As the U.S. Senate postpones its vote on the Build Back Better Act (BBBA) into next year, it’s becoming increasingly clear that lawmakers’ attempt to enact almost every major program proposed by President Biden on a temporary basis — rather than prioritize a few key programs or find enough revenue to sustainably finance all of his proposed programs permanently — threatens both the bill’s prospects for passage and the success of its core initiatives should the bill become law. Democrats must rethink and revise this approach to address the most urgent national needs and secure a successful legacy for President Joe Biden.
The problem became clear last week in part thanks to a new estimate from the nonpartisan Congressional Budget Office, which suggested that the policies in the House-passed version of the BBBA would cost over $4.7 trillion between now and 2031 if none of them are allowed to expire before then. CBO’s analysis has given pause to Sen. Joe Manchin (D-W.Va.), who has consistently said he would only commit to supporting a bill that increases federal spending by no more than $1.5 trillion over the next decade and fully covers offsets the additional cost. Manchin holds the crucial 50th vote needed to pass any bill through the Senate without Republican support, so the bill cannot move forward until his concerns are addressed.
Democrats have countered that the official CBO score shows the House bill within $160 billion of being offset by new taxes, and even that gap may be overstated. But the numbers only appear to add up because the bill’s tax increases are permanent (and thus measured over all 10 years in CBO’s scoring window), while most major social programs are temporary: expanded tax credits for working families expire after just one year. Improvements to the Affordable Care Act expire in three or four years. Subsidies for child care and universal pre-K expire after six years. If these programs are extended, as is clearly intended by the bill’s proponents, the total cost of higher spending and tax cuts in the House-passed bill would be more than three times what Manchin originally agreed to support.
According to CBO, fully offsetting the cost of these policies will require raising taxes by $3 trillion more over the next decade on top of the tax increases already included in the current iteration of the BBBA. To their credit, Democratic leaders from President Biden to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer have committed to fully paying for any and all extensions of these policies.
But that may be easier said than done. Democrats have already picked the “low-hanging fruit” of tax-the-rich policies that have broad enough support within the party to pass this Congress; it will be extremely difficult to cover the remaining long-term gap while adhering to President Biden’s earlier pledge not to raise taxes on households making under $400,000. If Democrats cannot coalesce around these more-controversial tax increases now, at a time when they have full control of the House, Senate, and White House, how can they expect to do so when it is unlikely they will retain full control of Washington for the next six years straight?
One possible outcome, which Manchin fears, is that some or all of these programs will be extended without offset once lawmakers conclude that “continuing current policy” doesn’t need to be paid for. There is ample precedent for this: For example, the 2001 and 2003 Bush Tax Cuts were originally scheduled to expire in 2010 as a way to limit their official fiscal impact. But these tax cuts were subsequently extended several times, and in 2013, then-Vice President Joe Biden negotiated a deal to make over 80% of the tax cuts permanent without offsetting the nearly $3 trillion cost (a deal which both Pelosi and Schumer voted for). In a divided government, Democrats might end up trading an unfunded extension of BBBA programs for an unfunded extension of the Trump Tax Cuts, which incorporated similar timing gimmicks, thus compounding the red ink.
Alternatively, if Democrats remain committed to their promise to pay for extensions yet cannot agree on the offsets, or if Republicans successfully prevent the party from enacting their preferred policies, many of the programs set to expire automatically will. But this outcome is also deeply problematic: If the BBBA as passed by the House becomes law, but no programs are extended beyond the current proscribed expiration dates, the low- or middle-income parents of a child born in 2021 could have received almost $30,000 in benefits from stimulus checks, two years of expanded Child Tax Credit payments, four years of health-care subsidies, and six years of free or subsidized child care. The parents of a child born just a few years later, on the other hand, would receive nothing even if they were otherwise similarly situated. This is an extremely unfair outcome, but it may also be the most likely one if Democrats keep their promise to only extend programs they can pay for.
Not only does this structure threaten to revoke benefits from families after a few short years, but it may prevent them from ever receiving those benefits in the first place. Several programs, including universal pre-K, require participation and implementation by state or local governments. But many local officials, both Republicans and Democrats, have said they are unlikely to commit the resources needed to stand up these programs if the federal support for them is scheduled to vanish just a few years after it starts. This means millions of families won’t even receive the help they are being promised. If Build Back Better programs are poorly implemented, it will turn from a politically beneficial achievement into an albatross around the neck of Democrats that sours the public on further progressive programs.
A better approach would be to prioritize a few core programs that can be fully funded for 10 years using the revenue sources this Congress can win majority support for. The Progressive Policy Institute recommends these include a robust package of long-term climate policies, a permanent expansion of the Affordable Care Act partially offset by health-care cost savings, a permanent universal pre-K program, permanent full refundability of the Child Tax Credit (so that families with no tax liability still receive the benefits), and a permanent supplement to the CTC for children under pre-K age that is no bigger than the amount that can be fully funded by the remaining revenues the current Congress agrees to raise.
This package would represent a far more durable progressive victory than the one passed by the House, and its success would build momentum for future policies — such as a universal paid family leave program — that could be enacted when lawmakers identify the offsets needed to sustainably finance them.
The “temporary” provisions in the House BBBA fundamentally threaten its success. Requiring that new spending be measured over the same number of years as the revenue used to offset it presents voters with a more transparent trade-off between new social programs and the taxes needed to finance them. It also ensures programs are more durable, more fair, and more successful, thus laying the groundwork for further expansion down the road. Democrats should take the opportunity Sen. Manchin has given them with this recent delay to make Build Back Better better.