — whether she will continue to breathe fumes from a freeway that she says constantly make her home in New Orleans shudder. She has a message for the president and the Democrats who are in the process of trying to pack his sprawling agenda into a diminishing legislative package.“You come up and live next to this,” Ms. Stelly said. “You live this quality of life. We suffer while you debate.”Mr. Biden began his presidency with an expensive and wide-ranging agenda to remake the U.S. economy. But under the duress of negotiations and Senate rules, he has shelved a series of his most ambitious proposals, some of them indefinitely.He has been thwarted in his efforts to raise the federal minimum wage and create a pathway to citizenship for undocumented immigrants. He has pared back investments in lead pipe removal and other efforts that would help communities of color. Now, as the president tries to secure votes from moderates in his party, he is reducing what was originally a $3.5 trillion collection of tax cuts and spending programs to what could be a package of $2 trillion or less.That is still an enormous spending package, one that Mr. Biden argues could shift the landscape of the economy. But a wide range of Americans who have put their faith in his promises to reshape their jobs and lives are left to hope that the programs they are banking on will survive the cut; otherwise, they face the prospect of waiting years or perhaps decades for another window of opportunity in Washington.“The problem now is this may be the last train leaving the station for a long time,” said Jason Furman, an economist at the Harvard Kennedy School who was a top economic adviser to President Barack Obama. “It could be five, 10, 20 years before there’s another shot at a lot of these issues.”President Biden entered the White House with an expensive and ambitious agenda to remake the U.S. economy. He has pared back those plans.Tom Brenner for The New York TimesMr. Furman and other former Obama administration officials saw firsthand how quickly a presidential agenda can shrink, and how presidential and congressional decisions can leave campaign priorities unaddressed for years. Mr. Obama prioritized an economic stimulus package and the creation of the Affordable Care Act over sweeping immigration and climate legislation in the early years of his presidency.Stimulus and health care passed. The other two did not. A similar fate now could befall Mr. Biden’s plans for home care workers, paid leave, child care subsidies, free prekindergarten and community college, investments in racial equity and, once again, immigration and climate change.If Mr. Biden is able to push through a compromise bill with major investments in emissions reduction, “he’s got an engine that he’s working with” to fight climate change, said John Podesta, a former top aide to Mr. Obama and President Bill Clinton. “If he can’t get it, then I think, you know, we’re really kind of in soup, facing a major crisis.”Republicans have criticized the spending and the tax increases that would help fund it, claiming that the Democratic package would hurt the economy. Democrats “just have an insatiable appetite to raise taxes and spend more money,” Representative Steve Scalise, Republican of Louisiana, said on “Fox News Sunday” this week. “It would kill jobs.”Amy Stelly said she wondered whether she would continue to breathe fumes from the Claiborne Expressway, which is near her home in New Orleans.Edmund D. Fountain for The New York TimesThe threat of Republican filibusters has blocked Mr. Biden’s plans for gun and voting-rights legislation.For now, though, the president’s biggest problem is his own party. He is negotiating with progressives and moderates over the size of the larger tax and spending package. Centrists like Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona have pushed for the price tag to fall below $2 trillion. Mr. Manchin has said he wants to limit the availability of some programs to lower- and middle-income earners. Progressive groups are jockeying to ensure that their preferred plans are not cut entirely from the bill.The House has proposed investing $190 billion in home health care, for example, less than half of what Mr. Biden initially asked for. If the price tag continues to decrease, Democrats would almost certainly have to choose between two concurrent aims: expanding access to older Americans in need of caretakers or raising the wages of those workers, a group that is disproportionately women of color.Another proposal included in Mr. Biden’s original infrastructure bill was an investment of $20 billion to address infrastructure that has splintered communities of color, although the funding was slashed to $1 billion through a compromise with Republican senators.Ms. Stelly thought the funds, plus the president’s sweeping proposals to address climate change — which might also be narrowed to appease centrist Democrats — would finally result in elected officials addressing the highway emissions that have filled her lungs and darkened the windows of her home.Ms. Stelly, an urban designer, has since limited her expectations. She said she hoped the funding would be enough to at least issue another study of the highway, which claimed dozens of Black-owned businesses and the once-thriving neighborhood of Tremé.The Claiborne Expressway bisects the residential neighborhood of Tremé in New Orleans. Ms. Stelly said she hoped the funding would be enough for another study on the effects of the highway.William Widmer for The New York TimesSome Democrats are eager to pack as much as they can into the bill because they fear losing the House, the Senate or both in the midterm elections next year. Mr. Podesta has urged lawmakers to see the package as a chance to avoid those losses by giving Democratic incumbents a batch of popular programs to run on, and also giving the president policy victories that could define his legacy.Mr. Biden has promoted some of his policies as ways to reverse racial disparities in the economy and lift families that are struggling in the coronavirus pandemic from poverty.Ms. Mount, who immigrated to the United States from Trinidad and Tobago, said she was appreciative of her job helping older Americans and the disabled eat and bathe and assisting them in their homes. But her wages for her long hours — working about 50 hours a week for $400, at times — have made it effectively impossible to stay on top of payments for basic needs.She had hoped Mr. Biden’s plan to raise the minimum wage or salaries for home health care aides meant she would no longer need to choose between her electric bills and her medical expenses. She said the treatment had improved her blindness, but without a salary increase for her field, she is more convinced that she will be working for the rest of her life.“I have to make a choice: Do I go to the grocery store or pay my mortgage? Do I pay my water bill or pay my electric bill?” said Ms. Mount, who lives in Philadelphia. “With that, retirement looks B-L-E-A-K, all uppercase. What do I have there for retirement?”When Mr. Biden initially proposed two years of free community college, Ms. Mount, 64, was encouraged about future opportunities for her six grandchildren in the United States. But she fears that effort could also be cut.“That’s politics from on top,” she said. “At times, they always seem detached.”Protesters gathered in front of the White House in August in support of the DACA program, which protects young immigrants from deportation.Andrew Caballero-Reynolds/Agence France-Presse — Getty ImagesSome measures that Democrats have long promised voters have run afoul of Senate rules that dictate which policies the administration should include in bills that use a special process to bypass the filibuster, including a minimum-wage increase and a plan to offer citizenship to immigrants brought to the United States as children.When the Senate parliamentarian rejected the strategy, it made Mr. Suasnavas, who has lived in the United States since he was 13, consider the prospect of eventually being deported; he would have to leave behind his job as a medical technology specialist, and his 6-year-old daughter and 2-year-old son.“We’ve been having the hopes that politicians in Washington — Democrats and Republicans — will see not only the economic impact we can bring to the country but also we’re still people with families,” said Mr. Suasnavas, 35. “Our hearts have been broken so many times that it feels like another wound in your skin.” More

