Build Back Better Act
Overview
Biden’s Build Back Better Plan has passed the House, then it will be on to the Senate for further negotiations and consideration. This is the soft infrastructure part of Biden’s proposal to restore America.
Its cost is projected at $1.75 trillion over ten years. It includes the following: Childcare and pre-school ($400 billion), home care ($150 billion), child tax credits and earned income tax credits ($200 billion), clean energy and climate ($555 billion), ACA improvements ($130 billion), Medicare hearing aids ($35 billion), increased affordable housing ($150 billion), higher education ($40 billion), immigration ($100 billion), equity and other investments ($90 billion).
It is paid for by setting some alternative minimum taxes for large profitable corporations that pay near zero in taxes, by assuring the highest income Americans pay their fair share, and by negotiating the prices of Medicare’s drug coverage with the big pharmaceutical manufacturers. CBO concluded that it was not fully paid for, but CBO did not include any revenues from beefing up IRS enforcement on those high-income earners dodging their tax liabilities.
For kids and their parents, grandparents too. Universal preschool for three and four year olds, subsidies for child care costs for kids 0-3 so that parents pay not more than 7% of income, child tax credits of $300 a month for young children and $250 a month for older children, and an increase in Pell grants to help pay for college.
For your health. Coverage through the Exchanges for low-income people in the twelve states who have not expanded their Medicaid coverage to the working poor as financed under the ACA, coverage for hearing aids through Medicare, continuation of the reduced premiums in the Exchanges, elimination of the waiting lists for home and community based services for seniors and the disabled, cap on the growth of prescription drug prices, and Medicare negotiation of prices of some prescription drugs.
Climate. Clean energy tax credits and incentives for renewables.
State and local taxes: mostly restores the taxpayer’s deduction for state and local taxes (e.g. your property tax and your income tax) that was capped at $10,000 by Trump, by increasing the cap to $80,000. This mitigates the impacts of a tax on a tax in states like California.
Immigration: there would be a five-year parole for some undocumented workers who arrived prior to 2011 and have not been in any trouble with the law. This may fall out as the Senate parliamentarian is likely to rule it’s not germane to budget reconciliation
Family leave: Four weeks of paid family or medical leave. This is a reduction from 12 weeks in earlier versions, but may fall out in the Senate due to Senator Manchin’s opposition.
You might want to write your local Congressperson to express your support for this legislation.
Lucien Wulsin
11/16/2021
Build Back Better – Child Care and Early Childhood Education
Child care and early childhood education are essential for young working families with kids 0-5; however, they face an array of problems – availability, affordability and quality. They cannot afford it; it is of uneven quality, and there are not enough childcare providers in over half the country (three times as many kids as slots).
Our government ranks near the very bottom of thirty-one advanced nations on childcare spending; we are just above Turkey and Mexico. https://equitablegrowth.org/falling-behind-the-rest-of-the-world-childcare-in-the-united-states/
On top of this we have a lot of children living in poverty; we have poor birth outcomes and high infant mortality, lots of childhood hunger and poorer performance of our kids in schools than other developed nations. https://www.oecd.org/els/family/CWBDP_Factsheet_USA.pdf
We have some building blocks in place: a CDBG block grant for childcare for poor kids (reaches only 1 in 6 eligible kids), the TANF block grant for poor families, and a small childcare tax credit for the middle class. The funding for the Block Grants has not grown to keep up with the need and demand for childcare in an economy with many more two parent working families and many more single parent working families, and where child care is essential to their workforce participation.
There are many different forms of childcare: Childcare centers, family child care, and Head Start plus grandparents or parents staying home to care for the kids and nannies for more affluent parents. Build Back Better uses all of them.
Build Back Better creates an entitlement to child care funding for families (at their option), administered by the states (at their option) and building on and expanding and improving the existing system. Some states may decline to participate in the expansion; they will continue to receive their existing block grant funding. States will have wide flexibility to design their systems to meet the needs of working families in their own communities. Some families will not want their children in early childhood education preferring home schooling or no preschool; this is their option as well.
This is a program for working families (at least one parent working) with a few limited exceptions, such as during job search or when a parent is in the midst of medical treatment for a work-limiting condition. It pays for child care in families with children 0-5. Existing block grants can be used to pay for child care for older children if the state determines that is necessary (e.g. lock-key kids after school).
