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From Cradle to Grave, Democrats Move to Expand Social Safety Net

From Cradle to Grave, Democrats Move to Expand Social Safety Net

ECONOMIC NEWS

From Cradle to Grave, Democrats Move to Expand Social Safety Net

WASHINGTON — When congressional committees meet this week to begin formally drafting Democrats’ ambitious social policy plan, they will be undertaking the most significant expansion of the nation’s safety net since the war on poverty in the 1960s, devising legislation that would touch virtually every American’s life, from conception to aged infirmity.Passage of the bill, which could spend as much as $3.5 trillion over the next decade, is anything but certain. President Biden, who has staked much of his domestic legacy on the measure’s enactment, will need the vote of every single Democrat in the Senate, and virtually every one in the House, to secure it. And with two Democratic senators, Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, saying they would not accept such a costly plan, it will challenge Democratic unity like nothing has since the Affordable Care Act.That is largely because the proposed legislation would be so transformative — a cradle-to-grave reweaving of a social safety net frayed by decades of expanding income inequality, stagnating wealth and depleted governmental resources, capped by the worst public health crisis in a century.The pandemic loosened the reins on federal spending, prompting members of both parties to support showering the economy with aid. It also uncorked decades-old policy desires — like expanding Medicare coverage or paid family and medical leave — that Democrats contend have proved to be necessities as the country has lived through the coronavirus crisis.“Polls have shown for a very long time that these issues to support American families were important, and were popular, but all of a sudden they became not a ‘nice to have’ but a ‘must have,’” said Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers who has been developing such policies for decades.Democrats say they will finance their spending with proposed tax increases on corporations — which has already incited a multifaceted, big-budget effort by business groups working to kill the idea — and by possibly taxing wealth in ways that the United States has never tried before.“We’re talking about free or affordable child care where no one pays more than 7 percent of their income; we’re talking about universal pre-K programs with two years of formal instruction; we’re talking about two years of postsecondary education,” said Representative Jamaal Bowman of New York, a former teacher and principal who is vice chairman of the House Education and Labor Committee. “This is how you build a strong nation.”To Republicans, who are readying a counteroffensive, the Democratic plans are nothing short of socialism. They say they are concerned that the plan is financially unsustainable and would undermine economic growth, by rendering Americans too dependent on the government for their basic needs.“What are Democrats trying to do to this country?” Representative Bruce Westerman, Republican of Arkansas, asked on Thursday, as the House Natural Resources Committee began drafting its portion of the sprawling bill.To grasp the intended measure’s scope, consider a life, from conception to death. Democrats intend to fund paid family and medical leave to allow a parent to take some time off during pregnancy and after a child’s birth.When that parent is ready to return to work, expanded funding for child care would kick in to help cover day care costs. When that child turns 3, another part of the bill, universal prekindergarten, would ensure public education can begin at an earlier age, regardless of where that child lives.Most families with children would continue to receive federal income supplements each month in the form of an expanded child tax credit that was created temporarily by Mr. Biden’s pandemic-rescue law and would be extended by the new social policy bill. School nutrition programs, expanded on an emergency basis during the pandemic, would continue to offer more children free and reduced-price meals long after the coronavirus retreats.And at high school graduation, most students would be guaranteed two years of higher education through expanded federal financial aid, geared toward community colleges.Even after that, income supplements and generous work force training programs — including specific efforts to train home health and elder-care workers — would keep the government present in many adult lives. In old age, people would be helped by tax credits to offset the cost of elder care and by an expansion of Medicare to cover dental, hearing and vision services.“Many of us feel that this is the biggest opportunity we will have in our careers to do something deeply structural and transformational to our economy,” Representative Donald S. Beyer Jr., Democrat of Virginia, said, “and we should not miss it.”To critics, the legislation represents a fundamental upending of American-style governance and a shift toward social democracy. With it, they worry, would come European-style endemic unemployment and depressed economic dynamism.“There’s always been difference of opinion on the role of government in people’s lives, and the United States has long taken a different approach than Western Europe,” said N. Gregory Mankiw, a Harvard economist who was chairman of President George W. Bush’s Council of Economic Advisers. “This is clearly designed to take a big step toward the Western European model.”Defenders shrug off such concerns. Representative Robert C. Scott of Virginia, chairman of the House Education and Labor Committee, said the legislation would promote economic growth, with child care subsidies that would get parents back into the work force, education spending to more equitably prepare all Americans to work, and job training to improve labor mobility.“We are making the American economy more dynamic and more globally competitive,” he said.Besides, in the longstanding struggle to balance economic growth against equality and equity, Democrats are ready to shift toward the latter.“The route we’ve taken has led to the concentration of wealth in the hands of a very few people while the rest have just struggled to survive,” Mr. Bowman said. “It’s time to try something else.”In a mechanical sense, the legislation is not as much of a sea change as the creation of Medicare and Medicaid in the 1960s, or Social Security in the 1930s. Even the Affordable Care Act of 2010 created an entirely new government infrastructure, a federally operated or regulated exchange where Americans could buy private health insurance that has to conform to government strictures on coverage and cost, noted Michael R. Strain, an economist at the conservative American Enterprise Institute.In contrast, the new legislation would largely augment existing programs. Childcare support would come through the Community Development Block Grant to states, cities and counties. Universal pre-K would be secured through block grants and expanded funding to Head Start. Two years of higher education are supposed to become accessible through more generous Pell grants and other existing financial aid programs.But if it passes, Mr. Strain said the legislation could fundamentally change the relationship between the state and its citizens: “Its ambition is in its size.”Most Americans traditionally have seen the federal government’s involvement in their finances once a year, at tax time, when they claim a child credit, get a write-off for the truck they may have bought for their business, or receive a check for an earned income credit, to name a few.That would change profoundly if the social policy bill were enacted. The expanded child tax credit has begun to provide monthly checks of up to $300 per child to millions of families, but is slated to expire in 2022. Its extension for as long as a decade could make it a fixture of life that would be very difficult for future Congresses to take away. The same goes for the Child and Dependent Care Credit, which now offers up to $8,000 in child care expenses but also expires in a year.And the federal government, not private employers, would pay most of the salaries of people qualifying for family and medical leave.“If we get this passed, a decade from now, people are going to see many more touch points of government supporting them and their families,” Ms. Boushey said.One major difference between the social economy that Mr. Biden and congressional Democrats hope to create and the welfare state in Europe is how it would be paid for. Most European countries ask their citizens broadly to fund their social welfare programs, largely through a value added tax, a sales tax levied at each stage of a consumer good’s production.At the president’s insistence, the House and Senate tax-writing committees are to finance the bill’s spending with taxes on corporations and individuals with incomes over $400,000 a year.To that end, the Senate Finance Committee is considering groundbreaking ways to tax wealth, including changing how estates are taxed so that heirs must pay more taxes on inherited assets. The committee is also looking at taxing the accumulated wealth of billionaires — things like homes, boats, stocks and other assets, regardless of whether they are sold — a new frontier of tax policy that would be difficult to achieve. Senator Ron Wyden of Oregon, the Finance Committee chairman, said such measures are the only way to ensure that the superrich must pay their fair share of taxes each year. “I’m going to bring the caucus into that discussion, but I believe billionaires ought to pay taxes every year, just like nurses and firefighters do” out of each paycheck, Mr. Wyden said.


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