The roughly $1.75 trillion budget reconciliation bill that House Democrats released Thursday cut large swaths of the tax-writing Ways and Means Committee’s earlier version, scrapping plans to boost retirement savings, invest in infrastructure, expand a benefit for dependent care and support child care providers’ wages.

Hundreds of billions of dollars in programs and benefits the panel approved fell out of the package as Democrats worked to move toward agreement this week, hoping to hone in on a deal that can pass the Senate.

[Biden makes $1.75T sales pitch to House Democrats]

New paid family and medical leave benefits were among the higher-profile sacrifices, after Sen. Joe Manchin III, D-W.Va., objected. And tax rate increases fell to concerns from Sen. Kyrsten Sinema, D-Ariz. Manchin’s concerns also cut Democrats’ prized four-year child tax credit extension down to one year, which was well-telegraphed — but another less-publicized fix also would end monthly advance credit payments for households earning more than $150,000.

The need to whittle down the overall price tag had numerous other victims from the earlier Ways and Means recommendations marked up last month, ranging from an expanded aid program for workers displaced by trade deals to tax breaks for labor union dues, recording studios, beauty parlors, local news outlets and a Wisconsin fuel distributor.

After the White House unveiled the bill’s broader points earlier in the day, the House Rules Committee released text that laid out in detail the president’s latest plans to spend on social safety net and climate priorities by taxing the wealthy and corporations while boosting IRS enforcement.

The latest legislation represented a major step ahead, though Democrats could still change the plan.

“Look, this isn’t over until the Senate acts,” Senate Finance Chair Ron Wyden, D-Ore., said Thursday, as he kept pressing to add some of his revenue priorities into the deal.

Democrats made cuts to Ways and Means’ plans to satisfy the Senate and White House and meet the spending levels they’d agreed on, according to a source familiar with the negotiations.

Monthly payments

And a tweak was ultimately made to the bill’s expansion of the child tax credit specifically to satisfy Manchin, who’s been the harshest — and maybe the only — vocal Democratic critic of the program most in his party have widely touted.

The benefit, meant to help cover costs of raising children and reduce child poverty, will only be paid in monthly installments next year to individuals who make up to $75,000 per year, heads of household who earn up to $112,500 and married couples filing jointly with up to $150,000 in income. Those are the same thresholds when the extra cash Democrats are adding to the benefit begin to phase out.

Democrats’ 2021 expansion had the IRS automatically sending the benefit in monthly installments to anyone who qualified, including households earning up to $400,000 who benefit from a maximum $2,000 per child credit.

Lawmakers made the change because Manchin didn’t like the idea of monthly checks going to people who could be seen as wealthy, according to the source. Anyone who qualifies for the tax credit can still claim the credit when they file their annual returns. But Democrats have described the monthly payments as important to get money to people living month-to-month, and who might need the funds sooner to afford necessities like food, bills or school supplies.

The child tax credit expansion is otherwise in line with what Democrats included for 2021 in their March pandemic relief law, avoiding calls from Manchin to add work requirements and further means test to cut off people at higher income levels.

To alleviate spending pressures, the child tax credit expansion was limited to one year, but with a permanent change; it’s available in full to people who owe little or nothing in federal taxes. The sweetening of a benefit for wage earners without children was also limited to one year, while a $98.4 billion expansion of a tax credit for those caring for kids under 13 and dependents of all ages was dropped entirely.

The updated text would cut grant programs for child care facilities, as well as $35.5 billion in tax credits to support child care provider wages. But hundreds of billions in child care subsidies and a universal pre-kindergarten program handled by another House committee remain in the package. Overall, Democrats preserved much of their planned investments in child care.

Also on the cutting room floor was a Ways and Means-approved plan to mandate that most employers automatically enroll their workers in retirement savings plans. The “auto IRA” plan has been a long-term priority of Ways and Means Chairman Richard E. Neal, D-Mass., but like other priorities, it was squeezed out by spending constraints.

