What’s in the House Reconciliation Package


September 15, 2021 5:27 pm

House Democrats have taken their first steps to advance a sweeping social spending and tax package that would implement President Joe Biden’s economic agenda.

Thirteen committees approved legislation to be included in a reconciliation package that can be used to try and pass Democrats’ policies without Republican support. The fiscal 2022 budget resolution (S. Con. Res. 14) adopted in August gave the panels until Sept. 15 to report legislation that would increase or decrease the deficit by specified amounts over 10 years.

The House Budget Committee will assemble the measures approved by the various committees into the reconciliation bill that could be considered by the House later this fall.

Below are highlights of the approved measures.

Ways and Means (Target: $1 billion reduction)

The budget resolution directed the Ways and Means Committee to reduce the deficit by $1 billion over 10 years, a “nominal” amount intended to give the panel flexibility to draft its legislation, including offsets for the reconciliation package.

The measure covers taxes, health care, drug pricing, paid leave, infrastructure financing, community development, retirement, child care, and trade.

Tax Increases: The Ways and Means package includes sweeping tax changes to raise revenue for other portions of the package, including:

  • Raising the top marginal personal income tax rate to 39.6%, from 37%, for individuals making more than $400,000 and joint filers making more than $450,000. A 3% surtax also would be imposed on individuals with adjusted gross incomes of more than $5 million.
  • Increasing the capital gains tax rate to 25% from 20% for “certain high-income individuals.”
  • Replacing the flat 21% corporate income tax rate with graduated rates: 18% on the first $400,000 of income, 21% on income up to $5 million, increasing to 26.5% for income after that.
  • Generally requiring investment funds to hold assets for more than five years, rather than three years, for managers to get a preferential tax rate on their share of profits, known as carried interest.
  • Reinstating a 16.4 cents-per-gallon tax on crude oil and imported petroleum products to fund Superfund cleanups of hazardous sites. It also would double the tax rate on sales of certain chemicals.
  • Barring taxpayers from claiming losses on digital assets, such as cryptocurrencies.
  • Increasing the current rate of excise taxes on cigarettes, small cigars, and roll-your-own tobacco, as well as on nicotine that’s been extracted, concentrated, or synthesized in tobacco products.
  • Providing $78.9 billion in additional funding for the Internal Revenue Service to increase audits on wealthy individuals.

Tax Credits: Other tax provisions in the measure are designed to aid certain households and industries, such as:

  • Extending an expanded version of the child tax credit through 2025 and making it permanently refundable.
  • Making permanent expanded versions of the earned income tax credit for childless workers and the child and dependent care credit under the American Rescue Plan Act, Public Law 117-2.
  • Making permanent the expanded availability under ARPA of the Affordable Care Act’s premium tax credits for health insurance purchased through the exchanges. It also would allow individuals who receive unemployment benefits to receive premium-free insurance plans through 2025.
  • Temporarily expanding the ACA tax credits to individuals with income below 100% of the federal poverty level, and providing enhanced cost-sharing subsidies to those below 138% of the federal poverty level, until a federal Medicaid program is established in 2025 (see below).
  • Creating a refundable income tax credit for union-made electric vehicles placed into service before Jan. 1, 2027, and extending several tax credits related to renewable energy production, including the production and investment credits.

Drug Pricing: The measure would create a “Fair Price Negotiation Program” for the Centers for Medicare and Medicaid Services to negotiate the price of 250 covered drugs and insulin. Prices couldn’t exceed 1.2 times the average price of the drug in six other countries. They would also be available to private insurance plans.

Drugmakers that don’t negotiate successfully would face an excise tax of as much as 95%. Those that charge more than the negotiated maximum price would pay as much as ten times the difference in prices.

The measure would also:

  • Require drugmakers to repay the government their profits if they raise the price of a drug above inflation.
  • Cap the cost of prescription drugs under Medicare Part D for beneficiaries.
  • Block the drug rebate rule published under former President Donald Trump in November 2020.

Medicare Coverage: The measure would expand Medicare coverage to include dental benefits beginning in 2028, hearing benefits beginning in 2023, and vision benefits beginning in 2022. For dental benefits, Medicare would cover 50% of the cost of major treatments and 80% of the cost of preventive services. Hearing coverage wouldn’t include over-the-counter hearing aids.

Reinsurance Program: The measure would provide $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.

