WASHINGTON — Call it the incredible shrinking domestic policy initiative.
As Democrats struggle to salvage pieces of President Biden’s sweeping social policy, climate change and tax package this summer, their negotiations have highlighted how significantly they must curb their ambitions by bending political realities and economic shifts.
What was once a transformational social safety net plan from cradle to grave what some liberals said they envisioned? spend a whopping $6 trillion — with free preschool, affordable childcare, nationally paid leave, and major new programs to curb climate change — now emerges as a roughly $1 trillion proposal with few of those components.
Even the prospects for a package of that magnitude are questionable as Senators Chuck Schumer, New York Democrat and Majority Leader, and West Virginia Democrat Joe Manchin III, bicker over the details of revamped legislation targeted so far. on reducing the cost of prescription drugs and reducing the national debt.
Talks are still ongoing about whether or not to include other long-standing Democratic priorities, including tax hikes, some climate and energy provisions, and an extension of expanded grants to the Affordable Care Act.
The dramatic downscaling has been prompted by the party’s wafer-thin majority and Mr Manchin’s refusal to embrace some of his colleagues’ most precious plans. But it also reflects the demise of a brief but strong political consensus that emerged at the start of the coronavirus pandemic in favor of rampant domestic federal spending and a muscular role for the government in tackling the country’s problems. With inflation and other economic concerns mounting in the run-up to the midterm elections, Democrats are poised to put aside their desire to launch massive new federal initiatives for a narrow package this year.
Here’s a look at how and where Democrats’ domestic law has shrunk.
healthcare
How it started: In his budget last year, Mr. Biden proposed expanding Medicare to cover hearing, vision and dental benefits, a proposal estimated to cost about $350 billion over a decade, and some progressive Democrats hoped to go even furtherlowering the eligibility age from 65 to 60, a change that would have cost $200 billion.
How it shrank: When the House has passed the $2.2 trillion version of the bill in the fall, it included $165 billion to cover Medicare hearings, cut health insurance premiums for people covered by the Affordable Care Act, and insure an additional four million people through Medicaid.
where it is now: Discussions have now focused on whether or not to extend the expanded Affordable Care Act grants, which were enacted in March 2021 as part of the $1.9 trillion pandemic relief plan and are expected to expire by the end of the year.
Democrats also released a plan aimed at reducing the cost of prescription drugs that would allow Medicare for the first time to directly regulate prescription drug prices, according to a draft submitted to Senate officials this month. It would truncate the cash amount Medicare patients can be asked to pay for $2,000 a year prescription drugs and limit how much drug companies can raise prices.
climate
How it started: President Biden, who promised the United States would cut its emissions at least 50 percent below 2005 levels by the end of the decade, called for a variety of climate proposalsincluding a ban on offshore drilling and the creation of a civilian climate corps.
How it shrankManchin, a conservative-leaning Democrat from one of the top oil and gas-producing states in the country, opposed many of the climate regulations, including the most important measure, a program that would have replaced coal and gas-fired power plants with wind and solar power. The plan approved by the house set aside $555 billion for programs designed to reduce fossil fuel emissions.
where it is now: Democrats discuss a smaller climate and energy package. If passed, it could still be the largest single action the United States has ever taken to tackle climate change. It would likely target about $300 billion in tax breaks for buyers and producers of wind, solar and nuclear power. The largest amount previously earmarked to fight climate change at once was about $80 billion, as part of the 2009 stimulus package.
The negotiators also discuss tax incentives for the purchase of electric vehicles and a provision to curb emissions of methane, a potent pollutant that is heating the planet and leaking from oil and gas wells. Mr Manchin has also expressed concern about those proposals.
Families, education and jobs
How it startedLegislation passed by the House included proposals to provide up to four weeks of federally paid family and sick leave and universal kindergarten, as well as billions of dollars in college funding, childcare and housing. It also included an extension of the extended monthly payments to families with children, which expired at the end of 2021.
How it shrank: Mr. Manchin was against many of the programs and personally informed Mr. Schumer in a memo from last summer explaining his point of view on the multi-billion dollar package he wanted to at least “mean” them — and limited them only to Americans who needed them most.
where it is now: With Democrats looking to cut spending to no more than half of the emerging $1 trillion plan, it’s unlikely any of those proposals will be taken up.
Tax increases
How it started: Democrats had great ambitions on using the package not only to generate revenue for domestic spending, but also to make tax law fairer and massively raise taxes on the rich. The House-approved package would have been paid for by substantial tax increases for high earners and corporations, estimated to bring in nearly $1.5 trillion over 10 years. And the Democrats initially intended to roll back key components of the tax cuts Republicans pushed through in 2017.
How it shrank: Senator Kyrsten Sinema, the centrist Democrat from Arizona, opposed the plan to raise most tax rates on the richest companies and people. (Mrs. Sinema supported other tax-increasing ideas, although some were) met with pushback from other senators.)
where it is now: Senate Democrats are fused around one plan to tax some high-earning Americans by imposing an additional 3.8 percent tax on income earned from owning a piece of what is known as a pass-through business, such as a law firm or medical practice . The money would then be used to extend the solvency of the Medicare trust fund that pays for hospital care — currently starting to run out of money in 2028 — until 2031, officials said.
Negotiators are also discussing strengthening the Internal Revenue Service’s enforcement capacity as a way to raise billions of dollars, as well as some minimal taxes on businesses as they finalize the remaining proposals. But the revenue portion of the package was one of the most challenging pieces to negotiate for Democrats, and officials warned the contours could still change.
Some ordinary Democrats started expressing dismay on raising taxes, faced a series of Republican attacks that the proposals would jeopardize small businesses and middle-class Americans already reeling from inflation.
A small group of Democrats — largely from high-income communities in states like New York and New Jersey — have also given new impetus to include an expensive proposal that would increase federal tax deductions for state and local taxes. The House’s plan raised the so-called SALT cap set in the 2017 tax law from $10,000 a year to $80,000, though its costs are likely to prevent its inclusion.