The House on Friday morning passed the $1.75 trillion Build Back Better Act, a signature piece of legislation in President Biden’s domestic agenda that would change or expand numerous social programs that encompass nearly every House committee’s jurisdiction.

Every House Democrat except for Rep. Jared Golden (D, ME-2) voted yes while the bill received unanimous House Republican opposition in what was a last-minute legislative session. House Speaker Nancy Pelosi (D-CA) had planned to vote on Thursday night, but House Minority Leader Kevin McCarthy delayed the vote with an eight-hour floor speech. The final vote was 220-213.

Text of the House bill can be found here.

The package is wide ranging in scope, with provisions such as a 15 percent corporate minimum tax on “book income” of companies with such income over $1 billion, a different 15 percent minimum tax on U.S.-based multinational companies’ foreign income, reduce deductions for foreign income of U.S. companies that would yield a 15 percent global intangible low-taxed income (GILTI) rate and a 15.8 percent foreign-derived intangible income tax (FDII), a 1% excise tax on corporate stock buybacks including any subsidiary, a 5% surtax on adjusted gross income for individuals above $10 million and 3% on AGI above $25 million, a 3.8% tax on active business income for high-income business owners. These tax provisions are expected to raise $1.48 trillion in revenue over 10 years to pay for the spending provisions of the bill. Importantly, the package did not include changes to unrealized capital gains or a plan to require banks to report annual account flows to the Internal Revenue Service (IRS).

In terms of spending, the bill would expand Affordable Care Act subsidies through 2025; new eligibility for Medicare recipients to receive hearing benefits; $555 billion for climate related provisions like utility-scale, residential renewable energy and electric vehicle tax credits for 10 years; $105 billion for climate mitigation efforts related to wildfires and droughts; $110 billion for U.S. supply chains to develop and manufacture renewable energy technology; federally funded preschool for three- and four-year-olds, funded for six years; a one-year extension of the child tax credit that was expanded in the most recent reconciliation bill; eligibility for childless workers to receive the earned-income tax credit for an additional year; increased the size of Pell grants; $150 billion for affordable housing including $65 billion to repair public housing, $25 billion for rental assistance, and $15 billion for the Housing Trust Fund; an expansion of free school meals during the school year and a $65-per-child monthly benefit to help low-income families purchase food during the summer; $100 billion for immigration-related provisions including a “parole” program to provide legal protection to individuals residing illegally in America; $1.96 billion for a small dollar direct loan product under the Small Business Administration’s (SBA) 7(a) Loan Program; $950 million to temporarily reduce waiver fees for 7(a) loans that are under $2 million; $400 million for the Cybersecurity and Infrastructure Security Agency (CISA) to improve the cybersecurity of federal agencies; $1.02 billion to pay off all or part of Farm Service Agency (FSA) loans to economically distressed farmers and ranchers; “such sums as necessary” for payments through the Commodity Credit Corporation (CCC) to farmers and land owners that adopt cover crop practices during the 2022 through 2026 crop years; funding to expand eligibility for free school meals, allowing entire states to participate, and increasing the reimbursement rate schools are paid for the meals, which would increase the number of children receiving them by almost 9 million; and appropriating “such sums as may be necessary” for a Summer Electronic Benefits Transfer (EBT) for Children program, which would sunset in 2024, would provide children eligible for free or reduced-price school meals with $65 per month in food benefits when school is out of session for the summer.

The bill includes hundreds of other provisions impacting many different programs.

The Congressional Budget Office released a cost estimate Thursday night that concluded the bill would increase deficits by $367 billion over 10 years, but potential additional revenue from increased IRS tax enforcement was not factored into the estimate. The CBO differed from the White House’s estimate that IRS enforcement would add $480 billion in new revenue over a decade, ultimately concluding that the enforcement might produce $207 billion over 10 years. That means the bill is roughly $160 billion over 10 years short of paying for itself in the CBO’s estimate. This estimate was key in securing the votes necessary to pass the bill along a simple majority line.

The bill, while passed by the House, is not yet law.

House and Senate Democrats are using a process known as budget reconciliation, which comes with certain rules and requires only a simple majority vote for passage. That leaves zero votes Senate Democrats cannot lose when it takes up the bill, which is likely to be after the Thanksgiving recess.

Some Senate Democrats have voiced hesitation with some of the House provisions. Senator Joe Manchin (D-WV) has signaled opposition to the paid leave provisions of the bill, for example. Should the Senate make changes and pass its own version of the bill, the House would need to take up the bill again before it could head to President Biden for his signature.

 

 

 

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