Paid Leave: The measure would provide up to 12 weeks of paid leave for eligible workers for the birth or adoption of a child, a personal health condition, caregiving for a family member, circumstances related to a family member’s deployment, and bereavement. Benefits would be administered by the Treasury Department and would begin in July 2023.

Infrastructure & Community Development: The measure includes several tax changes related to infrastructure financing and community development, such as:

  • Allowing state and local governments that issue qualified infrastructure bonds to receive a tax credit for a portion of the interest they pay, similar to Build America Bonds under the 2009 American Recovery and Reinvestment Act (Public Law 111-5). The credit would be 35% of interest paid for bonds issued from 2022 through 2024, phasing down to 28% for bonds issued in 2027 and later years.
  • Restoring a tax exemption for interest on advance refunding bonds, which was repealed by the 2017 tax overhaul (Public Law 115-97). State and local governments used those bonds to refinance their debt and access lower interest rates.
  • Establishing a 30% tax credit for state, local, and tribal governments to operate and maintain government-owned broadband systems.
  • Making permanent and expanding the New Markets Tax Credit, offered to taxpayers that invest in lower-income communities.
  • Establishing a 30% tax credit for individuals and businesses that participate in a qualified wildfire resilience program.
  • Increasing state Low-Income Housing Tax Credit (LIHTC) allocations.
  • Establishing a neighborhood homes credit for rehabilitating homes in certain lower-income areas.

Child Care: The measure would provide:

  • $15 billion in state grants to help providers improve child care facilities.
  • Such sums as necessary for grants to supplement the wages of qualified child care providers.

Retirement: The measure would require employers with more than five workers to automatically enroll new hires for retirement benefits. Employees could choose to opt out of the savings plan or modify contributions. Employers would be subject to an excise tax of $10 per day for each employee who isn’t covered by an automatic retirement plan.

Trade: The measure would reauthorize Trade Adjustment Assistance (TAA) programs for seven years and provide $3.4 billion annually for those programs, including $1 billion annually through fiscal 2026 for new grants to help communities affected by global trade.

Education and Labor (Target: $779.5 billion)

The measure includes provisions on education, child care, labor, and child nutrition programs.

Education: The measure would provide roughly $111 billion for higher education, including by:

  • Providing two years of free community college through grants to states and eligible tribal colleges and universities. The federal share of costs would start at 100% in the first year and decrease to 80% by the 2027-2028 award year.
  • Increasing the maximum Pell grant by $500.
  • Allocating $9 billion for retention and completion grants to states and tribal colleges and universities to support students.
  • Providing additional support to historically Black colleges and universities and minority-serving institutions.

It also would provide $82 billion to rebuild public elementary and secondary schools that have fallen into disrepair. That would include $40.9 billion for grants for school districts to construct or repair facilities, improve energy efficiency, and reduce health and safety hazards.

Child Care: The measure would provide $450 billion for child care and early childhood education, including by:

  • Capping child care costs at a maximum of 7% of family income, using a sliding scale that would apply to all income levels. It would provide $90 billion over the first three years and then such sums as may be necessary for the next three years.
  • Requiring child care providers that receive federal assistance to provide at least a living wage to staff.
  • Providing free preschool to all three- and four-year-olds. States would submit plans to participate and receive federal funding, which would start at 100% in the first three years and decrease to 60% by fiscal 2028.

Labor: The measure would provide:

  • About $80 billion for workforce development and training programs.
  • Impose increased civil penalties for employers who violate labor laws.

Child Nutrition: The measure would provide almost $35 billion for child nutrition programs and other activities to address child hunger, including:

  • Expanding eligibility for free school meals, among other changes that would increase the number of children receiving them by almost 9 million, according to a fact sheet from the House Education and Labor Committee.
  • Appropriating such sums as may be necessary for a Summer Electronic Benefits Transfer (EBT) for Children program, which would sunset in 2029. The program would provide children eligible for free or reduced-price school meals with $75 per month in food benefits when school is out of session for the summer.

Energy and Commerce (Target $486.5 billion)

The measure includes language related to health care, energy and environmental matters, telecommunications, and manufacturing. The panel didn’t agree to drug pricing provisions, similar to what’s in the Ways and Means package, in a tie vote with three Democrats joining Republicans in opposition.

Medicaid: The measure would close the Medicaid coverage gap for lower-income individuals in states that didn’t expand the program under the Affordable Care Act by:

  • Temporarily expanding the ACA’s premium tax credits to individuals below 100% of the federal poverty line and providing further cost-sharing subsidies.
  • Creating a federal Medicaid program, operated by third-party entities, for nonexpansion states beginning in 2025 to cover those individuals.