  • 113 Shares189 Views

    in Economy

    Biden's Presidential Agenda Rests on $3.5 Trillion Spending Bill

    by

    A plan for the economy, education, immigration, climate and more binds disparate Democratic lawmakers, but the proposal risks sinking under its own weight.WASHINGTON — No president has ever packed as much of his agenda, domestic and foreign, into a single piece of legislation as President Biden has with the $3.5 trillion spending plan that Democrats are trying to wrangle through Congress over the next six weeks.The bill combines major initiatives on the economy, education, social welfare, climate change and foreign policy, funded in large part by an extensive rewrite of the tax code, which aims to bring in trillions from corporations and the rich. That stacking of priorities has raised the stakes for a president resting his ambitions on a bill that could fail over the smallest of intraparty disputes.If successful, Mr. Biden’s far-reaching attempt could result in a presidency-defining victory that delivers on a decades-long campaign by Democrats to expand the federal government to combat social problems and spread the gains of a growing economy to workers, striking a fatal blow to the government-limiting philosophy of President Ronald Reagan that has largely defined American politics since the 1980s.But as Democrats are increasingly seeing, the sheer weight of Mr. Biden’s progressive push could cause it to collapse, leaving the party empty-handed, with the president’s top priorities going unfulfilled. Some progressives fear a watered-down version of the bill could fail to deliver on the party’s promises and undermine its case for a more activist government. Some moderates worry that spending too much could cost Democrats, particularly those in more conservative districts, their seats in the 2022 midterm elections, erasing the party’s control of Congress.The legislation, which Democrats are trying to pass along party lines and without Republican support, contains the bulk of Mr. Biden’s vision to overhaul the rules of the economy in hopes of reducing inequality and building a more vibrant middle class. But its provisions go beyond economics.Democrats hope the package will create a pathway to citizenship for as many as eight million undocumented immigrants, make it easier for workers to form unions, and lower prescription drug costs for seniors. They want to guarantee prekindergarten and community college for every American, bolster the nation’s strategic competitiveness with China and stake an aggressive leadership role in global efforts to fight climate change and corporate tax evasion.The plan includes a large tax cut for the poor and middle class, efforts to reduce the cost of child care and expand access to home health care for older and disabled Americans and create the first federally guaranteed paid leave for American workers.Democrats hope the package will create a pathway to citizenship for immigrants brought to the United States as children.Carlo Allegri/ReutersIt is almost as if President Franklin D. Roosevelt had stuffed his entire New Deal into one piece of legislation, or if President Lyndon B. Johnson had done the same with his Great Society, instead of pushing through individual components over several years.“The president is on the cusp of achieving a major expansion in public education, one of the largest expansions of the social safety net, the largest investment in climate change mitigation” and overhauls in labor law and drug pricing, said Patrick Gaspard, a former Obama administration official who is now the president of the liberal Center for American Progress in Washington..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“Each one of these things is significant in its individual constituent parts,” he said, “but taken as a whole, it, I think, speaks to the remarkable opportunity that we have — these once-in-a-generation opportunities to set a course that creates growth for all, including and especially those who have been most vulnerable in this economy.”If the effort succeeds, Mr. Biden will have accomplished much of what he campaigned on in one fell swoop. Observers say he will carry a strengthened hand into global summits in October and November that are meant to galvanize the world around transitioning from planet-warming fossil fuels and ending the use of offshore havens that companies have long used to avoid taxation.White House officials say that the breadth of programs in the package form a unified vision for the United States’ domestic economy and its place in the world, and that the planks serve as a sort of coalition glue — a something-for-everyone approach that makes it difficult to jettison pieces of the plan in negotiations, even if they prove contentious.But the sheer scope of its contents has opened divisions among Democrats on multiple fronts, when Mr. Biden cannot afford to lose a single vote in the Senate and no more than three votes in the House.Centrists and progressives have clashed over the size of the spending in the legislation and the scale and details of the tax increases that Mr. Biden wants to use to help offset its cost. They are divided over prescription drug pricing, the generosity of tax credits for the poor, the aggressiveness of key measures to speed the transition to a lower-emission energy sector and much more.Even items that are not top priorities for Mr. Biden have opened rifts. On Friday, one of the party’s most outspoken progressives, Representative Alexandria Ocasio-Cortez of New York, took aim at a crucial priority of several top Democrats, including Senator Chuck Schumer, saying she