The government is sending up to $300 monthly checks to families with kids starting today. Democrats want to make it permanent as a new form of Social Security.

Joe Biden Chuck Schumer
President Joe Biden and Senate Majority Leader Chuck Schumer.

  • The US government is poised to send the first batch of child tax credit payments on Thursday.
  • Policymakers estimate 35.2 million families could see cash deposited into their bank accounts.
  • The success of the program will determine whether Democrats can extend it as another form of Social Security.
  • See more stories on Insider’s business page.

America’s neglected social safety net could be getting its largest patch in a generation on Thursday, when the US begins a year-long experiment providing a guaranteed income for families with children. Its success will determine whether it becomes a permanent fixture.

The Internal Revenue Service is poised to send the first batch of monthly child tax credit payments stemming from President Joe Biden’s stimulus law, which was approved in March over united Republican opposition. For six months, families can get a $300 monthly benefit per child age 5 and under, amounting to $3,600 this year. The measure provides $250 each month per kid age 6 and 17, totaling $3,000. Half of the benefit will come as a tax refund.

If all goes to plan, the federal government will deposit cash directly into the bank accounts of 36.2 million families, according to projections from administration officials shared with reporters on Wednesday evening. That represents the bulk of the 39 million families the IRS has identified as being eligible for the child allowance.

Experts say the one-year child tax credit payments could shift public attitudes on cash benefits given its wide reach and mark a big step forward in slashing child poverty – some estimate it could be cut by up to half.

“It’s hard to understate the significance of this expansion for child poverty in America,” Samuel Hammond, a welfare policy expert at the center-right Niskanen Center, told Insider. “Most countries have some form of child or family allowance – and the US has been an outlier in excluding the lowest income households from our version of a child benefit,” he said, adding “once you start on this path, it’s hard to turn back.”

Some Democrats are already drawing comparisons between the program and the birth of Social Security in 1935, a milestone that set up a critical source of income for retired and disabled Americans.

“It’s the most transformative policy coming out of Washington since the days of FDR,” Sen. Cory Booker of New Jersey recently told The New York Times.

‘Some bumps in the road’

Michael Bennet Capitol Hill
Sen. Michael Bennet (D-CO), arrives for a vote in the Capitol.

Democratic lawmakers and Congressional aides have labored behind the scenes to ensure a smooth rollout of the payments. The child tax credit was revamped to include low-income families not required to file taxes, a group previously shut out from tapping into the benefit.

There were some signs of problems early on. Some experts and community groups raised concern that an IRS portal to sign up the poorest families was too complex and inaccessible for people who lacked desktop computers.

Sen. Michael Bennet of Colorado, an architect of the measure, said on Monday the IRS has given the child tax credit “100% of their attention” and said he’s regularly communicated with the agency.

Still, he cautioned there could still be some snags. The pandemic has added to the IRS’s responsibilities over the past year and strained its depleted staff. It has gone from being a tax-collecting agency to a benefit distributor on par with the Social Security Administration.

“I’m sure there will be some bumps in the road as there always are when rolling out something new like this,” he told reporters. “But it’s important as bumps arise to iron them out.”

Some of those potential problems, Bennet told Insider, include “people not getting the benefit they were supposed to receive and accounting issues that might arise. I hope they won’t be systemic issues, I don’t think they will be.”

The IRS has struggled sorting through a massive backlog of tax returns in recent months, delaying tax refunds in at least some cases. Hammond said it was unclear whether distributing monthly child benefits via the IRS is “sustainable in the long run.”

“We’ve increasingly asked the IRS to do an awful lot of social policy beyond taxing and collecting revenues, and the IRS is just not equipped to be a benefits administrator,” he said.

The future of Biden’s child allowance

joe biden
President Joe Biden makes brief remarks at the White House.

The bulked-up child tax credit is a rare measure that enjoys deep support among both House and Senate Democrats. Bennet, Sen. Sherrod Brown of Ohio, and Reps. Rosa DeLauro of Connecticut and Suzan DelBene of Washington, are among the lawmakers spearheading efforts to make it permanent.

Biden proposed in his spending plans to extend the bulked-up benefit until 2025, the same year that Trump-era tax cuts for individuals end. It’s possible Republicans could trade support to renew the pair of benefits, given the GOP is generally opposed to cash aid as a standalone measure.

“I think we should embrace allowing people to keep more of their own money, if we’re applying it towards their payroll tax,” Sen. Marco Rubio of Florida told Insider last month. Rubio and Sen. Mike Lee of Utah led efforts to double the size of the child tax credit in the 2017 Republican tax law. The pair favor boosting the benefit amount for workers.

On Wednesday, Rubio released a statement tearing into the child allowance. “The way President Biden tells it, the handout is part of his administration’s ‘pro-family’ plan,” he said. In reality, he has transformed the pro-worker, pro-family Child Tax Credit into an anti-work welfare check.”