Reinsurance Program: The measure would provide $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.

Medicare Coverage: The measure would expand Medicare coverage to provide dental benefits beginning in 2028, hearing benefits beginning in 2023, and vision benefits beginning in 2022.

CHIP: The measure would make the Children’s Health Insurance Program (CHIP) permanent and appropriate “such sums as are necessary” for it. It also would allow states to increase the income level needed for families to participate in CHIP and require states to provide one year of continuous eligibility for children enrolled in CHIP.

Other Health Programs: The measure would provide:

  • $35 billion for public health infrastructure, including $10 billion for hospital infrastructure projects and $10 billion for community health center grants.
  • $15 billion for pandemic preparedness, including $1.25 billion for the Centers for Disease Control and Prevention to strengthen vaccine confidence.
  • $3 billion to establish the Advanced Research Projects Agency for Health (ARPA-H) to invest in breakthrough technology and advancements in medicine.

Energy and Environment: Funding for clean energy and environmental initiatives would include:

  • $150 billion for a Clean Electricity Performance Program that would charge or pay electric utilities based on the share of clean energy they supply to consumers. Utilities would be eligible for grants if they increase the share of clean energy in their portfolios by at least four percentage points each year. Utilities that don’t meet that benchmark would pay a fee.
  • $30 billion to replace every lead water service line in the U.S.
  • $27.5 billion to support nonfederal financing of zero-emission technology deployment.
  • $18 billion to support home energy efficiency and appliance electrification rebates.
  • $17.5 billion to decarbonize federal buildings and vehicle fleets.
  • $13.5 billion for electrical vehicle charging infrastructure.
  • $10 billion for cleanup activities at priority Superfund sites where federal agencies are the responsible parties.
  • $9 billion to improve the reliability and resiliency of the electric grid.
  • $5 billion for grants to replace school buses, garbage trucks, and other heavy-duty vehicles with zero-emission vehicles.

The measure would establish a fee on methane emissions from the oil and gas industry, the proceeds of which would be used to monitor and reduce greenhouse gas emissions at oil and gas operations.

Communications: The measure would provide:

  • $10 billion to implement Next Generation 911 services that facilitate sending text messages, photos, and videos to emergency responders.
  • $4 billion for the Emergency Connectivity Fund, established under Public Law 117-2, to supply students, teachers, and others with internet-connected devices.
  • $1 billion to the Federal Trade Commission to establish a new bureau focused on data privacy and identity theft.

It also would direct the Federal Communications Commission to auction 200 megahertz of spectrum to offset the cost of other provisions.

Manufacturing: The measure would provide $10 billion for efforts to strengthen and diversify critical manufacturing supply chains that affect interstate commerce.

Financial Services (Target: $339 billion)

Housing: The measure would provide:

  • $77.3 billion for formula and needs-based public housing programs.
  • $75 billion for incremental Housing Choice Vouchers and support services, including for individuals at risk of homelessness and for survivors of domestic violence and sexual assault.
  • $36.8 billion for the Housing Trust Fund and $34.8 billion for the HOME Investment Partnerships Program to fund the construction of affordable housing for low-income people.
  • $15 billion for project-based rental assistance.
  • $10 billion to offer down payment assistance to first-generation homebuyers.
  • $10 billion to address lead paint and other health hazards in housing for low-income families.
  • $10 billion for a new Housing Investment Fund to leverage private-sector investments to create and preserve affordable homes.

Flood Insurance: The measure would wipe out $20.5 billion in debt owed by the Federal Emergency Management Agency for money it borrowed to pay claims through the National Flood Insurance Program. It also would provide $3 billion for flood mapping and $1 billion for FEMA to offer flood insurance discounts to low-income policyholders.

Judiciary (Target: $107.5 billion)

Immigration: The measure would make green cards and a pathway to citizenship available to Dreamers who were brought to the U.S. as children and reside here illegally, essential workers, and holders of Temporary Protected Status and Deferred Enforced Departure.

It also would roll over green cards from year to year, allowing for additional visas to be issued following years when the numerical caps aren’t reached—as happened during the Covid-19 pandemic.

Other Programs: The measure also would provide:

  • $2.8 billion to U.S. Citizenship and Immigration Services to address visa processing backlogs.
  • $2.5 billion to the Justice Department for grants and contracts to support community violence reduction programs.

