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How Democrats Could Shrink Their $3.5 Trillion Budget Bill

  • September 26, 2021

The expansion of the child tax credit has already been hailed as a sea change in anti-poverty policy. Right now, the House is planning to extend it through 2025 at a cost to the Treasury of around $500 billion.

The law also greatly expanded subsidies for the purchase of health insurance through the Affordable Care Act, and extended those subsidies further into the middle class through 2022. Extending them for 10 years would cost $210 billion.

For workers without children, the pandemic relief law raised the maximum earned-income tax credit, which supplements the income of the working poor, from about $540 to about $1,500 and raised the income cap to qualify from about $16,000 to about $21,000, while letting adults as young as 19 access the program for the first time. Extending that would cost $135 billion. Another popular but temporary provision — a much larger child and dependent care tax credit — could be extended by a decade for $95 billion.

Politically, this skinny option should not be a heavy lift, since the House and Senate have already passed both programs. Extending the child tax credit out a full decade would push the price tag to $1.5 trillion.

The cost of such a plan could be covered by proposals drafted by the House Ways and Means Committee to raise taxes on the wealthy and increase the corporate income tax rate.

Progressive Democrats have indicated that they will not vote for the $1 trillion infrastructure bill that has already passed the Senate and would fund new roads, bridges and tunnels without ensuring passage of the climate change and social welfare bill, which would push the country’s fleet of cars, trucks and buses more toward electric power, supported by electric utilities fortified to handle all those vehicles and fueled by solar, wind and other renewable sources. To pass the former without the latter could actually make global warming worse, they argue.

To answer those concerns, Democrats could include the social welfare components of the lowest-common-denominator option — extending the temporary benefits of the American Rescue Plan — while going big on climate change. Those climate provisions would cost $585 billion over 10 years, according to the Committee for a Responsible Federal Budget.

Article source: https://www.nytimes.com/2021/09/24/us/politics/democrats-social-welfare-climate-change-bill.html

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