Is the Build Back Better Act (BBB) going on a diet?
President Biden’s $2.2 trillion spending proposal is showing signs that it’s too big to squeeze through the doors of the U.S. Senate, but advocates believe that losing a few pounds – er, dollars – is just what it needs to win final approval.
The stakes are huge, and the refusal of supporters to give up is proof of Build Back Better’s staying power. So much is at stake that, even as all sides signal compromise, few Washington players have declared that BBB is DOA.
Where things stand depends on a daily, if not hourly, assessment of political posturing. Suffice it to say that the U.S. House of Representatives approved President Biden’s bill, but Sen. Joe Manchin, D-W.Va., opposed the price tag, creating just enough resistance to block it in the Senate.
But the Build Back Better Act clawed its way back into the headlines after President Biden’s Jan. 21 news conference, when he signaled a willingness to break the enormous bill into smaller chunks.
“To revive his sweeping Build Back Better climate-change and social-spending legislation, President Biden plans to make it, well, less sweeping,” according to a recent MSNBC article.
Movement is imperative. As accountants, we are keenly attuned to BBB’s provisions for rebuilding a gutted IRS. An infusion of $80 billion would enable the IRS to hire 87,000 new agents and conduct 1.2 million more audits a year, although Republicans are arguing that half of those audits would target households making under $75,000 a year. New personnel and new technology would help the IRS clear a backlog that amounts to 6 million unprocessed returns in the inbox of every tax collector, up from a more typical 1 million at the start of past filing seasons.
In addition to the tax provisions contained in the original Build Back Better Act, which we will continue to cover for our customers, once-in-a-lifetime changes are on the table. Consider the momentous impact if these provisions were to become law:
- Extension of the expanded child tax credit. Families would get a direct win here. The Center on Budget and Policy Priorities found that nine families out of 10 used their payments for basic needs such as food, clothing, shelter and utilities. One study published in the Proceedings of the National Academy of Sciences found modest but significant brain activity associated with stronger cognitive development in the babies of poor mothers who received cash stipends.
- Medicare changes bringing down costs for enrollees. As part of the House-passed Build Back Better plan, the federal government could – for the first time – leverage its immense buying power to negotiate with pharma companies over the prices of certain drugs. Out-of-pocket spending for Medicare’s drug benefit, known as Part D, would be capped at $2,000 annually, offering significant savings for the 1.2 million Medicare Part D enrollees currently paying more than $2,000 a year for prescription drugs. Plus, insulin costs would be limited to $35 a month, and hearing services would be covered under Part B’s outpatient care coverage.
- ACA eligibility for 2 million uninsured adults living below poverty. The provision is considered a key to closing the Medicaid gap and reducing racial inequalities in health care delivery and health outcomes.
- Green- and clean-energy incentives. The costs of climate change in dollars, not to mention human lives, are becoming unbearable. Even Manchin, who is from coal-friendly West Virginia, supports BBB’s climate-change initiatives. The bill proposes funds that would enable tax incentives for buyers of clean power, infrastructure upgrades allowing power grids to transmit renewable energy, tax credits for buyers of electric vehicles, construction of EV charging stations, rebates for energy-efficient appliances, training and research in climate-friendly farming and forestry practices, a “green bank” to help communities finance renewable energy projects and aid for rural electric co-ops switching from coal to renewable energy.
Many Republicans support these provisions for their power to alleviate the problems currently crushing their constituents. But their objections to BBB’s total costs, in chorus with Manchin, could prompt agreement to trim such provisions as the expanded child tax credit and paid family leave from the larger package.
As long as President Biden’s Build Back Better Act is still viable, hope remains that the decision makers in Washington will find agreement. We see near-universal recognition of the core premise that BBB holds the power to launch consequential and, perhaps most importantly, non-partisan improvements to the daily lives of Americans. That kind of common ground is the starting point for negotiations that lead to breakthroughs.
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No matter what happens with the Build Back Better Act, Surgent CPE will continue delivering timely news on BBB’s progress. Surgent CPE will continue to provide up-to-the-minute insights into tax law changes and groundbreaking policies that impact the crucial work of tax accounting and financial professionals.