Biden social and climate bill gets a boost as nonpartisan panel says plan is unlikely to add to long-term deficits

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  • The panel said the bill would raise $1.48 trillion in revenue over a decade.
  • The report did not include pandemic-era Obamacare subsidies or Medicare’s cost of covering hearing aids, nor did it assess savings from expanded IRS enforcement.
  • The report helps Democrats overcome one of the last remaining obstacles to a House vote on the bill, a demand from moderates to look at JCT analysis or Congressional Budget Office scores.
  • Late Thursday, Pelosi could be seen pulling aside key swing vote members on the floor of the House. Such face-to-face lobbying by the speaker is a final step before a traditionally high-stakes vote.

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WASHINGTON — The nonpartisan Joint Committee on Taxation on Thursday released its preliminary analysis of Democrats’ key social spending and climate bills, noting that the “Build Back Better Act” would raise $1.48 trillion in revenue and deficit over a decade. Will not be likely to add up for a long time. Period.

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The results are a boon for Democrats, and the report itself clears one of the last remaining hurdles, preventing the House from holding a vote on the bill—at least one major nonpartisan of the bill’s effects by moderates. Seeking analysis.

The JCT and the Congressional Budget Office traditionally evaluate the effects of major legislation on the federal budget, and their assessments carry weight with lawmakers on both sides of the aisle. It was unclear on Thursday when the CBO would release its report.

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but with JCT Report In hand, House Speaker Nancy Pelosi and her lieutenants engaged in talks with the last few remaining holdouts in the Democratic caucus. With a majority of only three votes, Pelosi cannot tolerate any last-minute defection.

Late Thursday afternoon, Pelosi could be seen pulling key swing vote members aside on the floor of the House to talk to them during an unrelated vote.

And while she won’t give any guesses about when major bills might be voted on, such face-to-face lobbying by the speaker is a final step before a traditionally high-stakes vote.

Earlier in the day, Pelosi insisted that the House vote together on the Build Back Better bill and fellow bipartisan infrastructure legislation, thus meeting a key demand from progressives that the infrastructure bill would not go beyond the social spending plan. .

JCT Result

NS 10 page report This did not include an assessment of the Obamacare subsidies of the pandemic or the cost of Medicare covering hearing aids. Democrats have estimated those provisions would cost $165 billion in total.

Nor does the report factor in the revenue potential of expanded IRS enforcement, something Democrats believe will bring in nearly $400 billion over a decade. Another revenue stream that was not included in the report is projected income from allowing Medicare to directly negotiate prices for certain drugs, which start in 2023 for up to 10 products.

But even in the absence of these key provisions, the JCT assessed that the bill would not increase the budget deficit in the medium term or long term.

While the bill’s first two years of enactment will be costly, largely due to a one-year extension of the expanded Child Tax Credit, the Build Back Better Act’s revenue in its third year will outweigh the cost. Over a decade, JCT estimates that total revenue from the legislation will be $944 billion.

While key pieces of the bill are currently omitted, it provides Democrats with a reason for optimism, as the JCT reports. Long-term net revenue estimates exceeded estimates by many observers.

President Joe Biden has long insisted that the bill will not add to the long-term budget deficit. But some of the early estimates of the bill’s revenue sources seemed too rosy, with leading liberal Democrats and some economists questioning whether the bill’s authors were too liberal in their estimates.

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Some outside observers accused Democrats of deploying the same vague math that Republicans used in 2017 to argue that their big tax cuts for the wealthy — the Tax Cuts and Jobs Act — would ultimately add to net revenue for the federal budget. There will be benefits, as it will stimulate economic growth and in turn leads to a higher tax base and more revenue.

Thursday’s JCT report should at least temporarily allay many of those fears.

By comparison, JCT forecast in 2017 That Republican tax cuts would cost the federal government $1.46 trillion more in a decade than they would bring.

Other analysis

Following Thursday’s JCT release, the Treasury Department issued a statement saying that the Build Back Better bill would generate $2 trillion in savings, not the $1.48 trillion JCT estimated.

Treasury arrived at this figure by adding additional elements that were omitted from the JCT analysis.

Specifically, the Treasury has estimated that Medicare negotiations and exemption rules will generate an additional $250 billion over a decade, and that advanced IRS enforcement measures will add another $400 billion to the exchequer.

“The bottom line is that the Build Back Better Act under consideration in the House of Representatives will be fully paid for and the deficit will be reduced,” Lilly Bachelder, Assistant Treasury Secretary for Tax Policy, said in a statement.

Separate Moody’s Analytics Analysis The release on Thursday also gave fodder to Democrats.

The report said Democratic social spending and bipartisan infrastructure bills would jointly be “more or less paid” by stable scoring – which does not include economic impacts – and “more than once paid” once growth is taken into account. is kept.

Moody’s estimates that real GDP growth over the next decade will average 2.2% if both bills become law, compared to 2.1% if they don’t. The report said that “concerns that the plan would ignite undesirably high inflation and an overheating economy have been decimated” – a welcome projection for the White House as inflation remains high across the country.

Moody’s chief economist is Mark Zandi, whose past analyzes have been used by the Democratic administration to help case their economic policy proposals.

But Democrats’ third analysis of the social spending bill was not as optimistic about the bill’s long-term effects.

A Penn Wharton Budget Model Report The plan will cost $1.87 trillion and raise $1.56 trillion over a decade, according to estimates released Thursday – leaving a shortfall of more than $300 billion.

Like the JCT estimate, it did not include the effects of the Medicare negotiation change.

The Penn model estimates that the legislation would increase federal debt by 2 percentage points and decrease GDP by 0.1 percentage points in 2050.

Christina Wilkie reported from Washington and Jacob Pramuk from New York.

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