My Thoughts on How to Improve the Build Back Better Proposal
My team and I have been poring over the draft reconciliation bill passed by the House Budget Committee, also called the Build Back Better proposal. Over the past few weeks, I’ve worked to show my constituents what we’re finding in the proposal, how I’m weighing the pros and cons, and some of the problems I am trying to solve as the legislation is negotiated. With that in mind, I wanted to provide an update and share more details on many of the issues I’m working to address.
My Thoughts on How to Improve the Build Back Better Proposal
Many of my constituents have been following the work in Congress related to a large-scale reconciliation bill to address important public policy issues. I wanted to take the opportunity to provide you with an update on the proposal to help you understand where I am coming from when I say that it is not yet in a place where it would earn my vote. I do not present the concerns below idly, with no intention to try to change them. I am actively engaged with the White House and my colleagues in Congress to address as many of these issues as possible.
This is not a responsible way to make policy, and I think we should do better. Below, I outline some of the key sections of the bill that illustrate these points, as well as some provisions that would have a meaningful impact in Maine. This review is not intended to be exhaustive of the more than 2,400-page draft bill, but instead is designed to give you a better understanding of some of the issues that many members of Congress, including me, are weighing as we work to try to improve the draft proposal.
Tax Credits for Working Families
The current version of the bill includes valuable improvements to a number of tax credits, including the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Health Coverage Tax Credit (HCTC). These existing credits play an important role in helping working- and middle-class families afford basic necessities, including health insurance. I am glad that the reconciliation proposal would bolster each of these policies, but the CTC changes double down on a problematic expansion of the credit to wealthy households first implemented by Republicans in their 2017 Tax Cuts and Jobs Act (TCJA). I would like to see the CTC targeted more precisely, rather than sending taxpayer funds to high-income people who don’t need the help.
I fully support the bill’s improvements to the EITC and HCTC. The proposal would fix long-standing problems with the EITC that have shortchanged workers without children at home, younger workers, and workers older than age 64. Without the changes proposed to be extended in this bill, each of these categories of workers will lose access to some or all of the EITC, undermining the credit’s work incentive and making it harder for working-class people to get by. Additionally, the bill proposes to enhance the HCTC and extend it permanently. I have fought each year that I have been in Congress to prevent expiration of this important credit for people like some Twin Rivers Paper workers and retirees. Ending the annual guessing game for these workers would be a big step towards their financial security.
The bill also proposes to extend, through 2025, enhancements to the Child Tax Credit that include expanding eligibility to 17-year-olds, advancing the credit in monthly payments, increasing the maximum benefit to $3,600 per year for children 0–6 and $3,000 per year for older children, and making it fully refundable. These are positive changes, especially making the credit fully refundable. But the proposal has multiple problems, including that it would last only four years and that it does nothing to stop the TCJA-created giveaway to rich families. Instead of controlling costs by shortening the duration of the added benefit for working- and middle-class families, Congress should cut wealthy families’ eligibility. Currently, the proposal would benefit joint filers making as much as $400,000 per year, which is far beyond the income range of working- and middle-class families this credit was originally intended to help.
Child Care Assistance
Quality child care is critically important for young children’s development and for supporting young families in our state. I believe that well-designed support for child care is an important investment in our future. The primary child care program in the bill is the Birth Through Five Child Care and Early Learning Entitlement, which would cap families’ total child care payments. Families with incomes under 75 percent of the state median income would have no copayment, and then copayments would increase on a sliding scale up to 7 percent of family income for the highest-income families.
While I support child care assistance for working- and middle-class families, I do not support extending this program to wealthy families who do not need it. This is not a fringe position within the Democratic Party. The Chairman of the House Education and Labor Committee, Congressman Bobby Scott, originally introduced this bill with a household eligibility cap at 200 percent of state median income. That eligibility cap was eliminated by an amendment adopted in the Committee’s markup of the bill. While Chairman Scott voted for that amendment, he has stated publicly that he only did so because if the amendment was rejected, other Democrats on the committee had threatened to tank the entire bill. As currently designed, this entitlement has no income limit — it is only technically closed to households with more than $1 million in assets, and all a household needs to do to meet that test is self-certify that they meet it. This is not a meaningful or effective test to ensure that the benefit goes to the families that need it.