would resist attempts to fully repeal a cap on deductions for state and local property taxes that would aid high earners in high-tax areas.If Mr. Biden’s party cannot find consensus on those issues and the bill dies, the president will have little immediate recourse to advance almost any of those priorities. Outside of a hard-fought victory on a bipartisan infrastructure package — which has passed the Senate but not yet cleared the House — Mr. Biden has found almost no reception from Republicans for his proposals. His economic, education and climate agendas, and perhaps even additional efforts to rebuild domestic supply chains and counter China, could be blocked by Republicans under current Senate rules for most legislation.Democrats hope to stake an aggressive American leadership role in global efforts to fight climate change.Kathleen Flynn/ReutersRepublicans say the breadth of the bill shows that Democrats are trying to drastically shift national policy without full debate on individual proposals.Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, complained repeatedly this week that Republicans and conservatives “believe that our government is wasting so much to kill so many American jobs.”Mr. Biden’s plan would “hook a whole new generation of the poor on government dependency,” he said.Biden administration officials say the bill’s contents are neither secret nor socialist. They say the plan tracks with the proposals Mr. Biden laid out in the 2020 campaign, in his first budget request and in an address to a joint session of Congress.“There is a through line to everything that we are advancing,” Brian Deese, who heads the White House National Economic Council, said in an interview, “from investments in education, to winning the clean energy economy of the future to restoring fairness in the tax code, that connects to how we make ourselves globally competitive in this next quarter of the 21st century.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Ted Kaufman, a longtime aide to Mr. Biden who helped lead his presidential transition team, said the core of the bill went back much further: to a set of newsprint brochures that campaign volunteers delivered across Delaware in 1972, when Mr. Biden won an upset victory for a Senate seat.“He ran because he wanted to do all these things,” Mr. Kaufman said, both during his 1972 race and during his presidential campaign last year. But tackling so many things at once has exposed divisions among congressional Democrats, including this week, when Mr. Biden’s attempt to reduce prescription drug costs failed a House committee vote after three Democrats joined Republicans in disapproval.Party leaders are trying to balance the demands of liberals who already see a $3.5 trillion bill as insufficient for the nation’s problems and moderates, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, who have balked at its overall cost and some of its tax and spending provisions.Many polls show the bill’s pieces largely fare well with voters, including independents and some Republicans. Margie Omero, a principal at the Democratic polling firm GBAO, which has polled on the bill for progressive groups, said the ambition of the package was a selling point that Democrats should press as a contrast with Republicans in midterm elections.“People feel like the country is going through a lot of crises, and that we need to take action,” she said.As they scuffle over the bill’s final cost and levels of taxation, Democrats have tried to find savings without discarding entire programs — by reducing spending on home health care, for example, instead of dropping it or another provision entirely.Progressive groups say that is a reason for lawmakers to not further reduce the size of the effort, worrying that scaled-back programs could undermine the case for broad government intervention to solve problems.The bill calls for expanding access to child care.Kathleen Flynn/Reuters“If the bill passes as is right now and we get a major sea change in the progressivity of the tax code, we build a serious infrastructure for, like, universal child care in this country, and we really, really sort of start to make progress toward a green economy, this is going to be a historic piece of legislation,” said Lindsay Owens, the executive director of the Groundwork Collaborative, which has pushed the administration to focus on shared prosperity that advances racial equity.If the bill is whittled down, she said, Mr. Biden risks “a situation in which we didn’t spend enough money on any piece to do it well.”“You don’t want half a child care system and a little bit of a greening of the economy in two sectors,” she added. “You really don’t want to do a lot of things poorly.”Administration officials insist that even if the bill fails entirely, other efforts by Mr. Biden — including executive actions and bipartisan measures now awaiting House approval after clearing the Senate — have reasserted the United States’ leadership on climate, competitiveness and confronting China. In some areas, though, Mr. Biden has little other recourse, like opening the pathway to citizenship for immigrants brought to the country as children.For now, the president continues to publicly set high expectations for a bill that aides say he sees as fundamental to demonstrating that democratic governments can deliver clear and tangible benefits for their people.“This is our moment to prove to the American people that their government works for them, not just for the big corporations and those at the very top,” Mr. Biden said on Thursday. He added, “This is an opportunity to be the nation we know we can be.” More

