Joe Biden slashes the social component of his investment plan to finally get a deal

The American president has reduced the ambitions of his “Build Back Better” program (also kown as BBB), which aims to revive the welfare state. A necessary concession in order to obtain a majority. Without an agreement on this social and ecological component, the other massive investment plan linked to infrastructure will not be ratified.

Negotiations for the giant American investment plan are on track but it has lost some feathers. At least that’s what President Joe Biden said on Thursday. “I know we have the framework for a historic economic plan,” he said after meeting with his party’s lawmakers in Congress. Faced with difficult political negotiations, the American president had to make heavy concessions to hope to finally reach an agreement on the social component of the plan, while he made this social program “Build Back Better” (BBB), as well as the one on infrastructure, a major focus of his mandate.

New social investment plans

This social investment plan aims to revitalize the welfare state (with strong social measures) and to finance the fight against climate change. The final amount is around 1,750 billion dollars, far from the 6,000 billion initially announced and the 3,500 billion considered.

This plan, which the American president describes as “historic”, in fact has several layers, all of which are linked, which has caused discussions to drag on for months. Without agreement on the social component – the BBB – the other massive $1.2 trillion plan to renovate and deploy new infrastructure in the U.S. will not also be endorsed.

“It is no exaggeration to say that the majorities in the House and Senate and my presidency will be determined by what happens in the week ahead,” the president told his party’s elected officials, according to several U.S. media outlets.

The American president is still looking for a majority in Congress to pass this text. Two centrist senators, Kyrsten Sinema and Joe Manchin, were opposed to a first version of the social component, judging its amount too high and denouncing its financing by tax increases on companies or on the wealthiest households.

Massive hold backs

To convince them, Joe Biden reduced the amount of the plan to $1.75 trillion over a decade, which is half the amount initially announced. Progressive independent Senator Bernie Sanders denounced the “major flaws” in the plan, particularly on health care. He has always stressed that without an ambitious plan, there would be no agreement on the infrastructure modernization plan.

As he attends next week’s international climate summit in Glasgow, Scotland, the president stressed that his plan includes “the largest investment ever made to address the climate crisis. The Biden administration is proposing to invest $550 billion to reduce greenhouse gas emissions by 50 to 52 percent below 2005 levels by 2030.

This framework “will create millions of jobs, grow the economy, invest in our nation and our people,” he added in a speech from the White House. Joe Biden intends to present in Europe the image of an America committed to the energy transition and growth, as well as to the fight against social inequality and tax evasion.

During the difficult negotiations, Joe Biden and his administration have tirelessly put forward the importance of these expenses, arguing that the United States is losing competitiveness and is a poor performer among advanced countries in terms of education, environment or social protection. The White House notes that this plan would allow “most American families to save more than half of their child care expenses” and “will offer two years of free preschool for every three- and four-year-old”.

Soliciting large, profitable companies for funding

The question of funding remains. Joe Biden continues to defend the idea that these billions of investments can be financed by “large profitable companies”. He said that these investments would not create an additional deficit. The bill contains measures to ensure that these companies “cannot reduce their tax bill to zero” and includes provisions for millionaires and billionaires to contribute more. However, it does not include the super-rich tax introduced by elected officials on Wednesday, which would have taxed the unrealized capital gains of billionaires, those gains that lie dormant in the thick stock portfolios of America’s wealthiest individuals.

While consumer prices are soaring in the U.S. (up 5.4% in September compared to the same period in 2020), these billions of dollars – if a final political agreement is reached – should not boost inflation. This spending “will be spread over ten years, not over a single year”, said U.S. Treasury Secretary Janet Yellen.