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Remaking the Economy

todayAugust 26, 2021 2

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Medicare would expand to include dental, hearing and vision coverage for Americans over 65 — an important change, given how many of them struggle to see, hear or chew, Margot says. Medicaid (the federal program focused on low-income people) would expand specifically in the 12 states that have not signed up for the program’s Obamacare expansion. Subsidies for private Obamacare plans would also grow, as would money for home health care, to help more people avoid nursing homes.

Margot says that her reporting on Capitol Hill indicates the biggest uncertainty is how aggressive Congress will be about trying to reduce prescription drug prices. That provision could be very popular — and also reduce Medicare and Medicaid spending, freeing up more money for other parts of the bill. “The House is on board for a big drug price approach,” Margot says. “But there is less consensus in the Senate, and, of course, the pharma industry will not go down without a fight.”

The plan includes two major expansions of education. It would make prekindergarten available to every 3- and 4-year-old, likely by subsidizing the state programs that more than half of them already attend. The federal government would also try to make community college universal, by expanding financial aid to cover both tuition and living expenses.

Those provisions have the potential to lift upward mobility by reducing educational inequality, experts say. And several other provisions would immediately reduce poverty. They include:

  • The extension of a child tax credit in the pandemic relief plan that sends families up to $300 per child each month but is set to expire in December.

  • A national program of paid leave — worth up to $4,000 a month — for workers who take time off because they’re ill or caring for a relative.

  • Subsidies for child care.

Democrats plan to pay for the bill’s costs by raising taxes on the affluent. The plan includes increases in the corporate tax rate and the top income tax rate, as well as perhaps a new tax on companies’ overseas profits.

The fight over these taxes is likely to be “the most fraught part” of the debate, says our colleague Emily Cochrane, who covers Congress. Manchin, for example, has said both that he favors a smaller corporate tax increase than what Biden and top Democrats have proposed — but also that he wants tax increases to cover the bill’s full costs. That’s one reason the bill could shrink from its current estimated cost of $3.5 trillion.

One other thorny tax issue: Some House members, especially from higher-tax states like New York and New Jersey, want to restore some deductions that largely benefit higher-income households and that Republicans scrapped during the Trump presidency. Why are Democrats pushing for a tax cut that mostly benefits the upper middle class and above? “It is truly an ‘all politics is local’ issue,” The Times’s Jim Tankersley says.

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todayAugust 26, 2021 3