  • 163 Shares199 Views

    in Economy

    In Social Policy Bill, Businesses See a Lot to Like. They Oppose It.

    by

    Resistance to tax increases outweighs the appeal of a $3.5 trillion measure containing child care credits and other items that corporations embrace.WASHINGTON — The far-reaching social policy bill under construction in Congress has much that corporate America has long sought from Washington.Federal funding for family leave would ease the burden of businesses that currently pay for it while helping those that cannot afford it compete for workers. Child care tax credits would get women back in the work force. Income supports for young families could ease upward pressure on wages.But the bill also contains plenty for corporate America to dislike — particularly the tax increases that would pay for it — and in the cold calculus of corporate lobbying, industries are working hard to bring the whole enterprise down.“It’s not fair to say we like all the spending but don’t want to pay for it. There is some investment that is more valuable than others,” said Neil Bradley, the executive vice president and chief policy officer for the U.S. Chamber of Commerce. But, he added, “ultimately we’re making the case that taken as a whole, this is economically devastating for the country and in particular members’ districts and states.”Businesses have long seen a role for the government in creating and sustaining the kind of trained, healthy work force that can keep them competitive in a global economy.Access to affordable child care and early childhood education would help parents who stopped working during the coronavirus pandemic return to the labor force. Expanded higher education aid and worker retraining could create a more flexible labor pool, programs that business groups have supported for years. Federally financed family and medical leave would help small businesses that cannot afford it compete for talent with larger businesses providing the benefit.“What’s holding back growth? Labor force participation, which hasn’t recovered; nonaffordability of child care, which is going to take the biggest leap forward that we’ve ever had; paid leave for illness and family leave,” said Representative Donald S. Beyer Jr., a Virginia Democrat who owned and ran car dealerships before his political career. “On the business side, I think it will make for a better workplace, an easier one with less tension.”Yet the Chamber of Commerce, the Business Roundtable, the National Federation of Independent Business and the National Association of Manufacturers are implacably opposed. Many have made it clear: Taxes trump policy.“We’re hearing somewhere between $1.8 and $3.5 trillion on job creators in America. That would take us back to where we were before the 2017 tax reforms,” Jay Timmons, the chief executive of the manufacturers’ association, said on CNBC. “We will oppose the bill with any of those factors in there.”That 2017 tax law, signed by President Donald J. Trump, is at the heart of the opposition. The net tax cuts were supposed to cost the Treasury Department about $1.5 trillion over 10 years, but the total tax cutting, more than $5 trillion over a decade, was far larger than the tax increases now being contemplated — though it was partly offset by other tax increases, mainly on individuals.The major business groups are divided on precisely how to respond to the emerging social policy bill, but they are united in their defense of the Trump-era tax cuts. For instance, the Retail Industry Leaders Association, in a letter to congressional leaders on Thursday, embraced a proposal by President Biden to create a corporate minimum tax, declaring, “For too long, some of the largest corporations have paid minimal or no taxes.”But retailers pleaded with lawmakers to hit other companies first before even contemplating an increase in the corporate income tax rate, which the 2017 tax cut lowered to 21 percent from 35 percent. Mr. Biden has proposed raising it to 28 percent.The social policy bill under construction in Congress has much that corporate America has long sought from Washington.Stefani Reynolds for The New York Times“This is, in many ways, just a small response to the 2017 Tax Cuts and Jobs Act bill that passed under Trump, which led to some $2 trillion in lost revenue that could have gone to the public investments that we are all calling for and everyone agrees are needed,” said Didier Trinh, the director of policy at the Main Street Alliance, a liberal small-business group that is dwarfed by the groups opposing the measure. “The corporate tax rate at 28 percent would only be halfway to the pre-Trump tax rate.”Beyond the corporate tax rate, Democrats are considering taxing business repurchasing of stocks, raising taxes on overseas profits, limiting tax write-offs for foreign investment, tightening access to a special low tax rate for partnerships and other companies that do not pay corporate income taxes, and dozens of other measures.Jeffrey Hollender, a co-founder and former chief executive of Seventh Generation, which makes “green” household and personal care products, said Congress’s progress toward what would be the most significant expansion of the social safety net since the 1960s was testing the business community’s stated commitments to social change. He said he was not surprised that the calls for change were not standing up to the reality of paying for it.“People say they’re for this new stakeholder economy, that they’re committed to sustainability,” said Mr. Hollender, now the chief executive of the liberal American Sustainable Business Council. “But at the same time, there is a system of incentives designed to maximize profits, and when those profits are threatened, businesses don’t like it.”More mainline business groups recoiled at the accusation. Mr. Bradley, of the Chamber of Commerce, agreed that parts of the Democratic vision mirrored the business lobby’s longstanding wishes. Accessible child care is a high priority, he said, and addressing climate change with investments in clean energy is overdue.“The administration was right to raise I.R.S. enforcement to close the tax gap,” he added. “We want a pro-growth tax code, but we want people to comply with that tax code.”But he said the way Democrats were addressing those issues — by hastily lumping them into one voluminous $3.5 trillion measure to be passed through a fast-track process known as reconciliation — guaranteed opposition.For instance, business groups had been working with lawmakers from both parties to try to create a paid family and medical leave program that would be paid for with a payroll tax, shared among businesses, workers and the government. To satisfy Mr. Biden’s pledge not to raise any taxes on people with incomes below $400,000, the payroll tax has disappeared, replaced by a variety of tax increases on rich people and corporations that are no longer connected to the program they are to finance.“Paid family leave, outside a reconciliation context, would require intense negotiations and trade-offs, but it wouldn’t be outside the realm of possibility that we could find a proposal that we could support,” Mr. Bradley said. “Inside reconciliation, it’s only getting worse.”The Business Roundtable, which represents the chief executives of the nation’s largest corporations, expressed a similar desire. “There is strong bipartisan support for some of these policies, and we encourage Congress to take them up through that deliberative process, not via reconciliation,” the group said in a statement.To many Democrats, that sounds like an excuse, “a tactic to avoid having to pay,” Mr. Hollender said. For many of the programs under consideration, like paid family leave, recently championed by Ivanka Trump, former President Donald J. Trump’s older daughter, bipartisan negotiations have dragged on fruitlessly for decades. Now that legislative efforts are moving forward in earnest, supporters are dropping away.Heather Boushey, a member of the White House Council of Economic Advisers, defended the broad-based approach of addressing social policy needs and paying for them with tax policies generally devised to address income inequality, not narrowly tailored as direct offsets to specific programs.“This is a pro-growth agenda, based on the notion that when the middle class does well everyone does well,” she said, “and one history will show is the right way to go.” More