Eligibility for child care subsidies would be based off a state’s median income – i.e. half above and half below the median income. In year 1, it’s 100% of SMI to determine eligibility, year two 125% of SMI, year 3 150% of SMI, and thereafter 250% of SMI. For example, California’s state median household income is $75,000 in 2021. https://tcf.org/content/commentary/build-back-better-plan-proposes-transformative-child-care-early-learning-policies/?session=1
The federal government pays for 90% of the program’s costs, and states are expected to pay the match for 10% of the costs. Over the first three years, 50% of a state’s allocation must be spent on childcare services for eligible kids, 25% on improving availability and quality of child care and 25% on either or both, at state option. After three years of startup, the federal government pays 90%, and the states pay 10% of the costs of childcare. The federal government will reimburse the states for improving supply and quality pursuant to the federal Medicaid match (but not more than 5-10% of total spending). Administrative costs of the program are split 50/50 between the states and the feds – the same administrative match model as Medicaid. https://tcf.org/content/commentary/build-back-better-plan-proposes-transformative-child-care-early-learning-policies/?session=1
Childcare providers who participate in the program cannot charge families more than their required copayments. Payment rates will be set to provide a living wage to childcare workers, and it will be tiered based on quality and child outcomes, consistent with the reimbursement models used in the existing, highly regarded Head Start program. https://tcf.org/content/commentary/build-back-better-plan-proposes-transformative-child-care-early-learning-policies/?session=1
The programs are for children 0-5 not yet in kindergarten -- childcare for children 0-3 and early childhood education for children 3-5. They are optional both with families and with states. Families who participate will pay for their childcare on a sliding fee scale based on their incomes. Families would pay $0 for childcare if their incomes are below than 75% of SMI, 0 to 2% of income if their incomes are 75-100% of SMI, 2-4% of income if their incomes are 100-125% of SMI, 4-7% of incomes if their incomes are 125-150% of SMI, and 7% of incomes if their incomes are between 150 and 250% of SMI. Families with incomes above 250% of SMI are eligible for the Child Care Tax Credit of $600 for one child and $1200 for more than one child. https://tcf.org/content/commentary/build-back-better-plan-proposes-transformative-child-care-early-learning-policies/?session=1
For Early Childhood Education, Build Back Better looks to a mixed delivery system that builds on all existing elements. Only 44% of 4 year olds and 17% of three year olds are enrolled in Pre-K; we rank 4th to last among 41 industrialized nations. DC stands out with 80% of all kids enrolled in Pre-K. States would have great flexibility in the program’s design, but must begin with the communities and zip codes with the greatest need — only 18% of low income kids are enrolled in Pre-K. The federal funding would start at 90/10 and decline over time to a 60/40 match. https://www.usnews.com/news/education-news/articles/2021-11-19/build-back-better-act-a-game-changer-for-early-childhood-education Education is typically funded at the state and local levels, and there is wide variability in the extent to which Pre-K programs already exist, but they are the building blocks towards universal Pre-K (at parent option, this is not compulsory). Arkansas is at the top of state rankings on access and quality while Indiana is dead last, number 51; California is mid-range, ranked 29. https://wallethub.com/edu/e/states-with-the-best-and-worst-early-education-systems/62668
This aspect of “Build Back Better” bill is urgently needed to modernize our economic and social and educational system for families with young children. Our existing system was built as a part of the Great Society programs during a time in the aftermath of WW II when two parent families were the norm, and wives stayed home and raised the kids, and the husbands worked and made wages sufficient to support the family. Now both parents work, sometimes at multiple jobs or at different times of the day; wages have stagnated for working families since the late 70’s. A modern childcare and early childhood education program for children 0-5 is absolutely essential to making today’s economy work for all of us – kids, parents, grandparents and employers alike.
Prepared by: Lucien Wulsin
Dated: 11/19/21
Health Provisions in the Build Back Better Bill
We still have about 25 million Americans who are uninsured, and our system of care is vastly over-priced compared to other developed nations which assure universal coverage at half the price of the US system. Build Back Better reduces the numbers of the nation’s uninsured, and reduces the cost of health care, and expands coverage, and increases access to care in very targeted ways. It builds on and enhances the existing public/private system of financing and care delivery.