Energy and Climate Provisions
The reconciliation proposal contains a number of business and individual tax credits to incentivize the expansion of clean energy investment and electric vehicle (EV) deployment to help address climate change. While many of these provisions build on the efforts already underway in Maine to further reduce our state’s carbon footprint, I believe some improvements should be made to ensure that the tax credits are targeted at middle class families and businesses that cannot afford to make these investments without help. For example, the draft legislation would allow households making up to $800,000 dollars a year to be eligible for the full $12,500 EV credit. This credit should be better targeted to those who need the incentive to make an EV purchase feasible.
Elsewhere in the draft proposal, the bill devotes $39 billion to incentivize homeowners to make energy efficient upgrades to their home heating and cooling systems and property. While I think it is valuable to encourage these investments, the bill as drafted is a missed opportunity to make meaningful changes to current law’s structure of these credits, which flow in large part to upper-income households. Indeed, 2018 IRS data show that over 77 percent of the credit’s value goes to households with incomes higher than $75,000. Further, because these credits are nonrefundable, taxpayers with no tax liability — nearly 44 percent of U.S. households — are ineligible for these incentives. If we want to make investments to reach those with the least means to make these investments on their own, it would be wise for Congress to reevaluate their structure during this current debate.
While working to mitigate and address climate change, we must also reflect the realities of life in our state and protect jobs in the communities we represent. For me, that means looking out for mills and their workers in Madawaska, Old Town, Baileyville, Skowhegan, Rumford, and Jay, all of which depend on reliable energy delivery on demand; farmers in need of good farmland who face pressure from commercial solar development; and lobstermen who fear being crowded out of historic fishing grounds by offshore wind projects. It is imperative that we develop renewable energy in Maine and across the country, but it is just as critical that we simultaneously protect our Americans’ jobs and community livelihoods.
Taxes on Businesses and the Wealthy
The Republicans’ 2017 tax reform law gave big tax breaks to the rich that were not paid for, which is why I think we should fix the flaws with that law while maintaining its benefits to the middle class. I agree that billionaires and corporate giants, like Amazon, should pay more in taxes. Too often, we hear accounts of millionaires and billionaires as well as big corporations that use tax loopholes to dodge paying taxes or to pay rates lower than hardworking American families. We all know that’s not right, and I strongly support closing these tax loopholes.
The draft bill proposes meaningful steps to close those loopholes, but more work needs to be done to ensure we control for unintended consequences. For example, many businesses in Maine are organized as pass-through entities, so any changes to individual-side tax policy could have a significant impact on them. I believe any changes to business tax policy should be aimed at preventing the giant corporations and multinationals from continuing to exploit our tax system while minimizing the impact on small businesses.
Several of you have written to me with particular concern about the proposal to raise tobacco taxes, and I agree with you that this is a regressive policy that would disproportionately hit low-income and working, middle-class Mainers. I do not support it. If one of our primary aims with the tax policy in the Build Back Better Act is to rebalance the scale in favor of everyday people, levying an additional tax squarely on the backs of folks at the lower end of the income scale is not the way to do it.
Also under discussion, though not yet included in the draft legislation in Congress, is an effort to roll back an existing limitation on the State and Local Tax (SALT) deduction, effectively giving a big tax break to individuals in higher-tax, higher-income states like New Jersey and California. This is bad policy and would disproportionately benefit the wealthy. Under current law, households can deduct up to $10,000 that they pay in state and local taxes from the amount of their income that is subject to federal taxes. Raising or eliminating this cap only benefits those households that pay more than $10,000 in state and local taxes. Thus, according to some estimates, 98.6 percent of taxpayers with incomes under $100,000 would see no benefit from this change. By contrast, 93 percent of millionaires would benefit. Overall, more than half of the tax cuts from the SALT cap repeal would go to the wealthiest 1 percent, and 97 percent would go to the top 20 percent.
