The Build Back Better Bill--

A new hurdle for Biden’s Build Back Better legislation
Rick Newman·Senior Columnist
Tue, November 16, 2021, 10:18 AM

The Congressional Budget Office will soon publish its analysis of the financial impact of the Build Back Better legislation Democrats in Congress hope to pass by the end of the year. This official “score” will determine if the social-welfare and green-energy bill garners enough votes to become law.

There are already signs of an impasse. The CBO has questioned a key assumption of the legislation—the amount of additional tax revenue tougher IRS enforcement would bring in. President Biden’s summary of the legislation estimates that an extra $80 billion to beef up the IRS over a decade would bring in $480 billion in foregone tax revenue, for a net of $400 billion. But the CBO believes the same amount of extra funding would net just $125 billion.

That $275 billion gap means the means the bill could add to the national debt, violating a requirement of some moderate Democrats who insist the bill must be “fiscally responsible.” Passing the BBB legislation would require nearly every Democratic vote in Congress, so the CBO’s finding on tax enforcement could end up being a major barrier to passage.

CBO Director Phil Swagel explained the differing estimates in a Nov. 15 webinar sponsored by Yahoo Finance and the Bipartisan Policy Center. “One key aspect of our estimate is the idea of deterrence,” Swagel said. “There’s other analysis that puts a lot of weight on the idea of deterrence, that if the IRS is doing more auditing, people pay more of their taxes. The research literature on this is very mixed for high-net-worth individuals and for large companies. When a company understands that other companies similarly situated are being audited or examined, sometimes they actually take a more aggressive position. We ended up coming down in the middle of the literature of the effects of deterrence. Others take a more optimistic position.”

The basic idea behind strengthening the IRS is to compensate for a decade of declining funding and provide money for new auditors, updated technology and better customer service. Americans avoid paying as much as $1 trillion in taxes they owe each year, according to IRS Commissioner Charles Rettig. That’s a gigantic sum that would boost total U.S. government revenue by 20% if the IRS were able to collect all of it. Most of the “tax gap” stems from businesses and financial assets wealthy people own, which provide income that’s easier to hide than labor income reported directly to the government.

Tougher tax enforcement uncertainties

Narrowing the tax gap is a crucial source of funding for the BBB bill, which entails about $2 trillion in new spending on social-welfare programs and green-energy investments over a decade. According to the White House estimate, tougher tax enforcement would be the third largest source of funding for those programs, after an income-tax surcharge on millionaires (which the White House says would raise $640 billion over a decade) and a new minimum tax on big companies ($443 billion). President Biden has said repeatedly that his BBB plan would “pay for itself,” which means there would be enough new taxes to cover all the new spending. But that can’t be true if tougher tax enforcement falls short.

The CBO says it will publish its full analysis of the BBB bill by Friday, Nov. 19. That will most likely incorporate an estimate of the tax enforcement provision the CBO published in September, which cited several uncertainties in forecasting how much revenue tougher tax enforcement would raise. One question is whether taxpayers would report their income more honestly if the risk of an audit was higher. The CBO thinks this type of compliance would improve “only modestly.” The IRS also might not be able to hire all the experienced auditors it wants. And while the agency desperately needs better computer systems, it’s not clear how much that would improve tax collection.

The CBO isn’t the only group that thinks the White House tax enforcement estimate is far too high. The Penn Wharton Budget Model, which does independent analysis of prominent legislation, thinks $80 billion in extra IRS funding will net $190 billion in new revenue—less than half the White House estimate.

House Speaker Nancy Pelosi says she wants a House vote on the BBB bill as soon as the CBO publishes its score. But if the math doesn’t work and the funding comes up short, the House may have to modify the bill, either coming up with new revenue or cutting spending. Even if the House passes the bill by Thanksgiving, it will almost certainly be modified in the Senate, where moderate Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have their own concerns about excess spending, higher taxes and additional debt. Rebuilding a depleted IRS would probably be beneficial no matter what, but it may not be the silver bullet Democrats are hoping for

Build Back Better Act Includes Billions for Niche Programs and Special Interests: Report
Yuval Rosenberg
Wed, November 17, 2021, 4:59 PM

Democrats’ Build Back Better Act includes a number of landmark policy changes — big ticket items such as universal pre-K and climate programs. But Jonathan Weisman of The New York Times reports that the legislation also includes a hodgepodge of smaller programs that have gotten less scrutiny even as they can carry price tags running into the billions of dollars.