  • 138 Shares149 Views

    in Economy

    From Cradle to Grave, Democrats Move to Expand Social Safety Net

    by

    The $3.5 trillion social policy bill that lawmakers begin drafting this week would touch virtually every American, at every point in life, from conception to old age.WASHINGTON — When congressional committees meet this week to begin formally drafting Democrats’ ambitious social policy plan, they will be undertaking the most significant expansion of the nation’s safety net since the war on poverty in the 1960s, devising legislation that would touch virtually every American’s life, from conception to aged infirmity.Passage of the bill, which could spend as much as $3.5 trillion over the next decade, is anything but certain. President Biden, who has staked much of his domestic legacy on the measure’s enactment, will need the vote of every single Democrat in the Senate, and virtually every one in the House, to secure it. And with two Democratic senators, Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, saying they would not accept such a costly plan, it will challenge Democratic unity like nothing has since the Affordable Care Act.That is largely because the proposed legislation would be so transformative — a cradle-to-grave reweaving of a social safety net frayed by decades of expanding income inequality, stagnating wealth and depleted governmental resources, capped by the worst public health crisis in a century.The pandemic loosened the reins on federal spending, prompting members of both parties to support showering the economy with aid. It also uncorked decades-old policy desires — like expanding Medicare coverage or paid family and medical leave — that Democrats contend have proved to be necessities as the country has lived through the coronavirus crisis.“Polls have shown for a very long time that these issues to support American families were important, and were popular, but all of a sudden they became not a ‘nice to have’ but a ‘must have,’” said Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers who has been developing such policies for decades.Democrats say they will finance their spending with proposed tax increases on corporations — which has already incited a multifaceted, big-budget effort by business groups working to kill the idea — and by possibly taxing wealth in ways that the United States has never tried before.“We’re talking about free or affordable child care where no one pays more than 7 percent of their income; we’re talking about universal pre-K programs with two years of formal instruction; we’re talking about two years of postsecondary education,” said Representative Jamaal Bowman of New York, a former teacher and principal who is vice chairman of the House Education and Labor Committee. “This is how you build a strong nation.”To Republicans, who are readying a counteroffensive, the Democratic plans are nothing short of socialism. They say they are concerned that the plan is financially unsustainable and would undermine economic growth, by rendering Americans too dependent on the government for their basic needs.“What are Democrats trying to do to this country?” Representative Bruce Westerman, Republican of Arkansas, asked on Thursday, as the House Natural Resources Committee began drafting its portion of the sprawling bill.Senator Joe Manchin III of West Virginia said he could not support the bill at its current size. Stefani Reynolds for The New York TimesTo grasp the intended measure’s scope, consider a life, from conception to death. Democrats intend to fund paid family and medical leave to allow a parent to take some time off during pregnancy and after a child’s birth.When that parent is ready to return to work, expanded funding for child care would kick in to help cover day care costs. When that child turns 3, another part of the bill, universal prekindergarten, would ensure public education can begin at an earlier age, regardless of where that child lives.Most families with children would continue to receive federal income supplements each month in the form of an expanded child tax credit that was created temporarily by Mr. Biden’s pandemic-rescue law and would be extended by the new social policy bill. School nutrition programs, expanded on an emergency basis during the pandemic, would continue to offer more children free and reduced-price meals long after the coronavirus retreats.And at high school graduation, most students would be guaranteed two years of higher education through expanded federal financial aid, geared toward community colleges.Even after that, income supplements and generous work force training programs — including specific efforts to train home health and elder-care workers — would keep the government present in many adult lives. In old age, people would be helped by tax credits to offset the cost of elder care and by an expansion of Medicare to cover dental, hearing and vision services.