The Democratic Party’s odds of passing Joe Biden’s signature legislation by year’s end are long and getting longer. Little space remains on the legislative calendar. The Senate parliamentarian, who must adjudicate which provisions of the Build Back Better Act are immune from a Republican filibuster, is undergoing treatment for breast cancer. The final bill remains unwritten. And for the moment, it has (at most) 49 supporters in the upper chamber.
This is a problem. And not merely because punting Build Back Better to next year would hypothetically sap the legislation’s “momentum.” The enhanced child tax credit that Democrats established in the American Rescue Plan will expire at year’s end absent congressional action. This means that, shortly after Christmas — and in the midst of rising prices — just about every U.S. household with minor children will see its monthly income abruptly fall. It seems likely that this would be politically disadvantageous for the ruling party. It is certain that allowing the enhanced CTC to expire would increase child poverty.
Progressives tend to lay blame for this state of affairs on Joe Manchin, the Senate’s lone Democratic holdout against Build Back Better (or, at the very least, its lone loud holdout). And for good reason: Manchin’s allergy to both deficit spending and large tax increases on the wealthy compelled Democrats to downsize Biden’s agenda. Now, with inflation rising, the West Virginia senator is withholding support from even the diet version of the president’s climate–and–social-welfare platform.
And yet, if negotiations drag on into January, Democratic leadership will bear no small share of the responsibility.
In truth, Manchin’s position on BBB has been more consistent and coherent than many liberals allow. For months, the senator has suggested that he will not support new spending far in excess of $1.75 trillion, that he would like every cent of that spending to be offset with new taxes, and that cutting the bill’s costs by phasing out programs Democrats intend to eventually make permanent is a gimmick that would not satisfy his demand on the spending cap. As Manchin told Politico back in September, “Once you start doing something, it becomes ingrained in it. We want to do it and do it right and finance it.”
This last concern is the major roadblock in today’s negotiations.
Even as Democratic leaders heeded Manchin’s demands on the bill’s top-line price and tax provisions, they ignored his consistent, emphatic opposition to budget gimmicks. Instead of paring down Biden’s social agenda to two or three programs and then funding full permanent versions of those policies, House Democrats chose to retain nearly all of Biden’s proposals and then cram them under a $1.75 trillion spending cap through a variety of means tests, phase-ins, and phaseouts.
As Jonathan Chait and I have both argued, this gambit is objectionable on substantive grounds. Before delving into the current political dynamics in the Senate, it’s worth reviewing the downsides of the Democrats’ defiance of Manchin purely on the merits.
Right now, Democrats have a rare opportunity to permanently expand the American welfare state. Merely supplying permanent funding for the enhanced CTC would lift millions of U.S. children out of poverty a year, in perpetuity. Establishing universal prekindergarten or closing the Medicaid gap would be a similarly laudable achievement.
By attempting to enact nearly all of Biden’s social policies in miniature, however, Democrats risk permanently establishing none. There is something to be said for taking this gamble. It is a scandal that the United States lacks public child care, paid family leave, universal prekindergarten, and a child allowance — programs that are commonplace in similarly wealthy countries and vital for promoting gender equality and working-class economic security. Further, once enacted, social programs that benefit the middle class are infamously difficult to roll back. So why not plant the seeds for a comprehensive family welfare state today, then struggle to entrench these policies tomorrow?
Alas, this political analysis misunderstands the roots of the welfare state’s resilience. A major reason social programs have proven so sticky in the United States is that it is difficult to pass any bills through our veto-point-laden legislative system. If ending federal funding for child care and the enhanced child tax credit required a future Republican government to move a repeal bill through both chambers of Congress, then that funding would be relatively secure. The millions of Americans who benefit from the programs would have time to mobilize in defense of them, and the status quo bias of the median voter would make marginal GOP lawmakers uneasy about casting an unpopular vote.
By contrast, if Republicans merely need to do nothing in order to shrink the social welfare state, there is little reason to assume they won’t be up to that challenge. On the contrary, even if Biden’s programs become popular in their first years (a hypothetical made less likely by the programs’ corner-cutting designs), GOP lawmakers could still find it politically untenable to actively support extending the legacy of the man who “stole” the 2020 election. And these considerations of the GOP’s likely conduct are no trifling matter. Democrats face massive structural disadvantages in the House, Senate, and Electoral College. The odds that the GOP will boast full control of the federal government when Build Back Better’s temporary programs come up for renewal are not negligible; the odds that Republicans will control at least one chamber of Congress for most of this decade are high.
Meanwhile, merely phasing out Biden’s social programs wasn’t sufficient to get the package’s cost down to $1.75 trillion. Democrats also had to lower the federal contribution in their prekindergarten program. Initially, the policy would have covered 100 percent of the costs incurred by any state that established universal pre-k during the program’s first three years; now, over that same period, it provides enough funding to cover the costs of sending roughly 5 percent of America’s kids to pre-k. The funding rises to 95.44 percent in the program’s fourth year but then starts falling again — and, thanks to the phaseout, drops to zero come 2028. This is a much worse deal for states than the Medicaid expansion was. And 12 red states still have not taken Uncle Sam up on the latter program. The Congressional Budget Office estimates that more than one-third of American children live in states that would be highly unlikely to participate in the program. That not only means the bill’s “universal pre-k” provision would not be universal; it also means there will be a natural base of opposition to extending the program within the Republican Party.