“[W]hen a nearly $2 trillion piece of legislation moves through Congress, it affords lawmakers ample opportunity to pursue any number of niche issues — and lobbyists and industries plenty of room to notch long-sought victories tucked deep inside thousands of pages of text,” Wesiman writes.

Those provisions reportedly include a $4.1 billion tax break for buyers of electric bicycles, $2.5 billion for “tree equity” and another $2.5 billion to help “contingency fee” lawyers recover their expenses. There’s also a $1.9 billion program to provide a payroll tax credit to local newspapers and broadcasters; a $50 million pilot program to promote the use of doulas, who help guide pregnant women through labor; and a $35 million tax break — with bipartisan backing — for independent music producers.

Some of the lesser-known programs — whether they’re worthwhile or not — may open the door for additional Republican attacks on the entire package, Weisman notes, but their legislative champions aren’t backing down: “Many obscure provisions may emerge as subjects of ridicule, but Democrats are not shying away from their work,” Weisman reports. “Every niche item has a constituency that regards it as central.”

Biden's Build Back Better bill would add to national debt, congressional estimate says
Savannah Behrmann
Ledyard King
USA TODAY

WASHINGTON – The non-partisan Congressional Budget Office on Thursday released its full cost estimate of President Joe Biden's Build Back Better bill, projecting the measure would add $160 billion to the national debt over the next decade.

The CBO reported the measure would raise more than $1.2 trillion in the form of increased IRS crackdowns on tax cheats, higher taxes and other increased revenues but that overall spending on a myriad of social and climate priorities would lead to a net cost. Covering the period from 2022 to 2031, the projection concludes that expenses would outweigh revenues by $367 billion but that beefed up IRS enforcement would bring in another $207 billion, leaving a deficit of roughly $160 billion.

The release of the CBO data is important to the House's vote on the measure, a massive package of Democratic social spending priorities, including free preschool, climate change initiatives and expansion of affordable housing. Now that the estimate is out, a vote on the measure could take place as early as tonight.

The cost projection undercuts Biden's long-standing pledge the bill is not only fully paid for but would decrease the deficit.

The CBO is an independent, nonpartisan referee that analyzes the budgetary impact of proposed legislation. It was created by Congress in 1974 and operates by rules and regulations set by the House and Senate Budget committees.

The CBO broke down the costs by the House committee in charge of a particular section of the bill. Some of the areas that would add most to the deficit (and the actual amount) are Education and Labor ($454.1 billion); Energy and Commerce ($281.5 billion); Financial Services ($150.7 billion); and Judiciary ($115.1 billion).

The CBO also projected the revenue raised by increasing IRS enforcement would amount to about $207 billion, about half the $400 billion the White House estimated.

"The CBO score did not turn out well for this legislation," said Oklahoma Rep. Tom Cole, the top Republican on the House Rules Committee.

Despite the CBO score, the administration said the bill will be fully paid for. White House Deputy Communications Director Kate Berner said in a tweet the legislation would reduce the deficit by $100 billion over 10 years.

"How did we reach this? CBO estimates that BBB will add $367.1B to the deficit. That doesn’t include revenue collected from tax enforcement. Treasury estimates $479.6 revenue from tax enforcement. So… $112.5B in deficit reduction," read Berner's tweet.

The CBO score also changed the 10-year cost of the bill to $1.68 trillion. Biden and Democrats had touted the bill as costing $1.85 trillion.

But Rules Committee Chairman James McGovern, D-Mass., said Democrats were still working to come up with ways of keeping the measure from adding to the national debt.

"I do believe this bill will be fully paid for," he said.

House Democrats want to pass the bill Thursday and send it to the Senate, but centrists have held up a vote on the measure because they insisted on having the CBO estimate first. Moderates have been worried about the scope of the bill and its potential addition to the national debt – even beyond the coming decade – issues Republican challengers are expected to raise against Democratic incumbents during next year's mid-term elections.

McCarthy, Greene, Gosar:Kevin McCarthy said if Republicans retake House, Marjorie Taylor Greene and Paul Gosar may get 'better' committee assignments

For example, the bill would increase costs to Social Security by $121.7 billion over the next 10 years, according to the CBO. But "the budgetary effects would be noticeably greater during the following decade, resulting in an increase in the unified deficit totaling $369 billion over the 2032-2041 period," the agency said.

A group of moderates blocked the legislation from coming up for a vote earlier this month without the estimate (or "score"), saying it would be irresponsible to vote without it. In a letter to House Speaker Nancy Pelosi, five moderates wrote that the delay was to "ensure the final bill is indeed fiscally responsible."

It's not clear how those moderates will vote on the bill now that the estimate has been released but Democratic leaders were confident they could win them over.