“Many of us feel that this is the biggest opportunity we will have in our careers to do something deeply structural and transformational to our economy,” Representative Donald S. Beyer Jr., Democrat of Virginia, said, “and we should not miss it.”To critics, the legislation represents a fundamental upending of American-style governance and a shift toward social democracy. With it, they worry, would come European-style endemic unemployment and depressed economic dynamism.“There’s always been difference of opinion on the role of government in people’s lives, and the United States has long taken a different approach than Western Europe,” said N. Gregory Mankiw, a Harvard economist who was chairman of President George W. Bush’s Council of Economic Advisers. “This is clearly designed to take a big step toward the Western European model.”Defenders shrug off such concerns. Representative Robert C. Scott of Virginia, chairman of the House Education and Labor Committee, said the legislation would promote economic growth, with child care subsidies that would get parents back into the work force, education spending to more equitably prepare all Americans to work, and job training to improve labor mobility.“We are making the American economy more dynamic and more globally competitive,” he said.Besides, in the longstanding struggle to balance economic growth against equality and equity, Democrats are ready to shift toward the latter.“The route we’ve taken has led to the concentration of wealth in the hands of a very few people while the rest have just struggled to survive,” Mr. Bowman said. “It’s time to try something else.”“This is how you build a strong nation,” said Representative Jamaal Bowman, a former teacher and principal who is vice chairman of the House Education and Labor Committee.Desiree Rios for The New York TimesIn a mechanical sense, the legislation is not as much of a sea change as the creation of Medicare and Medicaid in the 1960s, or Social Security in the 1930s. Even the Affordable Care Act of 2010 created an entirely new government infrastructure, a federally operated or regulated exchange where Americans could buy private health insurance that has to conform to government strictures on coverage and cost, noted Michael R. Strain, an economist at the conservative American Enterprise Institute.In contrast, the new legislation would largely augment existing programs. Childcare support would come through the Community Development Block Grant to states, cities and counties. Universal pre-K would be secured through block grants and expanded funding to Head Start. Two years of higher education are supposed to become accessible through more generous Pell grants and other existing financial aid programsBut if it passes, Mr. Strain said the legislation could fundamentally change the relationship between the state and its citizens: “Its ambition is in its size.”Most Americans traditionally have seen the federal government’s involvement in their finances once a year, at tax time, when they claim a child credit, get a write-off for the truck they may have bought for their business, or receive a check for an earned income credit, to name a few.That would change profoundly if the social policy bill were enacted. The expanded child tax credit has begun to provide monthly checks of up to $300 per child to millions of families, but is slated to expire in 2022. Its extension for as long as a decade could make it a fixture of life that would be very difficult for future Congresses to take away. The same goes for the Child and Dependent Care Credit, which now offers up to $8,000 in child care expenses but also expires in a year.And the federal government, not private employers, would pay most of the salaries of people qualifying for family and medical leave.“If we get this passed, a decade from now, people are going to see many more touch points of government supporting them and their families,” Ms. Boushey said.One major difference between the social economy that Mr. Biden and congressional Democrats hope to create and the welfare state in Europe is how it would be paid for. Most European countries ask their citizens broadly to fund their social welfare programs, largely through a value added tax, a sales tax levied at each stage of a consumer good’s production.At the president’s insistence, the House and Senate tax-writing committees are to finance the bill’s spending with taxes on corporations and individuals with incomes over $400,000 a year.To that end, the Senate Finance Committee is considering groundbreaking ways to tax wealth, including changing how estates are taxed so that heirs must pay more taxes on inherited assets. The committee is also looking at taxing the accumulated wealth of billionaires — things like homes, boats, stocks and other assets, regardless of whether they are sold — a new frontier of tax policy that would be difficult to achieve. Senator Ron Wyden of Oregon, the Finance Committee chairman, said such measures are the only way to ensure that the superrich must pay their fair share of taxes each year. “I’m going to bring the caucus into that discussion, but I believe billionaires ought to pay taxes every year, just like nurses and firefighters do” out of each paycheck, Mr. Wyden said. More

