What the Democrats' sweeping social spending plan might include

Democrats in Congress are pushing ahead with a sweeping multi-trillion-dollar 10-year spending plan.

By Tami Luhby and Katie Lobosco, CNN

(CNN) -- After months of negotiations, the House passed the Democrats' sweeping $1.9 trillion budget reconciliation package on Friday.

The bill, which now goes to the Senate, would transform the nation's social safety net despite being whittled down to roughly half its original size amid infighting between the party's moderate and progressive wings.

It would create a universal pre-K program, assist families with child care and send them the enhanced child tax credit for another year. It would also provide beefed-up subsidies on the Affordable Care Act exchanges through 2025 and offer federal help to those who fall below the poverty line.

It would funnel nearly $570 billion into climate measures, attempt to address affordable housing shortfalls and provide money to parents to buy their kids food over the summer.

The legislation would increase the deficit by $367 billion over the next 10 years, according to the Congressional Budget Office. But that doesn't count revenue raised from enhanced tax enforcement, which the office found would bring in $207 billion over 10 years.

The legislation's path in the Senate remains uncertain, and more revisions are expected. Some Democrats, particularly Sen. Joe Manchin of West Virginia, have voiced concerns about various provisions in the bill, as well as the speed at which it is going through Congress.

Democrats are planning to use a procedure called reconciliation so that they can approve the bill in the Senate with just 50 votes, which would alleviate the need for support from Republicans. But since the Democrats have only 50 members in the chamber, they still can't afford to lose a single vote within their own party.

Here's what's in:

Universal pre-K: The bill would provide free pre-K for 3- and 4-year-olds. It would expand access to 6 million children a year. Funding would last six years. The provision, along with the child care measure, would cost an estimated $381.5 billion, according to the CBO.

Child care: The legislation would limit child care costs for families with children younger than age 6 to no more than 7% of income for those earning up to 250% of state median income, expanding access to about 20 million children. Funding would last six years. The provision, along with the universal pre-K measure, would cost an estimated $381.5 billion, according to the CBO.

Paid family and sick leave: Biden also wants to create a federally funded paid family and sick leave program for the millions of Americans who don't already receive the benefit from their employer. He first called for 12 weeks of paid leave, which was then reduced to four weeks during negotiations. The House bill includes four weeks of paid family and sick leave, costing an estimated $194 billion -- but the provision is likely to be cut out of the legislation once it is taken up by the Senate. Manchin is opposed to including the benefit in this bill, and Democrats can't afford to lose one vote.

A program that provides four weeks of paid family and sick leave would cost $205.5 billion, according to the CBO.

Enhanced child tax credit: The beefed-up child tax credit -- which provides $300 a month for each child under age 6 and $250 a month for each one ages 6 through 17 -- would be extended through 2022 for more than 35 million families.

Heads of household earning up to $112,500 and joint filers making up to $150,000 annually would qualify for the enhanced payments. But, unlike in 2021, only these families would receive the funds in monthly installments next year. Eligible parents with higher incomes would have to claim the credit on their tax return the following year.

The credit would be made permanently refundable so the lowest income families would continue to qualify. The enhancement, which was part of the $1.9 trillion coronavirus relief package Democrats enacted earlier this year, is currently only in place for 2021.

This credit, along with the earned income tax credit, would cost about $203 billion, according to the CBO.

The House bill unveiled in September would have extended the credit through 2025.

Earned income tax credit: The expanded earned income tax credit would be extended through 2022, helping 17 million low-wage childless workers. The boost, also part of the relief package, is only in place for this year. It nearly triples the maximum credit childless workers can receive, extends eligibility to more people, reduces the minimum age and eliminates the upper age limit. This credit, along with the enhanced child tax credit, would cost about $203 billion, according to the CBO.

The earlier House bill would have extended it permanently.

Home health care: The proposal calls for permanently improving Medicaid coverage for home care services for seniors and people with disabilities, with the goal of reducing the more than 800,000 people on state Medicaid waiting lists.

It also aims to improve the quality of caregiving jobs. The measure would cost nearly $158 billion, according to the CBO.

Originally, Biden had hoped to shower $400 billion on this effort as part of his infrastructure package.