A recent analysis from the nonpartisan Joint Committee on Taxation found the Build Back Better Act would raise $1.48 trillion in revenue over a decade and also said the plan would be unlikely to add to the deficit long term.

If the House passes the bill, it would go to the Senate, where two moderate Democratic lawmakers, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have been effective in getting Democrats to scale back the bill from its initial $3.5 trillion. Manchin and Sinema had objected not only to the scale of the Build Back Better plan but also to certain provisions related to the energy industry, prescription drug pricing, and taxes. It's unclear if they support the version the House will take up.

Sinema and Manchin are crucial to final passage of the bill because Democrats are trying to pass the legislation without any Republican support. They're using a process called reconciliation, which would bypass a potential filibuster in the Senate, but would require the backing of all 50 Senate Democrats and then the tie-breaking vote cast by Vice President Kamala Harris who acts as Senate president.

In the closely divided House, the bill would fail if more than three Democrats break rans and oppose the bill.

Democrats delay vote on Build Back Better bill after GOP leader stalls with hourslong speech
Sahil Kapur and Teaganne Finn and Kyle Stewart and Haley Talbot | NBC News
Thu, November 18, 2021, 10:45 PM

WASHINGTON — House Democrats postponed a much-anticipated vote on President Joe Biden's social safety net and climate package early Friday morning after Minority Leader Kevin McCarthy delayed a final vote with a long, wide-ranging and often angry speech.

The House is now slated to meet at 8 a.m. on Friday to finish consideration of the Build Back Better bill.

McCarthy, who began speaking at 8:38 p.m., crossed the four-hour mark in a speech that criticized the bill as reckless and inveighed against Biden's presidency overall. He discussed unrelated matters like the Southern border, Afghanistan policy, recruitment of police officers, poll numbers and the problem with "one-party rule."

A senior Democratic aide told NBC News that McCarthy “is welcome to continue his raving as late into the night as he wants. The House will return and vote first thing Friday morning so the American people know heading into Thanksgiving week that House Democrats are fighting with President Biden to Build Back Better.”

Some Democrats live-tweeted their criticisms of the speech. McCarthy at times was heckled on the floor but insisted he would continue.

At one point, he quoted Rep. Abigail Spanberger, D-Va., saying Americans didn't elect Biden to be FDR, to which Rep. Alexandria Ocasio-Cortez, D-N.Y., interrupted and yelled, "I did!"

McCarthy added he could wait for Democrats to stop talking. "Keep going," Rep. Tim Ryan, D-Ohio, yelled back. "No one is listening."

Shortly before McCarthy began speaking, the House voted 220-211 along party lines to advance the sweeping legislation to a final vote after the Congressional Budget Office released a cost estimate of the bill, which centrist Democratic lawmakers had demanded before proceeding with the measure.

The CBO estimate unlocked support from key holdouts and projected that the nearly $1.7 trillion package would add $160 billion to the deficit over the next decade, after accounting for taxes and savings to finance it.

While the budget office estimated that savings from beefed-up IRS enforcement would boost revenue by $207 billion, the Treasury Department projected it would be $400 billion.

"A particularly salient aspect of the revenue raised by the legislation is a historic investment in the IRS to crack down on high-earners who avoid paying the taxes that they owe, which Treasury estimates would generate at least $400 billion in additional revenue," Treasury Secretary Janet Yellen said in a statement Thursday, arguing that the Build Back Better Act is "fully paid for."

The White House has been priming Democratic lawmakers for that discrepancy. If the Treasury estimate were swapped in, the bill would be paid for, satisfying a demand of moderates. Key centrists like Rep. Josh Gottheimer, D-N.J., have said they believe the Treasury projection is more accurate.

Rep. Stephanie Murphy, D-Fla., a previous holdout, said Thursday she would vote for the bill.

"Despite its flaws, the Build Back Better Act has a lot of positive elements," she said, adding that "as a pragmatic Democrat who wants to deliver for my constituents, I am never one to let the perfect become the enemy of the good."

Democratic leaders began debate on the floor Thursday evening, aiming to pass the bill that night. Shortly after midnight, and almost four hours into McCarthy's floor speech, Majority Leader Steny Hoyer, D-Md., announced that the House would not hold the final vote that evening.

The legislation calls for spending on a variety of Democratic priorities, from health care subsidies to clean energy. It would give the government the power to negotiate prices for certain medicines, subsidize child care and extend cash payments for most parents with children under 18.