  • 138 Shares129 Views

    in Economy

    Democrats Roll Out $3.5 Trillion Budget to Fulfill Biden’s Broad Agenda

    by

    “We’re going to get a lot done,” President Biden said, as Senate Democrats began drafting the details on a social and environmental bill that could yield transformative change.WASHINGTON — President Biden and congressional Democrats vowed on Wednesday to push through a $3.5 trillion budget blueprint to vastly expand social and environmental programs by extending the reach of education and health care, taxing the rich and tackling the warming of the planet.The legislation is still far from reality, but the details that top Democrats have coalesced around are far-reaching. Prekindergarten would be universal for all 3- and 4-year-olds, two years of community college would be free, utilities would be required to produce a set amount of clean energy, and prescription drug prices would be lowered. Medicare benefits would be expanded, and green cards would be extended to some undocumented immigrants.At a closed-door luncheon in the Capitol, Mr. Biden rallied Democrats and the independents aligned with them to embrace the plan, which would require every single one of their votes to move forward over united Republican opposition. But crucial moderate lawmakers had yet to say whether they would accept the proposal, with a majority of policy details left to resolve.Mr. Biden’s message to the senators on Wednesday, said Senator Richard Blumenthal of Connecticut, was “be unified, strong, big and courageous.”Senate Democratic leaders have said they aim to pass both the budget blueprint and a narrower, bipartisan infrastructure plan that is still being written before the chamber leaves for the August recess — a complex and politically tricky task in a 50-50 Senate. The narrowly divided House would also have to pass the budget blueprint before both chambers begin tackling the detailed legislation.Speaker Nancy Pelosi, who must ultimately get the package through the House, embraced the deal, telling Democrats in a letter on Wednesday, “This budget agreement is a victory for the American people, making historic, once-in-a-generation progress for families across the nation.”The outline includes large swaths of Mr. Biden’s $4 trillion economic agenda. It wraps in every major category from his American Families Plan, including investments in child care, paid leave and education, and expanded tax credits that this week will begin providing a monthly check to most families with children.“I think we’re going to get a lot done,” Mr. Biden told reporters as he left his first in-person lunch with the Democratic caucus as president.Nodding to budget constraints, party leaders conceded that many of the programs included in their plan — including the tax credits — could be temporary, leaving a future Congress to decide whether to extend them further.The proposal also includes some measures that go beyond what Mr. Biden has called for, like expanding Medicare to cover dental, vision and hearing benefits. Democratic leaders left it to the Senate Finance Committee to decide whether to include reducing the eligibility age for Medicare to 60, a priority of Senator Bernie Sanders of Vermont, the Budget Committee chairman.The resolution would also create what would effectively be a tax on imports from countries with high levels of greenhouse gas emissions. That could violate Mr. Biden’s pledge not to raise taxes on Americans earning less than $400,000 a year if the tax is imposed on products that typical consumers buy, such as electronics from China.Democrats on Mr. Sanders’s committee must produce a budget resolution in the coming days that includes so-called reconciliation instructions to other Senate committees, which in turn will draft legislation detailing how the $3.5 trillion would be spent — and how taxes would be raised to pay for it.That would pave the way for Democrats to produce a reconciliation bill this fall that would be shielded from a filibuster, allowing them to circumvent Republican opposition but requiring all 50 of their members — and a majority in the narrowly divided House — to pass it.“In some cases, it doesn’t provide all the funding that I would like to do right now,” Mr. Sanders said. “But given the fact that we have 50 members, and that compromises have got to be made, I think this is a very, very significant step forward.”He added: “If you’re asking me at the end of the day, do I think we’re going to pass this? I do.”A neighborhood in Austin, Texas, where many homes have solar panels. The blueprint of the legislation includes clean energy provisions and other social programs.Tamir Kalifa for The New York TimesAt the private lunch, Senator Chuck Schumer of New York, the majority leader, outlined the proposal and the directives it would lay out.Democrats included the creation of a civilian climate corps to add jobs to address climate change and conservation, and to provide for child care, home care and housing investments. They are also expected to try to include a path to citizenship for some undocumented immigrants and address labor protections.Democrats would also extend expanded subsidies for Americans buying health insurance through the Affordable Care Act that were included in the broad pandemic aid law that Mr. Biden signed this year.Huge investments would go to renewable energy and a transformed electrical system to move the U.S. economy away from oil, natural gas and coal to wind, solar