Affordable Care Act subsidies: The enhanced federal premium subsidies would be extended through 2025 under the bill. It would reduce the cost of coverage on the Obamacare exchanges, particularly for moderate-income and middle-class Americans. The boost, also part of the Democrats' relief package, is currently set to expire after 2022.

This provision, along with Medicaid expansion, would cost $126 billion, according to the White House's latest estimate. And the number of uninsured Americans would drop by 3.4 million, mainly due to the subsidies extension and the Medicaid provision, according to the CBO.

The initial House bill would have made the enhancement permanent.

The legislation also would extend for one year a provision of the American Rescue Plan that allows those receiving unemployment benefits to qualify for federal subsidies that reduce their monthly premiums to as little as $0.

This provision would cost $74 billion, according to the CBO.

Medicaid coverage gap: The Democrats are calling for providing Affordable Care Act premium subsidies for low-income Americans in the 12 states that have not expanded Medicaid, enabling them to buy Obamacare policies with no monthly premiums, through 2025.

Doing so would cost about $57 billion, the CBO estimates.

The original House bill would have provided premium subsidies to low-income Americans until the Department of Health and Human Services would have set up a federal Medicaid expansion program that would have picked up the entire tab for enrollees' medical care. However, several Democrats from states that already expanded Medicaid raised objections because their states have to foot 10% of the bill, while the federal government picks up 90%.

The bill would also increase the federal assistance for expansion states to 93% through 2025.

And it would require state Medicaid programs to provide 12 months of eligibility to women after they give birth. States now typically provide 60 days of coverage.

Medicare hearing benefits: Hearing services would be covered under Medicare, starting in 2023, but vision and dental benefits would not be included.

Only 30% of seniors over age 70 who could benefit from hearing aids have ever used them, the White House said.

This measure would cost $36.7 billion, according to the CBO.

Climate change: The bill would deliver nearly $570 billion in tax credits and investments aimed at combating climate change. It would offer tax credits to families that install solar rooftops or buy electric vehicles, for example. The investments are aimed at providing incentives to grow domestic supply chains in solar and wind industries.

The legislation also calls for creating 300,000 jobs by establishing a Civilian Climate Corps that works to conserve public lands and bolster community resiliency.

Affordable housing: The legislation would funnel $25 billion into the construction, rehabilitation or purchase of affordable homes for low-income people and for the creation and preservation of affordable rental housing. It would provide $65 billion to address the capital needs backlog of public housing and would bolster rental assistance to hundreds of thousands of families.

The measure would also invest in down payment assistance and in community-led redevelopment projects in under-resourced neighborhoods. And it would provide $24 billion to fund housing vouchers and supportive services.

The effort would cost about $148.1 billion, according to the CBO.

Pell grants: The measure would increase the maximum Pell grant by $550 for more than 5 million students enrolled in public and private nonprofit colleges and expand access to undocumented students brought to the US as children, who are known as Dreamers.

It would invest in historically Black colleges and universities and other institutions that serve underrepresented communities. And it would increase funding for workforce development.

These provisions would cost a total of $39.8 billion, according to the CBO's estimate.

Children's nutrition: The bill would expand free school meals to nearly 9 million children during the school year and provide the parents of 29 million kids a $65 per child per month benefit to purchase food during the summer.

Immigration: The President has called for a $100 billion investment to reform the nation's immigration system, as well as reduce backlogs, expand legal representation and make changes to the asylum system and border processing.

But the Senate parliamentarian, who has the final say on whether the legislation adheres to procedural rules, has ruled twice against arguments from Democrats to include an immigration provision in the economic bill. Still, some Democrats are continuing to push to include protections for undocumented immigrants in the bill and plan to present another plan to the parliamentarian. The cost of the immigration provision is not currently included in the total cost of the legislation.

State and local tax deduction: It is critical to some Democrats from the Northeast and West Coast that the package lifts or repeals the $10,000 cap on state and local tax deductions, known as SALT, that was put in place by the Republican-backed Tax Cuts and Jobs Act in 2017. Under the House bill, deductions would be capped at $80,000 per year over a nine-year time span.

But many Democrats are opposed to lifting the cap, which would largely benefit higher-income households. New Jersey Sen. Bob Menendez and Vermont Sen. Bernie Sanders have proposed an income threshold limiting those who can deduct a higher amount.