· Subsidies in the ACA’s Exchanges: Build Back Better extends the improved subsidies for Exchange enrollees provided in the American Rescue Plan passed earlier this year. They are as follows: elimination of the cap at 400% of FPL, elimination of premiums for families with incomes below 150% of FPL, an increase in subsidies for all persons buying coverage in the Exchanges and zero premium coverage for people receiving UI (Unemployment Insurance). This will help about 3.6 million people get subsidized coverage, increases coverage for about 2 million uninsured, and reduces premiums and out of pocket for about 12 million Americans already getting Exchange coverage. These changes are effective through 2025, and therefore will need to be reviewed and renewed in 2025.
· Medicare Hearing Benefit: This would add hearing aids and evaluation, rehabilitation, and treatment by audiologists for 62 million Medicare beneficiaries. Projected costs are $35 billion.
· Negotiations for Medicare Prescription Drugs: Negotiated prices apply to 10, then 15, then 20 of the fifty highest cost Medicare covered drugs beginning in 2025. Excluded are new drugs, those with generic or bio-similar competitors. Included quite specifically are all insulin products.
o Inflation Caps for Increases in Drug Prices higher than the CPI
o Out of pocket caps of $35 for insulin products for Medicare patients
o Coverage of adult vaccines at no cost to Medicare patients
· Redesign of the Medicare Part D coverage of prescription drugs: Sets a hard cap of $2,000 on patient out of pocket spending, reduces beneficiaries’ share of premiums, requires manufacturer rebates on high drug prices
· Eliminates the Medicaid Coverage Gap: Twelve, primarily Southern states led by Texas, Florida, and Georgia, have not extended Medicaid coverage to working poor parents and other low income adults. This would cover those 2.2 million or more uninsured adults through the federal Exchanges with no premiums, no deductibles, and nominal copayments; their incomes are less than 100% of the Federal Poverty Level. The ACA offered a 90/10 match for this coverage that has been rejected in these 12 remaining states; this expansion would be at full federal cost, no state match. This fixes a truly egregious and horrendously racist exclusion by the political decision makers in those 12 states.
· Extends Medicaid post partum coverage from 60 days to 12 months after delivery and authorizes maternal health homes at state option.
· Extends Medicaid and CHIP (Healthy Families) coverage for children to 12 months of continuous coverage and permanently reauthorizes the CHIP program for uninsured moderate-income children.
· Increases federal Medicaid funding to states for their home and community-based services (HCBS) to the frail elderly and disabled: These are services like home health, chore and housekeeping services that help keep people out of nursing homes and other institutional settings. It would increase the federal match to the states by 6% for HCBS, if the states use these funds to reduce waiting lists (over 800,000 seniors), improve quality of care, and increase the workforce to meet family needs (i.e., pay these low wage aides a little more so we can get more people to do this essential work).
· 4 weeks of paid family or medical leave: The US is the only developed nation that does not provide for paid leave of employees; as a result only 1/4th of US workers have paid leave when they are very sick and cannot work, have recently given birth, or are caring for a seriously ill family member. This would be a sliding scale wage replacement --- 90% below $15,000, declining to 53% for wages between $32,000 and $62,000.
The pandemic exposed many of the faults and failures of the US health system – faults and failures many of us were quite simply unaware of, such as the failures of CDC and public health to act in a timely fashion to protect the nation’s health, the extreme levels of political interference in the performance of their duties to preserve and protect the nation’s health, and the rapid spread of lies, disinformation and fear mongering overwhelming the scientific truths about the COVID 19 pandemic, the vaccines and the treatments. But that’s another story for another day.
References:
Prepared by: Lucien Wulsin
Dated: 11/20/2021
Climate Change in the Build Back Better Act
The Senate will consider and hopefully pass the Build Back Better Act this month. Here’s what in it to try to save our excessively warming planet.
$555 billion over 10 years. It is expected to cut climate emissions by 1/3rd to ½ estimates the Rhodion Group, and to reduce greenhouse gases by a billion tons of carbon dioxide.
· Investments in clean energy and climate resilience -- $220 billion
· Clean energy and electric car and truck tax credits -- $190 billion
· Clean fuel and vehicle tax credits -- $60 billion
· Other climate related tax benefits - $75 billion
· Infrastructure tax breaks -- $10 billion
The goals are to switch from gas powered cars and trucks to electric powered transport, to switch homes from gas and oil heating and gas cooking to home heating and cooking by electricity, and to switch energy production from fossil fuels to renewables like solar and wind and nuclear. The further vision is to build and rely on American manufacturing of solar panels, wind turbines and storage batteries in the process of transitioning the economy.
