Democratic drama as House advances Biden's agenda: What's in the draft reconciliation bill?

The measure sets up negotiations with the Senate in the next two weeks.

September 16, 2021, 3:34 PM

Following months of negotiations, House Democrats advanced critical legislation late Wednesday that will help President Joe Biden deliver on a massive $3.5 trillion human infrastructure package filled with social and progressive priorities.

Thirteen House committees spent countless hours over the week marking up legislation to meet a self-imposed Sep. 15 deadline. The bill language passed by the committees will now be drafted into a final bill that is expected to be married with the Senate’s version of the bill in the coming weeks.

The negotiations this week were not without drama, as Democrats are dealing with growing disagreements on policy between progressives and moderates in the House, as well as skeptical holdouts Democratic Sens. Joe Manchin and Kyrsten Sinema who have concerns with overall spending.

Manchin has previously called for a "strategic pause" in moving forward with the reconciliation bill and has repeatedly said he does not support passing another multi-trillion dollar spending bill.

PHOTO: President Joe Biden delivers remarks on the economy in the East Room of the White House, Sept. 16, 2021, in Washington.
President Joe Biden delivers remarks on the economy in the East Room of the White House, Sept. 16, 2021, in Washington.
Evan Vucci/AP

Biden on Wednesday held separate meetings with both Manchin and Sinema as a form of personal outreach.

"The president certainly believes there’ll be ongoing discussions," White House press secretary Jen Psaki said Wednesday. "Not that there’s necessarily going to be a conclusion out of those today, but that was the primary focus and purpose of these meetings."

The final bill will include significant new investments in health care, child care, higher education, workforce training, and paid family and medical leave which would include 12 weeks paid family and medical leave for most working Americans.

It will also include plans to permanently close the Medicaid coverage gap, expand Medicare by offering seniors access to hearing, dental and vision benefits; extend several tax credits; strengthen the Affordable Care Act, invest in maternal health, and provide additional investments in public health. It would also make major changes to immigration, climate, and tax laws.

PHOTO: House Speaker Nancy Pelosi holds her weekly news conference at the U.S. Capitol in Washington, Sept. 8, 2021.
House Speaker Nancy Pelosi holds her weekly news conference at the U.S. Capitol in Washington, Sept. 8, 2021.
Jonathan Ernst/Reuters, FILE

Democrats intend to off-set the costs of the package by raising taxes on wealthy Americans, profitable corporations and investors.

The House Ways and Means Committee released a plan to raise the corporate tax rate to 26.5% for businesses earning more than $5 million in income. The corporate rate would be lowered to 18% for small businesses earning less than $400,000; all other businesses would continue to pay the current rate of 21%.

The legislation would also raise the top income tax rate to 39.6% from 37% for married couples who report taxable income of more than $450,000 and for individuals who report more than $400,000. The proposal also includes a 3% surcharge on individual income above 5% and increases the top tax rate for capital gains – the proceeds from selling an asset – to 25%, up from 20%.

The nonpartisan Joint Committee on Taxation estimated that the reconciliation proposal includes nearly $2.1 trillion in increased tax revenues, which could help fund parts of the mammoth bill.

The JCT also found that the bulk of the tax increases would fall on households making $1 million or more, while taxes could go up by as much as 2 percent on households making between $200,000 and $500,000.

“Big corporations and the super wealthy have to start paying their fair share of taxes. It’s long overdue. I’m not out to punish anyone. I’m a capitalist. If you can make a million or a billion dollars, that’s great. God bless you. All I’m asking is you pay your fair share. Pay your fair share,” Biden said Thursday.

“I know we still have a long way to go, but I’m confident the Congress will deliver to my desk both the bipartisan physical infrastructure plan and the Build Back Better plan that I have proposed,” Biden said.

House committee chairs are expected to brief Democrats on their portions of the spending bill on Friday. The House is set to return from a six-week recess on Monday.

"I want to thank all thirteen committees given instructions in this process for reporting recommendations within their jurisdictions for the Build Back Better Act. I also want to express my gratitude and admiration for the hardworking committee staff who sacrificed sleep and, in many cases, time with their families this summer in order to make sure that this critical legislation reflects Democrats’ focus on helping Americans access opportunity and achieve real economic security. We will continue our work on this legislation in the coming days, as we take action to deliver on President Biden's plan to Build Back Better," House Majority Leader Steny Hoyer said in a statement late Wednesday.

"This package, coupled with the bipartisan infrastructure plan, represents our firm belief that it’s not just the roads that get you to work that require funding, basic supports like child care and paid leave are also essential features of society worthy of investment. As the broader negotiations continue, I must emphasize that now is not the time to settle for less. The American people are looking to us as members of the Democratic Party to push ourselves and set the highest possible standards for what’s possible. Twelve weeks of universal paid family and medical leave, guaranteed access to child care, strong proposals to combat climate change, and responsibly funding our priorities are just some of the measures that must remain in this package and become law," said House Ways and Means Chairman Richard E. Neal in a statement.

PHOTO: Senate Majority Leader Chuck Schumer speaks to reporters at the Capitol in Washington, Sept. 14, 2021.
Senate Majority Leader Chuck Schumer speaks to reporters at the Capitol in Washington, Sept. 14, 2021.
J. Scott Applewhite/AP

But serious issues remain.

A trio of moderate House Democrats came out against the drug pricing plan in Democrats' sprawling agenda as it made its way through the House.

Reps. Kathleen Rice, Scott Peters, and Kurt Schrader on Wednesday opposed language in the House Energy and Commerce Committee that would give the federal government a greater role in negotiating drug prices. Another key House panel endorsed the drug pricing plan later Wednesday evening, but leadership may not yet have the votes to pass it as part of a larger bill.

It’s another bump in the road for leadership that underscores the challenge facing the Biden White House and the Democrats' narrow majority.

"Polling consistently shows immense bipartisan support for Democrats’ drug price negotiation legislation, including overwhelming majorities of Republicans and independents who are fed up with Big Pharma charging Americans so much more than they charge for the same medicines overseas. Delivering lower drug costs is a top priority of the American people and will remain a cornerstone of the Build Back Better Act as work continues between the House, Senate and White House on the final bill," Henry Connolly, a spokesman for House Speaker Nancy Pelosi, said in a statement to ABC News.

Northeastern lawmakers are also hoping the final package repeals a cap on deductions for state and local taxes – SALT – imposed by Republicans in 2017. Rep. Tom Souzzi, D-NY, has made clear that without SALT, he’s a “no” on the overall reconciliation package.

"I have been consistent for six months: 'No SALT, no deal'," Suozzi said in a statement.

House Democrats have said they will pursue "meaningful" change to the $10,000 limit on the federal deduction for state and local taxes. However, repealing the cap on the write-off may primarily benefit wealthy households, opponents have said.

The measure has been a sticking point in negotiations among lawmakers in high tax states.

While Democrats don’t need GOP support to pass their $3.5 trillion spending bill, due to the reconciliation process which allows legislation to pass with a simple majority, they have to get votes from every Democratic senator and nearly every House member.

House Democrats plan to tweak their bill in the coming days ahead, but they are under a tight deadline to get agreement with the Senate so that a bill can clear both chambers. Their goal is to finish their work before Sept. 27 – when Pelosi has promised she will allow the House to begin considering a $1 trillion bipartisan infrastructure bill.

Pelosi has long vowed to hold on to that bipartisan bill until the much larger, $3.5 trillion "human" infrastructure bill filled with Democratic priorities is passed first.

ABC News' Benjamin Siegel contributed to this report.

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