When Joe Biden was elected President his “Build Back Better” program was to be the cornerstone of his domestic agenda. TheBuild Back Better agendawas marketed as a far-reaching social spending bill pumping tax dollars into solutions for the global “climate crisis,” providing paid family leave, expanding child tax credits, and a host of other initiatives including raising tax rates on top earners and corporations. The initial price tag of the program was a whopping $3.5 trillion.
This spending bill was being negotiated under the Congressional reconciliation process, which “enjoys special rules that allow for expedited consideration in the Senate; specifically, it cannot be filibustered, and only needs 50 votes instead of the usual 60 to move forward,”noted the Peter G. Peterson Foundation.
Despite the streamlined process, the Build Back Better spending bill met stiff resistance from moderate Democrats in the Senate, including Senator Joe Manchin from West Virginia and Senator Kristen Sinema from Arizona.
Now, after months of deliberation, the Build Back Better spending bill has been slashed down to $1.75 trillion after numerous initiatives were removed from the framework.
To see a more complete outline of the newly proposed framework, including what didn’t make the cut,see here.
While the Build Back Better framework is now half the size of the Administration’s wish list, the question remains: How will the government pay for such a massive spending spree?
The answer to that question remains opaque, but at the surface is a strategy of taxing the ultra-rich and increasing taxes on American corporations.
Impose a new 5% surtax on individual income over $10 million a year. That rate would rise another 3% on income above $25 million
Institute a new 15% minimum tax on corporate profits that large corporations —those making over $1 billion in profits — report to shareholders. The White House says this minimum requirement will help close the tax loopholes large corporations have used to pay $0 in taxes.
1% surcharge on corporate stock buybacks
Adopt the Treasury Department-brokered 15% minimum global tax on foreign profits of U.S. corporations, “so that they can no longer claim huge tax benefits by shifting profits and jobs abroad.”
Additional revenue to help pay for the package would come from rolling back some of the Trump administration’s 2017 tax cuts, along with stepped-up enforcement of tax-dodgers by the IRS.
The White House and supporters of the Build Back Better framework in Congress say that the bill will be paid for almost exclusively by higher tax rates on the wealthy and increased taxation on corporations.
Together, proposals targeting wealthy taxpayers wouldraise about $1 trillionof the nearly $2 trillion of total revenue being raised. (The rest would come from new taxes on corporations and stock buybacks, for example.)
It is unclear whether these proposals would fully pay for the bill despitePresident Biden insistingthe plan is “fully paid for.”
In fact, at the time of this writing on November 2nd, Senator Joe Manchin remains a roadblock for the Democrats agenda concerning this bill making thefollowing statementon November 1stas President Biden toured Europe to promote his climate change initiative:
As more of the real details in the basic outline of the framework are released, what I see are shell games, budget gimmicks that make the real cost of the so-called $1.75 trillion dollar bill estimated to be almost twice that amount. This is a recipe for economic crisis.
President Biden believes that the legacy of his first term in office will be determined by whether Democrats can get his Build Back Better agenda passed in Congress. As his party faces headwinds from moderate members of their own party, this legislation hangs in the balance as Senators like Joe Manchinwait to seethe bill scored by the Congressional Budget Office and whether it is truly paid for, or is the “gimmick” some fear it may be.
Image Credit: Photo by Ryoji Iwata on Unsplash
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