These goals are achieved by substantial tax credits as opposed to mandates, and by making the shift more affordable to the American consumers and businesses. For example, the tax credits for electric vehicles are designed to make them 15% less costly than gas powered cars and trucks. In the home, credits will be available to make the shift from oil and gas to electric heat pumps, electric ranges, electric water heaters, and upgraded breaker boxes.
To think about it from the perspective of American consumers and homeowners, “the framework will, for example, cut the cost of installing rooftop solar for a home by about 30%, and will lower the cost of a U.S.-made electric vehicle produced using American materials and union labor by $12,500.”
You are not mandated to buy a new electric vehicle or install solar panels on your roof; it will just be cheaper if you choose to do so, and there will be sufficient charging stations for your EV and improved transmission lines and battery storage for the generators of solar and wind power.
Government would purchase differently. For example, the bill would shift the entire USPS truck and car fleet from gas to electric. Similar strategies would be in place for public transit – alternative fueled buses -- and for the nation’s ports, like LA and Long Beach.
Please take a moment to encourage your Senators to vote for the Build Back Better Act.
References:
https://www.nytimes.com/article/build-back-better-explained.html
https://time.com/6121415/build-back-better-spending-bill-summary/
https://www.washingtonpost.com/climate-solutions/2021/11/19/climate-biden-spending-bill/
https://www.nrdc.org/experts/manish-bapna/house-passes-historic-climate-action-build-back-better-act
https://www.crfb.org/blogs/whats-houses-build-back-better-act
Prepared by: Lucien Wulsin
Dated: 12/7/21
Financing the Build Back Better Bill
The Committee for a Responsible Federal Budget projects costs and revenues over the next ten years. It projects spending of $2.4 billion and revenue offsets (taxes and program cuts) of $2.3 trillion. https://www.crfb.org/blogs/full-estimates-house-build-back-better-act
Spending -- $2.4 trillion
· Family Benefits -- $585 billion
· Climate and Infrastructure -- $570 billion
· Tax credits -- $215 billion
· Health Care -- $340 billion
· Other (such as housing and higher education) -- $325 billion
· Increase SALT deduction cap from $10,000 to $80,000 — $275 billion
· Immigration reform -- $110 billion
Taxes and program reductions -- $2.3 trillion
· Increase corporate minimum taxes -- $830 billion
· Increase taxes on highest earners -- $640 billion
· Other -- $180 billion
· Reductions in health care spending -- $325 billion
Total impact on federal deficit over 10 years -- $160 billion
The Tax Policy Center gives a short description of the federal tax changes for individuals and corporations. https://www.taxpolicycenter.org/feature/tpcs-build-back-better-resources
Individuals
· Surcharge of 5% on an individual’s income above $10 million and 3% above $25 million
· Permanent refundability of the child tax credit
· Restrict MEGA IRAs
· Increase the cap on deductions for state and local taxes from $10,000 to $80,000.
Corporations
· 15% minimum tax for large corporations
· Restructure corporate tax rules for large multi-national firms to restrict tax avoidance
· Restrict favorable tax treatment of corporate stock buybacks
· Enforce federal tax laws by beefing up IRS auditing
The Tax Policy Center analyzed the distributional effects of the new spending and new taxes on individuals after tax incomes by income quintile. N.B. It should be noted that Tax Policy Center believes that individual tax payers ultimately absorb the impacts of increases in corporate taxes. https://www.taxpolicycenter.org/taxvox/build-back-better-20-still-raises-taxes-high-income-households-and-reduces-them-others
· Bottom 20% -- + 4%
· 20-40% -- + 2%
· 40-60% -- + 1%
· 60-80% -- + 1%
· 80-100% -- minimal change
· Top 1% -- (- 3%)
· Top 0.1% -- (- 6%)
The CBO (Congressional Budget Office) scored the fiscal impacts of the Build Back Better Act. Its conclusions were that over 10 years, it adds $367 billion to the federal deficit. It did not include in that calculation, its score for the impacts of increased IRS auditing at $207 billion. The total impact on the budget deficit across 10 years is $160 billion. https://www.cbo.gov/publication/57627
In summary, Build Back Better would help a lot of low, moderate, middle and upper middle income families and it would be paid for by those large corporations who have dodged taxes and by very wealthy individuals. It would have a minimal impact on the federal budget.
You might wish to urge you elected Senators and Representatives to vote for it.
Prepared by: Lucien Wulsin
Dated: 12/8/21