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The White House’s Revamped Social and Climate Spending Budget

 

The White House has released a slimmed-down version of its Social Policy and Climate Framework, which totals out to $1.85 trillion in spending. This new re-vamped plan comes in light of heavy negotiations surrounding the passage of bills, as Democrats also hope to pass a parallel $1 trillion infrastructure bill.

Why the Budget Cuts?

This slimmer bill comes to assist in the passage of the $1 Trillion Infrastructure Bill as some were holding out on approval of this bill saying it would be too expensive for America to pass both. A large majority of the cuts to the Social Policy and Climate Framework came from Kyrsten Sinema & Joe Manchin’s opposition to certain policies.

To combat this Democrats made changes to the tax on high-income earners, applying a 5% surtax on Adjusted Gross Incomes over $10 million and another 3% on AGI over $25 million. These taxes would effectively raise the top tax rate on ordinary income to at least 45% and increase the top capital-gains tax rate to 31.8%. Additionally, it would also apply a 3.8% investment income tax to active business income, which is poised to hit high-income owners of closely-held businesses.

New Break Down of Spending

The revamped bill contains several changed amounts to previous spending as well as some slashes to some previously incorporated programs. Let’s take a look at what the Government would spend the allocated money on pending the passage of the bill:
  • $555 Billion – Clean Energy and Climate Investments
  • $400 Billion – Child Care and Preschool
  • $200 Billion – Child Tax & Earned Income Credits
  • $150 Billion – Home Care
  • $150 Billion – Housing
  • $130 Billion – ACA Credits Including in Uncovered States
  • $100 Billion – Immigration
  • $90 Billion – Equity and Other Investments
  • $40 Billion – Higher Education & Work Force
  • $35 Billion – Medicare

Specific Spending Policies

Included in this spending is a one-year extension on the expanded child tax credit through 2022, as well as including a provision allowing for the credit to be permanently available for low-income families who do not pay income taxes. It also will help fund 6 years’ worth of universal pre-kindergarten classes, 6 years of child-care subsidies, as well as $150 billion to help support long-term care for elderly and disabled Americans. The climate-related spending will include $320 billion to support expanded tax credits for residential and utility-scale renewable energy, electric vehicles, and clean energy production over a 10-year span.

These are just some of the highlights of the planned spending, for a more detailed breakdown, please see the White House’s release of its Build Back Better Framework, and as always – give us a call at 516-541-6549 with any questions or comments on this!

 
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