House passes Build Back Better

The $1.7 trillion reconciliation package, a centerpiece of President Biden’s domestic agenda, passed largely along party lines (220-213) just before the Thanksgiving recess.

Several provisions were either left out or modified as Democrats sought to reduce the price tag of the initial $3.5 trillion plan and find consensus within their caucus. Those that were pared back include a proposal to provide 12 weeks of paid family leave.

This new measure would provide as many as four weeks of paid leave for the birth or adoption of a child, to care for a family member with a serious health condition, or for an employee’s own serious health condition that prevents them from working. Eligible workers would be entitled to the benefit within a one-year period, starting in 2024.

States with preexisting paid leave programs would receive grants to cover the equivalent costs of the benefits, and employers would receive grants to cover 90% of their paid leave benefits for as many as four weeks.

Below is a brief overview of other noteworthy policies….

  • Tax Credits: Extends the expanded child tax credit for one year (through 2022) and limits advance payments to those with incomes below $150,000 for joint filers and $75,000 for single filers. It also would make the credit fully refundable after 2022.
  • FMLA: Ends the employer tax credit for paid family and medical leave in 2024 (instead of 2026).
  • Child Care: Provides $100 billion for the first three years of a new child care entitlement program, which would end after 2027. It would cap child care costs at a maximum of 7% of family income, using a sliding scale that would apply to those up to 250% of the state median income.
  • Universal Preschool: Provides more than $18 billion for fiscal years 2022 through 2024 to provide free preschool to all three and four year olds.

While the timing for Senate consideration is still up in the air, changes are almost a certainty as several senators are opposed to various parts of the bill – including the paid leave portion. Regardless, any Senate amendment(s) will cause the package to be sent back to the House for a second vote.

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