Senate Democrats are kicking off a flurry of negotiations to finalize what measures will ultimately be included in a $3.5 trillion budget deal that would mostly be paid for with tax increases. They’ll advance it in a pathway known as reconciliation, which allows them to approve certain bills with a simple majority instead of a filibuster-proof 60 votes. Every Democrat must stick together for the budget package to clear the Senate.

Brown, the Banking Committee chairman, said talks were in their early stages so no child allowance expiration date was set. “Not clear what year yet, but it’s going to be a popular program like Social Security,” he told Insider on Wednesday. “Republicans will not only be afraid to take it away, they’ll start taking credit for it.”

He also suggested its hefty price tag could keep a permanent extension out: “I think its so costly it may not [be included], but I’m still fighting for permanence,” he said.

Brown also rejected the notion of changing the income thresholds. “I think that’s pretty locked in. We’ve all been talking about how important that is, 90% of the public getting this is really consequential and key to its popularity,” he told Insider.

Some Democratic moderates may balk at renewing the child tax credit in its current state. Sen. Joe Manchin of West Virginia, a swing vote, told Insider he was open to a permanent extension last month. Others are undecided on the program’s fate.

“I consider it not an easy issue,” Sen. Angus King of Maine, an independent who caucuses with Democrats, said in an interview. “It is a major expansion of what amounts to an entitlement program. I certainly supported it as part of the pandemic relief package. But supporting it on a permanent basis is something that I have to have more data on and understand how it’ll be paid for.”

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Parents could get a $300 check this week from the government thanks to the revamped child tax credit

Joe Biden
President Joe Biden.

  • The IRS will start sending advance child tax credit payments on July 15.
  • Monthly payments for families will be issued until December, with the remainder sent at tax time.
  • It amounts up to $300 per child, depending on the age.
  • See more stories on Insider’s business page.

The federal government is only three days away from kicking off what’s essentially a new child allowance program in the America.

It stems from a revamped child tax credit in President Joe Biden’s March stimulus law that widened the credit’s reach to families with no tax obligations, and bulked up the amount. Families can get a monthly $300 check for children ages 5 and under, and $250 for each child between 6 and 17.

The IRS noted that most families will receive the payments without having to do anything, and they should receive them through direct deposit, a paper check, or a debit card – similar to the three stimulus payments that the federal government sent over the past year.

Half of the amount will be divided into monthly payments issued from July until December. The remaining half will be provided at tax time next year. It will total $3,000 for kids between 6 and 17, and $3,600 for children under age 6.

Last month, the Internal Revenue Service (IRS) began notifying 36 million American families that they could be eligible to receive the monthly child tax credit.

Here’s when the IRS will distribute payments:

  • July 15
  • August 13
  • September 15
  • October 15
  • November 15
  • December 15

The White House estimates that 90% of families are eligible to get the credit. Researchers say it has the potential to put a major dent in child poverty as well.

Still, the IRS is scrambling to reach the lowest-income families who didn’t previously qualify for the child tax credit. At least 2.3 million children could be excluded from the child allowance, per a Treasury Department estimate.

A strong majority of Democrats in both the House and Senate are pushing to make the child tax credit changes permanent. Biden’s sprawling infrastructure package would extend it until 2025. After that, Congress would need to renew it.

“We must use this moment to pass the American Family Act and permanently expand and improve the child tax credit by increasing the benefit to families and providing payments monthly,” Chair of the House Appropriations Committee Rosa DeLauro said in a February statement. “Children and families must be able to count on this benefit long after the end of this pandemic.”

Still, some moderate Senate Democrats may push for cuts to the measure. At least one Democratic senator has expressed unease with checks going to households earning six figures.

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Why a fourth stimulus check isn’t likely anytime soon

Biden
President Joe Biden.

  • A fourth stimulus check is unlikely given the accelerating pace of the recovery.
  • For now, Democrats have moved onto addressing evictions, among other things.
  • The White House has punted the issue and said it’s up to Congress to decide.
  • See more stories on Insider’s business page.

Stimulus checks remain popular with average Americans. Congress under both the Trump and Biden administrations issued three direct payments amounting to $3,200 for millions of Americans.

However, a fourth round is unlikely to be sent anytime soon as the economy continues regaining jobs. No lawmaker in Congress has pitched a plan so far, and congressional Democrats are squarely focused on approving President Joe Biden’s infrastructure plans this summer.

“I don’t see people advocating for another check at this moment,” Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute, said in an interview. “I think the big fights are about dealing with the legacy of the pandemic, both getting vaccination rates up, dealing with evictions and foreclosures, and making sure that bottlenecks in the economy are swiftly taken care of.”