That could return focus to a bipartisan retirement bill that’s broader but less aggressive in its effort to promote savings. Neal has pledged to pass that bill in the House before the year ends, but Republicans had balked at his move to tuck a bigger plan into the reconciliation package.

[GOP reconsiders retirement bill as Democrats push new mandate]

The auto IRA provisions and an expansion of a government match for lower-income retirement savers would’ve cost $46.8 billion, according to the Joint Committee on Taxation.

Democrats dropped a plan to generate $4.3 billion by tightening rules for individual retirement accounts, provisions that responded to ProPublica reporting this year the wealthy’s use of the accounts to pay minimal taxes. Wyden has devoted attention to calling out the “mega IRAs” and pledging action, and Ways and Means worked them into their product.

Infrastructure bonds, clean energy

About $120 billion worth of infrastructure and economic development-related tax breaks also were left behind, including provisions that would expand low-income housing tax credits and revive a form of taxable municipal bond that lapsed after 2010 that enticed foreign and other tax-exempt investors into the market.

But a new incentive for active business in the U.S. territories, worth nearly $11 billion, stuck in the package. Another provision addresses farm loan borrowers, an add new to the Rules Committee bill that’s cost-free, according to a source familiar with the negotiations.

Clean energy tax credits remained a major plank of the bill and were expanded from Ways and Means’ version, totaling $320 billion in spending, according to the White House estimate.

[Framework’s climate elements may keep emissions goals in reach]

The clean energy tax credits included in the bill would first implement five years of Ways and Means’ original proposal to expand and extend existing clean energy tax credits, then move to a plan from Wyden to scrap existing tax breaks in favor of three buckets of technology-neutral, performance-based incentives, a far bigger rewrite of the tax code. Wyden embraced the two-step plan on Thursday, after in recent days working to make the shift to his plan sooner.

Smaller elements of Wyden’s proposal have already been worked into the House proposal, but the overhaul of how the tax code incentivizes renewable energy, clean fuel, zero-emission vehicles, efficient buildings and more would happen in 2027, according to a source familiar with the issue.

Manufacturing incentives for green technologies were a big part of Democrats’ push.

One addition that wasn’t in either the earlier Ways and Means bill or Wyden’s clean energy package would create a new “advanced manufacturing production credit” for components like solar cells and modules and wind blades.

The credit is based on legislation Sen. Jon Ossoff, D-Ga., introduced earlier this year. Earlier Thursday, before the text was unveiled, Ossoff expressed concern over whether it would end up included. Ossoff, whose state is home to Hanwha Q CELLS North America, a major South Korea-based solar equipment manufacturer, later took credit for securing the new credit in the package.

The updated bill adds wind blades, towers and other components that weren’t in Ossoff’s measure, which he co-sponsored with fellow Georgia Democratic Sen. Raphael Warnock. Both won their seats in Jan. 5 runoffs, and Warnock faces voters again next November.

Tobacco, international taxes

New taxes on e-cigarettes and higher taxes on tobacco that would’ve brought in almost $97 billion didn’t stick, either. Some Democrats thought that would be a regressive tax that would break Biden’s pledge not to raise taxes on anyone making less than $400,000.

And new details in the House bill showed Democrats would align their international tax plan to a deal among more than 130 countries to implement a 15 percent global minimum tax, after pushback from vulnerable Democrats concerned that U.S. firms could be put at a competitive disadvantage to foreign rivals.

The measure would make changes to taxes on multinationals’ foreign earnings beginning in 2023 to align with the global timeline, and would set a 15 percent rate on “global intangible low-tax income,” or income that multinationals can easily shift to tax havens. It would raise a tax aimed against erosion of the U.S. tax base higher than Ways and Means had originally planned, hitting an 18 percent rate in 2025.

While most smaller tax benefits tucked into the Ways and Means-approved text didn’t make it into the latest bill, a win for businesses sought by some of the biggest corporations found staying power. A change to how companies count research and development expenses, which would’ve undercut their ability to deduct that spending, would be pushed off to 2026.