Agriculture (Target: $89.1 billion)

The measure would provide:

  • $40 billion for forestry programs, including $9 billion for forest restoration and resilience grants and $4.5 billion for the Agriculture Department’s portion of a Civilian Climate Corps.
  • $18.7 billion for rural development programs, including $9.7 billion for green upgrades to rural utilities.
  • $7.75 billion for agricultural research.

House Agriculture Chair David Scott (D-Ga.) said he’d work to add $28 billion in aid to farmers and ranchers related to climate and conservation before the House votes on the full package, Bloomberg Government reported.

Transportation and Infrastructure (Target: $60 billion)

The measure would provide funding for a variety of transportation projects, including:

  • $10 billion for high-speed rail corridors.
  • $9.9 billion for new transit routes and expanded services in low-income and disadvantaged areas.
  • $6 billion for unspecified local surface transportation priorities.
  • $5.5 billion for the Economic Development Administration, including to develop regional economic growth clusters.
  • $4 billion to reduce transportation greenhouse gas emissions.

Science, Space, and Technology (Target: $45.5 billion)

The measure’s funding for science and technology programs would include:

  • $15.6 billion for Energy Department laboratory infrastructure; research, development, and demonstration activities; nuclear energy projects; and energy efficiency and renewable energy initiatives.
  • $11 billion for National Science Foundation research infrastructure and STEM research awards, scholarships, and fellowships, including $1 billion for minority serving institutions.
  • $4.4 billion for NASA infrastructure modernization efforts and climate change research and development activities.
  • $4.3 billion for National Oceanic and Atmospheric Administration weather, ocean, and climate research, in addition to instrument and spacecraft delivery development and delivery.
  • $4.2 billion for National Institute of Standards and Technology facility construction and renovation and advanced manufacturing research.

Natural Resources (Target: $25.6 billion)

The measure would provide around $31 billion over a decade for climate resilience, conservation, and other environmental initiatives. That total would be partially offset by increased fees on oil and gas companies to reach the $25.6 billion net spending target set by the budget resolution.

The spending would include $9.5 billion for environmental restoration in coastal areas and around the Great Lakes, $3 billion to create a Civilian Climate Corps at the Interior Department, and $2.5 billion for cleanup activities at abandoned mines.

Revenue raisers and other provisions aimed at the drilling and mining industries would:

  • Increase leasing fees and royalty rates for onshore and offshore oil and gas extraction and require royalties to be paid for methane that’s vented or flared.
  • Establish an oil and gas leasing moratorium on the Atlantic and Pacific coasts and in the eastern Gulf of Mexico.
  • Repeal a previous authorization for drilling in the coastal plain of the Arctic National Wildlife Refuge and void nine leases in the area issued this year.
  • Increase the royalty rate paid to the federal government on mining revenue.
  • Withdraw more than 1 million acres around the Grand Canyon from mineral leasing.

Veterans’ Affairs (Target: $18.0 billion)

The measure would provide $15.2 billion for infrastructure improvements to national cemeteries and memorials, medical facilities, and other property. It also would include $1.81 billion for major medical facility leases.

The measure would extend through fiscal 2026 the Veterans Affairs Department’s authority to enter into enhanced-use leases, which provide underutilized real estate to the private sector for supportive housing for homeless and at-risk veterans. They would be expanded to include leased property that provides services or benefits for veterans.

Small Business (Target: $17.5 billion)

The measure would include the following amounts for the Small Business Administration:

  • $9.5 billion to increase equity investment in underserved markets and key industries through a new subprogram within the Small Business Investment Company program.
  • $4.47 billion for a direct loan product under the 7(a) Loan Program.
  • $2.75 billion to create a direct lending subprogram under the 504 lending program that would allow Certified Development Companies to provide loans to small businesses, contractors, and manufactures in underserved markets.

Oversight and Reform (Target: $7.5 billion)

The measure would provide $7 billion for the U.S. Postal Service to purchase electric delivery vehicles and related infrastructure, and $5 billion for the General Services Administration (GSA) to procure electric vehicles for other federal agencies.

Other funding for the GSA would include $1 billion for the Technology Modernization Fund, which was established to upgrade federal agency IT systems.

Homeland Security (Target: $500 million)

The measure would provide $865 million for the Cybersecurity and Infrastructure Security Agency, including to assist federal agencies with multi-factor authentication, endpoint detection and response, improved logging, and securing cloud systems.