One of the key Democratic holdouts in the Senate, Joe Manchin of West Virginia, was seen at the White House on Thursday before the CBO estimate was released. He was in attendance for Dr. Rahul Gupta’s swearing in as director of the Office of National Drug Control Policy.

Earlier this week, Biden visited Detroit to promote the recently enacted infrastructure law and made the case for passing the social safety net bill.

Speaking from a General Motors plant that was renovated to build electric trucks and SUVs, Biden said Wednesday that his legislative agenda would not add to inflationary pressures and argued that his Build Back Better plan would make a "gigantic difference" for households by lowering the costs of child and health care.

On Monday, Biden signed the Infrastructure Investment and Jobs Act, which includes $7.5 billion to build a nationwide network of electric vehicle charging stations aimed at helping speed consumer adaptation of clean vehicles, and $6 billion for low- or no-emission transit vehicles.

Performative bullshit.
I'll consider believing the CBO score means anything when they delay a vote on the military budget until we can see how much it'll "cost". Until then as far as I'm concerned it's just another bit of smoke and mirrors to prevent any legislation that would benefit regular people instead of corporations and the wealthy.

Taxes don't, never have, and never will "pay for" a single fucking thing.

#LearnMMT

US House votes to pass $1.9tn social spending plan
BBC | Published 42 minutes ago

The US House of Representatives has passed US President Joe Biden's $1.9tn (£1.4tn) Build Back Better Act after facing fierce opposition from Republicans.

The sweeping social spending and climate package is considered a key pillar of Mr Biden's agenda.

The vote came after a record-breaking speech from House minority leader Kevin McCarthy to delay the vote.

The legislation now faces significant hurdles as it heads to the US Senate.

The Build Back Better Act would expand Medicare, lower prescription drug costs and includes funding for universal pre-kindergarten and subsidies for childcare.

It also includes hundreds of millions of dollars to combat climate change and a provision that would allow the government to give work permits and deportation protection to millions of undocumented immigrants.

Friday's vote largely fell along party lines, with 220 voting in favour and 213 voting against. Only one Democrat, Maine's Jared Golden, voted against.

The House floor erupted in cheers and applause as soon as House Speaker Nancy Pelosi announced the results.

In a statement, Mr Biden called the act "fiscally responsible" and said it will reduce the US budget deficit over the long-term. "Above all, it puts us back on the path to build our economy back better than before by rebuilding the backbone of America: working people and the middle class," he said.

On Thursday, the Congressional Budget Office said that the bill would increase the US budget deficit by $367bn between 2022 and 2031.

The vote was postponed late on Thursday following a wide-ranging speech by Mr McCarthy, which - at eight hours and 32 minutes - was the longest ever on the House floor.

The previous record was held by Ms Pelosi, who in 2018 spoke for eight hours and seven minutes.

Mr McCarthy's marathon speech to delay the vote touched on topics ranging from Covid-19 booster shots and China to George Washington's crossing of the Delaware river and how baby carrots are made.

The bill will now head to the Senate, where it faces significant hurdles, and where all 50 Democrats will be needed to pass it.

Parts of the legislation - such as four weeks of paid leave - may be cut out entirely, while other parts may be altered to garner the support of Democrats who have expressed concerns.

Two Democratic senators - West Virginia's Joe Manchin and Arizona's Kyrsten Sinema - have not committed to voting in favour.

Speaking to reporters following the vote, Democratic lawmakers dismissed concerns over disagreement in the Senate. "Whatever comes out of the Senate, we'll be working together with them so that we have agreement," Ms Pelosi. "I have absolutely no doubt. The biggest hurdle was to get the bill there."

If it is changed, it will be sent back once again to the House of Representatives.

Analysis box by Anthony Zurcher, North America reporter:

A big piece of Joe Biden's first-year legislative agenda just took a significant step closer to becoming law.

After months of wrangling and aborted attempts to hold a vote, the Build Back Better package - a collection of Democratic priorities on childcare, immigration, health and the environment - has been approved by the House of Representatives.

As recently as a few weeks ago, that was far from a certainty. Its success on Friday is the latest testament to House Speaker Nancy Pelosi's talent at keeping her party's rank-and-file together.

The bill now runs head-long into a new set of logjams in the US Senate, where centrists Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have already pledged to pay little heed to the House provisions when negotiating the terms of the legislation with Democrats in their chamber. If and when the Senate adopts its own version of this bill, the House will have to vote yet again, in what could be the ultimate test of Pelosi's skill.

For the moment, however, Biden and the Democratic leadership will take the win - and hope that the momentum generated from it will be enough to carry the spending package through the challenges ahead.