Similarly, thanks to a means test and phase-in, the Democrats’ child-care plan would likely increase child-care costs for middle-class families in its first years of operation, as the People’s Policy Project has long argued. The roots of this problem are fairly simple. The plan does not extend child-care subsidies to Americans who earn more than 150 percent of their state’s median income until 2025. Yet it would immediately subsidize the child-care costs of less affluent Americans while phasing in mandatory wage increases and quality standards at eligible child-care facilities. Given that the child-care sector already suffers from a labor shortage, increasing demand for child-care services (by rendering them newly affordable for low-income Americans through subsidies) is all but certain to drive up the unsubsidized price of child care. That isn’t just politically inadvisable in the immediate term; it undermines the notion that there will be bipartisan political will to make the program permanent years from now.
All of which is to say: Once they decided they needed to shrink Build Back Better, the Democratic leadership opted to do many temporary programs instead of a couple of permanent ones, even though this meant (1) undermining the quality and political strength of these programs and (2) ignoring one of Manchin’s core demands.
Last week, at the GOP’s request, the Congressional Budget Office released an estimate of Build Back Better’s ten-year cost assuming that all of its social programs are made permanent. Under the assumption, the CBO found the bill would add $2.75 trillion to the deficit. In response, Manchin called the score “sobering” and reiterated his call for a version of Build Back Better that consists entirely of permanent, fully funded programs, telling reporters, “Everyone has to choose basically what we can sustain.”
The White House derided the CBO’s report as a “fake score for a bill that doesn’t exist.” But there is an inherent dissonance in the administration’s messaging. Either Biden’s program makes “transformative” investments in the social safety net or it makes 100 percent temporary ones — but it can’t make both. Democrats have tried to resolve this contradiction by insisting that all of these programs will be extended and that when Congress extends them, there will be political will to enact tax increases to fully pay for them. But it’s unclear what basis the White House has for the latter presumption.
If a Congress controlled by the Democratic Party isn’t willing to raise taxes enough to fully fund permanent versions of these programs, how can we assume that a future Congress, in which Republicans are extremely likely to hold at least one chamber, would do so? To the extent that there is a plausible scenario in which a divided Congress agrees to extend Biden’s social agenda, it likely involves Democrats agreeing to reciprocate by extending the Trump tax cuts. In which case, making Build Back Better permanent would actually entail increasing the deficit by more than the CBO projects.
Personally, I am not very worried about the national debt. And I’m even less concerned about keeping America’s tax rates “competitive.” But Manchin is concerned about both and has said as much for months. So it isn’t surprising that he’s not thrilled with the pitch “Don’t worry, when we extend these temporary programs years from now, we’ll do it by enacting tax hikes that you oppose instead of through deficit spending that you also oppose.”
Now, it’s possible the Democratic leaders have some leverage over Manchin that we can’t see. Maybe they’re calling a bluff. But if they don’t nail down an agreement by year’s end, they will have committed political malpractice. Manchin’s position on phaseout gimmicks has been clear and consistent. The difficulty of rewriting BBB to meet that demand at the last minute has also been readily apparent. What’s more, unlike the senator’s other red lines, this demand is substantively worthwhile: Fully funding some version of the enhanced CTC and (truly) universal pre-k would be better than erecting a panoply of underfunded programs that are set to self-destruct by decade’s end.
This is especially true when one considers the implications of Manchin’s present intransigence. Democrats had hoped the enhanced CTC’s impending expiration would work as a forcing mechanism for Build Back Better’s passage. After all, the whole “do many temporary programs” strategy is premised on the idea that Congress simply cannot resist extending social benefits once they’re in place. Faced with a choice between acceding to the leadership’s demands or allowing West Virginia families to lose their monthly benefits, Manchin would feel compelled to cave.
But this doesn’t seem to be the case. On the contrary, Manchin reportedly sees the enhanced CTC’s expiration as a feature, not a bug. And the senator’s indifference to extending the program doesn’t just reflect his own peculiar ideological hang-ups. It’s also indicative of the fact that overwhelming public support for the policy has failed to materialize. Democrats have been sending hundreds of dollars every month to each of the roughly 40 percent of U.S. households that have kids under 18, yet in an NPR/Marist poll released last week, only 17 percent of voters said their family had ever received a monthly payment. Roughly half of the enhanced CTC’s beneficiaries don’t even know they have been benefiting from the program. But Democrats are counting on this constituency to be so politically powerful and mobilized that a future Republican Congress would have no choice but to extend the enhanced CTC. If direct monthly payments have failed to create a self-sustaining constituency, there is little basis for believing that less universal (and/or more dysfunctional) programs like the Democrats’ current child-care and paid-leave plans will do so.
If the Democratic leadership fails to persuade Manchin to cave by Christmas, the political theory behind the current version of Build Back Better will be falsified by New Year’s — and working-class families will pay the price.