Here's how Democrats will pay for it

The Democrats fractured over measures to cover their original sweeping $3.5 trillion spending proposal. Initial plans to make companies and well-off Americans pay by raising the corporate tax rate and the top marginal individual income and capital gains rates were scuttled by Democratic moderate Sen. Kyrsten Sinema of Arizona.

The party then floated a billionaire tax on the capital gains of the super-wealthy, but that quickly withered after resistance from Manchin, another key Democratic moderate, and several others in the Senate and House.

Biden and congressional Democratic leaders ultimately settled on a mix of corporate and individual revenue raising measures, along with two prescription drug provisions.

Under the House version, most middle-income families with children would get a tax cut in 2022 -- thanks to an expanded child tax credit -- and those without kids would generally see little change in their tax bills, according to an analysis by the nonpartisan Tax Policy Center.

Overall, nearly 40% of households would see a tax cut and nearly 19% would pay more in 2022 than they do now, according to the analysis. However, about 70% of those earning more than $1 million a year would enjoy a tax cut.

Corporate taxes: The bill would put in place a 15% minimum tax on the corporate profits that large companies report to shareholders, not to the Internal Revenue Service. This would apply to companies with more than $1 billion in profits. The legislation also includes a 1% surcharge on corporate stock buybacks.

Also, it would impose a 15% minimum tax, calculated on a country-by-country basis, that American companies pay on foreign profits, consistent with an agreement Biden recently won among 136 countries. The provisions would yield an estimated $814 billion, the Joint Committee on Taxation said.

Taxes on the rich: The wealthiest Americans would pay a 5% surcharge on income above $10 million, and an additional 3% levy on income above $25 million.

Next year, about 30,000 tax filers are expected to make $10 million or more, according to the Tax Policy Center. About 12,000 of them are likely to earn at least $25 million.

The bill would also close the loopholes that allow some affluent taxpayers to avoid paying the 3.8% net investment income tax on their earnings. And it would continue the limitation on excess business losses. This measure would raise $640 billion, the committee estimates.

IRS enforcement: The bill would beef up IRS enforcement so that it can ensure that people are paying what they owe to Uncle Sam. The new enforcement measure would focus on Americans with the highest incomes, not those earning less than $400,000 a year.

The CBO estimates that the provision would raise revenue by $207 billion -- far less than the $400 billion that the Treasury Department had projected. But White House officials have been arguing for weeks that the numbers would not line up due to methodological differences, criticizing the way the CBO accounts for the indirect effects the enhanced enforcement would have.

Medicare drug negotiation: The bill would empower Medicare to negotiate prices of certain costly medications administered in doctors' offices or purchased at the pharmacy. The Health and Human Services Secretary would negotiate up to 10 drugs in 2025. The number would rise to up to 20 medications starting in 2028. This controversial provision, which was dropped from the package and then restored after a deal was reached in the Senate, is a far more limited proposal than the one House Democratic leaders have backed in the past.

The legislation would also impose penalties if drug companies increase their prices faster than inflation. And it would redesign Medicare's Part D drug plans so that seniors and people with disabilities wouldn't pay more than $2,000 for medications bought at the pharmacy. The bill would also cap what Americans pay for insulin at $35 a month.

About 10 fewer drugs would be introduced in the US market over the next three decades if the bill were enacted, the CBO projects. About 1,300 drugs are expected to be approved over that time period under current law, the agency said.

Drug rebate rule: The bill calls for blocking the implementation of a Trump administration regulation that would change the drug industry's rebate system, though it isn't set to go into effect until 2026. The rule effectively would ban drug makers from providing rebates to pharmacy benefit managers and insurers. Instead, drug companies would be encouraged to pass the discounts directly to patients at the pharmacy counter.

Altogether, the prescription drug measures would save around $297 billion, including about $79 billion from allowing Medicare to negotiate drug prices, according to the CBO. Prior House efforts to permit drug price negotiations would have saved far more.

Here's what's out:

Free community college: Biden initially called for making tuition free for two years at community colleges, but it's been dropped entirely from the bill.

Medicare dental and vision benefits: The bill does not include expanding Medicare to include vision and dental coverage, both longtime goals of Sanders. Dental coverage, in particular, would have been costly.

This story has been updated with details on the House passage of the bill and Congressional Budget Office estimates of its cost.

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