and other renewable sources. The budget blueprint is to include a clean energy standard, which would mandate the production of electricity driven by renewable sources and bolster tax incentives for the purchase of electric cars and trucks.To fully finance the bill, it is expected to include higher taxes on overseas corporate activities to alleviate incentives for sending profits overseas, higher capital gains rates for the wealthy, higher taxes on large inheritances and stronger tax law enforcement.Senator Ron Wyden of Oregon, the chairman of the Finance Committee, said on Wednesday that he was also preparing to overhaul a deduction for companies not organized as corporations, like many small businesses and law firms — created by the 2017 Republican tax law — in order to cut taxes from small businesses but raise additional revenues from wealthy business owners.Specific provisions will have to pass muster with the strict budgetary rules that govern the reconciliation process, which require that provisions affect spending and taxation, not just lay out new policies. The Senate parliamentarian could force Democrats to overhaul or outright jettison the clean energy standard, the provision that climate activists and many scientists most desire, as well as the immigration and labor provisions, among others.Moderate Democrats, who had balked at a progressive push to spend as much as $6 trillion on Mr. Biden’s entire economic agenda, largely declined to weigh in on the blueprint until they saw detailed legislation, saying they needed to evaluate more than an overall spending number.“We’ve got to get more meat on the bones for me,” Senator Jon Tester, Democrat of Montana, told reporters, though he added that he would ultimately vote for the budget blueprint. “I’ve got to get more information on what’s in it.”The size of the package could be shaped by the success or failure of the bipartisan infrastructure plan, which would devote nearly $600 billion in new spending to roads, bridges, tunnels, transit and broadband. The group of lawmakers negotiating that package has yet to release legislative text as they haggle over the details of how to structure and pay for the plan.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee.Stefani Reynolds for The New York TimesIf Republicans cannot deliver enough votes to move the package past a filibuster, Democrats could simply fold physical infrastructure spending into their reconciliation plan and take away any chance for Republicans to shape it, said Senator Rob Portman, Republican of Ohio and one of the negotiators of the bipartisan bill.“If we don’t pass infrastructure, they’re going to put even more infrastructure in than we have and worse policies,” said Mr. Portman, who fielded skepticism from his colleagues at a private Republican lunch on Tuesday. Some Republicans had hoped that a bipartisan accord on physical infrastructure projects would siphon momentum from a multitrillion-dollar reconciliation package. Instead, it appears very much on track, and it may intensify the pressure on Republicans to come to terms on a bipartisan package, even if they fiercely oppose the rest of the Democrats’ agenda.“I want to be able to tell people in South Carolina: I’m for this, I’m not for that,” said Senator Lindsey Graham of South Carolina, the top Republican on the Budget Committee and a peripheral presence in the bipartisan talks.He added that the lengthy floor debate over the blueprint would allow Republicans to “ferociously attack it, to have amendments that draw the distinctions between the parties, to scream to high heaven that this is not infrastructure.”Senator Joe Manchin III of West Virginia, a moderate Democrat, said he looked “forward to reviewing this agreement” but was also interested in how the programs would be financed.Sarahbeth Maney/The New York TimesSenator Joe Manchin III of West Virginia, the centrist Democrat whose support might be determinative, told reporters after lunch with the president that he had concerns about some of the climate language. But he did not rule out supporting the budget proposal or the subsequent package. Senator Kyrsten Sinema, Democrat of Arizona and another key moderate, also hung back on Wednesday.Still, the $3.5 trillion package had plenty in it to appeal to senior Democrats who were eager to use it to advance their longtime priorities. For Senator Patty Murray of Washington, the chairwoman of the Health, Education, Labor and Pensions Committee, it was an extension of a more generous child tax credit, as well as subsidies for child care, prekindergarten and paid family leave.For Mr. Sanders, it was the Medicare and climate provisions.“Finally, we are going to have America in the position of leading the world in combating climate change,” he said.Mr. Tester said the need for school construction was so high that trillions could go to that alone.“The plan is a strong first step,” said Senator Elizabeth Warren, Democrat of Massachusetts, adding that she was focused on funding universal child care. “We’re slicing up the money now to find the right ways to make that happen.”The budget measure is expected to include language prohibiting tax increases on small businesses, farms and people making less than $400,000, fulfilling a promise Mr. Biden has maintained throughout the negotiations. Asked on Wednesday whether the proposed carbon tariff would violate that pledge, Mr. Wyden replied, “We’ve not heard that argument.”Lisa Friedman More