- White House releases framework for Build Back Better bill, which establishes several social policy and environmental initiatives
- $1.75 trillion proposal includes $555 billion for clean energy and climate investments as well as $400 billion for child care expansion
- Tax changes to support the measure include an increase in the corporate tax rate from 21 percent to 26.5 percent
Summary by Dirk Langeveld
The framework for a pared-down “Build Back Better” bill of social policy and environmental initiatives vows to improve access to child care, open opportunities for clean energy investments, and limit the tax implications of funding the bill to wealthier households and corporations. However, the proposal has also faced criticism for scaling back or eliminating certain programs, and full legislative text is not yet available.
Biden announced the framework for the $1.75 trillion “Build Back Better” agenda ahead of a trip to Europe, saying it follows intensive negotiations with members of Congress. He expressed his confidence that it will be able to pass the House and Senate, and urged members to act on the bill as well as a $1 trillion infrastructure measure that has been in a holding pattern during discussions on the larger bill.
The White House claims the Build Back Better bill will “set the United States on course to meet its climate goals, create millions of good-paying jobs, enable more Americans to join and remain in the labor force, and grow our economy from the bottom up and the middle out.”
Originally pitched as a $3.5 trillion measure, the bill has been reduced to $1.75 trillion. Biden described the framework as capable of winning 50 votes in the Senate, enough to pass by reconciliation with a tie-breaking vote from Vice President Kamala Harris. He acknowledged that certain measures, such as two free years of community college, had to be trimmed or cut entirely during negotiations.
Legislative text is not yet available, and the bill could be subject to further revisions or debate before it comes up for a vote. Republican lawmakers are unlikely to support the measure, and much of the reticence on the Democratic side has come from Senators Joe Manchin and Kyrsten Sinema, both moderates. The scaled back bill could also potentially lose the support of progressive lawmakers.
Here are some effects of the proposed framework with the potential to affect businesses:
Child care expansion
A total of $400 billion is earmarked for child care initiatives, which aim to improve access to child care and reduce the share of their household income that families contribute to this cause. Child care has emerged as a major issue impacting the labor force, with workers sometimes opting to leave their job due to the need to care for minor children.
The bill includes two years of free preschool for every three- and four-year-old in the nation. It also commits to limiting the amount of money American families spend on child care to no more than 7 percent of their income. Parents who are working, looking for work, or participating in an education or workforce training program will receive support on a sliding scale to cover the cost of child care. This funding support is available to eligible recipients making less than 2.5 times their state’s median income, and is capped at 7 percent of their own income.
Both of these initiatives are funded for six years. The monthly child tax credit, which was enhanced earlier this year to give eligible families a total of $3,600 per child under the age six and $3,000 per child between the ages of six and 17, is extended for an additional year under the bill.
In addition to the child care provisions, the bill appropriates $150 billion to improve access to home care for disabled Americans.
One major sacrifice in the negotiations was a national paid family and medical leave program, which was ultimately excised from the legislation altogether. The proposal originally included 12 weeks of paid leave, which was later dropped to four and ultimately abandoned after Manchin said he did not believe the issue should be included in the overall legislation.
Clean energy investments
A total of $555 billion is invested in clean energy and environmental initiatives. The White House says the goal of these expenditures is to realize a major reduction in carbon emissions and energy costs as well as the creation of hundreds of thousands of high-paying jobs.
A total of $110 billion in targeted incentives is dedicated to the growth of domestic supply chains in solar, wind, and other “critical industries.” The legislation also invests $20 billion in incentives for the federal government to procure next generation technologies, including “long-duration storage, small modular reactors, and clean construction materials.”
Another initiative included in the framework is the Clean Energy and Sustainability Accelerator to invest in green energy projects throughout the United States. A total of 40 percent of these investments will occur in disadvantaged communities.
The White House says the cost of the bill is offset by nearly $2 trillion to be raised through tax changes. The top individual income tax rate would increase from 37 percent to 39.6 percent on individuals earning more than $400,000 a year or couples earning more than $450,000, with an increase in the corporate rate from 21 percent to 26.5 percent.
The tax changes also include a 15 percent minimum tax on corporations with profits of $1 billion or more, in line with a 15 percent country-by-country minimum tax on foreign profits of U.S. corporations.
The bill creates a new 5 percent surtax for incomes above $10 million, with an additional 3 percent surtax on income above $25 million. It also invests in the Internal Revenue Service to strengthen tax evasion by wealthy Americans, which the Biden administration says is more than $160 billion a year.