Democrats persuade a slim majority to approve the centerpiece of President Biden’s economic agenda, though the bill now faces an evenly divided Senate.
The House passed a roughly $2 trillion education, healthcare and climate package on Friday, as Democrats corralled their slim majority to approve the centerpiece of President Biden’s economic agenda after months of wrangling.
The measure was approved on a 220-213 vote, with all Republicans opposed.
While the House vote puts Democrats closer to unifying their fractious centrist and progressive wings behind the bill, the party will still need to move the legislation through the evenly divided Senate. There, lawmakers are planning to change or pare back some of the bill’s provisions in the coming weeks.
The sprawling bill calls for creating a universal prekindergarten program, capping child-care costs for many families, negotiating lower prescription drug prices and expanding tax credits for reducing carbon emissions, among other programs. In addition to expanding tax-enforcement efforts at the Internal Revenue Service, the legislation raises taxes on some corporations and very high-income Americans.
Democrats have labored for months to craft an agreement that could pass the House, where the party can bear only three defections and still achieve a majority without GOP support.
“With these provisions we will make transformational investments in families, workers and the fight against climate change,” said Rep. Richard Neal (D., Mass.), the chairman of the Ways and Means Committee. “Getting to this point certainly has not been fast or has it been easy. Some might say it’s been quite challenging.”
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Democrats initially hoped to pass the bill Thursday night, but an eight-and-a-half-hour speech by House Minority Leader Kevin McCarthy (R., Calif.) slamming the legislation prompted Democrats to postpone the vote until later Friday morning. Republicans have united against the bill, arguing that it would exacerbate rising inflation and slow the economy’s growth.
“This is the single most reckless and irresponsible spending in the history of this country,” Mr. McCarthy said in his floor speech, which stretched past 5 a.m. A senior Democratic aide said Mr. McCarthy “is welcome to continue his raving as late into the night as he wants.”
Work had continued on the legislation into Thursday evening ahead of the final vote. Democrats had made final technical tweaks and awaited an official analysis of its cost from the nonpartisan Congressional Budget Office, a reading some centrist House Democrats had demanded as a condition of their support. The CBO found that the bill would contribute $367 billion to the deficit over 10 years; Democrats have argued that revenue not captured in the CBO score shows that the bill is more than fully paid for.
For technical reasons, the CBO’s bottom line doesn’t include $207 billion in revenue that the scorekeeper estimates would result from pouring roughly $80 billion into tax-enforcement efforts at the Internal Revenue Service. Adding that revenue to the CBO’s other estimates would make the bill’s 10-year deficit about $160 billion. The Biden administration says its IRS spending would generate $480 billion, not $207 billion; in its view, that would tip the bill over to reducing the deficit, and many Democrats appear willing to accept that perspective.
Treasury Secretary Janet Yellen said the various analyses “make it clear that Build Back Better is fully paid for,” using Democrats’ name for the legislation.
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Republicans charged that the CBO’s score undercut Democrats’ claims.
“This analysis from the Congressional Budget Office is a clear indictment of the Democrats’ tax and spending agenda and the false promises that have gone along with it,” said Rep. Jason Smith of Missouri, the top Republican on the House Budget Committee.
The bill will face another gantlet in the Senate, where Democrats control the 50-50 chamber with Vice President Kamala Harris providing a tiebreaking vote.
Some centrist Senate Democrats haven’t committed to supporting the House legislation, and Sen. Joe Manchin (D., W.Va.) has called for removing a proposed paid-leave program. Other Democrats are seeking changes to the House plan for raising the $10,000 cap on the deduction for state and local taxes, warning that the proposed $80,000 cap with no income limit offers unnecessary tax cuts for high-income households. A measure giving temporary legal protections to immigrants in the U.S. illegally may face parliamentary problems that could force Democrats to strip it from the bill.
If those measures are altered in the Senate, the bill would have to return to the House for another vote before going to Mr. Biden’s desk.
While it may still take weeks for Democrats to iron out those final changes in the Senate, the provisions in the House bill appear broadly on track to eventually become law. Some of its marquee measures, like expanded subsidies for healthcare premiums, are an extension of policies Democrats put into place in a $1.9 trillion coronavirus relief law earlier this year.
Others, like the universal prekindergarten for 3- and 4-year-olds and the roughly $555 billion in spending on climate measures, are longtime party goals that Democrats have hustled to enact before next year’s midterms, when they could lose control of Congress.
Many of the bill’s measures are funded only temporarily, though, a step Democrats took to keep down the package’s sticker price. For example, the expanded child tax credit would last only through 2022, neither indefinitely, as some had sought, nor for four more years, as Mr. Biden proposed.
Shortening the duration of the child tax credit was one of many compromises the party made to accommodate concerns from centrist Democrats about its scope and cost. The party had originally outlined a $3.5 trillion bill, later dropping measures like free community-college and a program aimed at pushing utilities to use more clean energy from the effort.
“We can’t help anyone unless we get policy passed through the House, through the Senate, to the president’s desk,” said Rep. Suzan DelBene (D., Wash.), one of the child credit’s leading supporters.
The looming expiration of many of the bill’s features means much of the Democratic Party’s work in Congress over the next decade is set to focus on reauthorizing its programs. Both Democratic and Republican critics have argued that the hope to keep funding the bill’s programs in later pieces of legislation only disguises its cost, with Mr. Manchin attacking what he called budget gimmicks.
The bill would impose a new 15% minimum tax on large U.S.-based corporations, create a 1% tax on stock buybacks and increase taxes on U.S. companies’ foreign profits, fulfilling part of the U.S. commitment to a global minimum tax agreement. The bill would leave the corporate tax rate at 21% after pressure from Sen. Kyrsten Sinema (D., Ariz.) scuttled many of Democrats’ plans for raising revenue.
For individuals, the basic tax rates would stay unchanged for all but top earners. Those with adjusted gross income over $10 million would pay a 5% surtax and those with income over $25 million would pay an additional 3%.
Cast aside during the negotiations were Biden administration proposals to tax unrealized capital gains at death and require banks to report annual account flows to the IRS.
Democrats are using a special legislative process called reconciliation that requires just a simple majority in the Senate, allowing them to skirt the 60-vote threshold for most legislation in the Senate and advance the bill over Republican opposition. Reconciliation comes with limits on what lawmakers can pass through the process, and Democrats are bracing for some of the bill’s measures, including its immigration provisions, to run afoul of reconciliation’s strictures and be removed from the legislation.
For months, Democrats tied the education, healthcare and climate package to a separate, bipartisan infrastructure bill. Many Democrats viewed the $1 trillion public works package as insufficient on its own and sought to create more pressure for the passage of the education, healthcare and climate effort by holding up the infrastructure bill.
That created a stalemate between progressives and centrists in the House until earlier this month, when the House passed the infrastructure bill after centrist Democrats signaled their support for the education, climate and healthcare bill. Mr. Biden signed the public works legislation into law earlier this week.