Eliminating the SALT cap, as some have proposed to do, would come at an enormous hit to the Treasury: the Congressional Budget Office estimates this would cost up to $88.7 billion per year. Again, as we seek ways to rebalance the scale in favor of working- and middle-class Americans, increasing the value of SALT would dilute those efforts and hamper our ability to make the kinds of investments that people in Maine need.
Medicare Expansion and Prescription Drug Reform
Two of the most promising parts of this proposal relate to Medicare: negotiation of prescription drug prices and expansion of hearing, vision, and dental benefits. Seniors and people with disabilities face frequently unsustainable health care costs for prescriptions, hearing, vision, and dental care. It is time that Congress take action to address these needs so that more Medicare beneficiaries can live in dignity and with financial security.
I strongly support allowing Medicare to negotiate prescription drug costs, capping Medicare drug price increases at the rate of inflation, and creating a $2,000 annual cap on out-of-pocket costs for Medicare Part D (prescription drug benefit) beneficiaries. Americans pay more than other countries for prescription drugs, something that Mainers know well from the comparison with prices available just across the border in Canada. This bill offers a way to reduce these costs for beneficiaries while also creating budgetary savings for taxpayers that can be made available to finance policies to address health care affordability.
One proposal with merit is to include hearing, vision, and dental benefits in Medicare, which would collectively fill a clear gap in care for seniors. Unfortunately, the current proposal delays the start of the dental benefit by such a degree — to 2028, with full benefits for major procedures delayed further to 2032 — that it would amount to an empty promise to many seniors. I believe beneficiaries would rather have certainty around a subset of these benefits than to have half-baked and uncertain implementations of all three benefits. This is why I am pushing for the current version of the bill to be revised to either start the dental benefit sooner or to drop it from the bill in order to free up budgetary resources to improve the implementation of other health policies.
Another issue with the current proposal is that it wastes limited resources on a blanket waiver of Part B premium increases that will disproportionately benefit higher-income beneficiaries. Given that Part B premium amounts are means-tested, I believe the estimated 22 percent of the proposal’s cost that goes towards this waiver should be redirected to shoring up benefits, rather than giving higher-income beneficiaries more help than they need.
This account of the bill is not exhaustive, but I wanted to make sure you understood that despite what the national media reports, this is not a debate exclusively centered on topline numbers or based on differing factions within the Democratic caucus. Out of the limelight, there are serious conversations taking place to determine what is the best policy and how we can pay for it.
However, I also want to be clear that this is not only a debate on policy details like income thresholds and timelines for implementation. This is a debate about who the Democratic Party stands for and with — and the direction the party will take in the years to come. My constituents are hardworking people. They don’t make $400,000 a year, and they don’t think that people making that much money need child care assistance, tax breaks designed for working- and middle-class families, or a subsidy to help buy an electric vehicle. They don’t believe that changing the law in order to send almost $90 billion a year to wealthy people in states like New Jersey and California makes sense.
They also bear the brunt of inflationary pressures, either short or long-term, that contribute to rising costs for gas, groceries, rent, used vehicles, buying a home, and more. This is not an insignificant concern, and I take their feedback seriously. In the face of $6 trillion in deficit spending related to COVID-19 since March 2020, and because we do not know for how long we will need to support our economy and workers through this pandemic, I do not believe that we can treat taxpayer resources as though they are limitless.
The concerns I’ve raised here aren’t just small details — taken together, addressing these issues would add up to hundreds of billions of dollars. Just as important, the decisions we make on these issues will shape the federal policy debate for years to come and cement the direction of the Democratic Party. Lawmakers should take our time and get the policy right. That’s the approach I’ve taken throughout my time in office, from the State House to Congress. I will continue to engage in good faith and will be glad to keep you apprised as negotiations continue.