It could also crash into resistance among most Republicans and some Democrats in Congress. During negotiations for the $1.9 trillion stimulus law in March, a bloc of moderate Democrats flexed its political muscle to cut who could get a $1,400 direct payment. Centrists balked at the prospect of government cash going to households that didn’t experience job losses during the pandemic or pulled six-figure incomes.

The Biden administration has punted on whether it would back more stimulus payments, throwing the issue to lawmakers. “We’ll see what members of Congress propose, but those are not free,” White House Press Secretary Jen Psaki said at a May press conference.

A White House official told Insider that the Biden administration is “committed to providing relief to the American people to recover from the impacts of the pandemic.” The official noted the stimulus law included various measures to shore up small businesses and provide rental aid, along with an expansion of the child tax credit.

“We look forward to continuing our work with Congress to implement ARP and pass the president’s full Build Back Better agenda,” the official said, referring to the American Rescue Plan.

The bulked-up child tax credit makes up a core part of Biden’s stimulus. The law transformed it into a monthly payment of either $250 or $300 for families, depending on the child’s age. Those are poised to go out on July 15 for nearly 90% of American families.

Konczal said the child allowance is capable of stabilizing incomes and cutting hunger rates once it starts reaching families. “It’s going to expand the notion of what social insurance is meant to do in a way that is profound,” Konczal said.

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Biden administration to kickstart $300 monthly child tax credit checks to parents on July 15

Joe Biden
President Joe Biden at the White House.

  • The Biden administration said it would start issuing advanced child tax credit payments on July 15.
  • It would be issued the 15th of every month unless it falls on a holiday.
  • Treasury and IRS estimate 39 million households will receive the cash without needing to sign up for it.
  • See more stories on Insider’s business page.

The Biden administration announced Monday it is kickstarting the first advanced payments of the child tax credit on July 15. Democrats have touted it as a key part of President Joe Biden’s stimulus law and it’s poised to benefit the vast majority of American children.

The Treasury Department and IRS announced they would start issuing the payments on July 15 and continue them on the 15th of each month, unless it falls on a holiday.

“The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children. With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July,” Biden said in a statement.

The $1.9 trillion stimulus law revamped the existing $2,000 child tax credit, widening its reach and beefing up the amount. It was boosted to $3,600 per young child aged 5 and under, and $3,000 for every child between 6 and 17. It also provides households the option to receive a monthly $250 or $300 payment instead of a one-time sum at tax time, the typical way of accessing it up to now.

Families with children can tap into the cash even if they have little or no income tax obligations. The Treasury and IRS said 39 million households will receive the payments with no additional action necessary as either a direct deposit, paper check, or debit card.

The president has urged Congress to swiftly approve the $1.8 trillion economic package called the American Families Plan, the second major infrastructure plan. The proposal would extend the monthly $300 checks for another four years until 2025. But it would continue at a lower amount if lawmakers don’t renew it at the bulked-up levels.

Experts are projecting the expanded tax credit would cut child poverty in half, particularly for Black and Latino kids. The non-partisan Tax Policy Center forecasted in March that over 90% of families with kids would receive an average $4,380 cash benefit.

“I think it’s about time we start giving tax breaks and tax credits to working-class families and middle-class families instead of just the very wealthy,” Biden said earlier this month.

The IRS had said it was on track to begin the stimulus child tax credit payments in July.

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The 4 major takeaways from Biden’s $1.8 trillion economic spending package

Biden
President Joe Biden.

  • Biden unveiled a new spending plan focused on families with new spending on childcare and education.
  • It aims to flood federal money into sectors of the economy and make the lives of families easier.
  • The plan likely won’t attract much Republican support – if any.
  • See more stories on Insider’s business page.

President Joe Biden is aiming to unleash a flood of new federal spending to cut into inequality and realign the role of the federal government to better assist families.

The second plan is different from the first measure, which was largely focused on physical infrastructure such as roads and bridges, although it also included other provisions like major funding for in-home elder care and broadband expansion.

This plan from the White House includes around $1 trillion in new spending and $800 billion set aside as tax credits. It’s likely to undergo some changes, however, as Congress takes it up and writes the legislation in the coming months.

Here are the four key takeaways from the administration’s latest plan.

(1) Flooding new money into education and childcare

The plan would parcel out money for childcare, education, and healthcare initiatives. Experts say many parts of the plan are geared toward assisting middle and low-income families, especially those with kids.

“Almost everything in the plan would directly benefit people, particularly children, particularly lower-income children,” Jason Furman, a former top economist to President Barack Obama, wrote on Twitter. “You can’t go very wrong with these policies.”

It essentially guarantees an additional four years of education for Americans with a universal pre-K and two years of tuition-free community college. Those two measures come out to around $309 billion, largely contingent on a partnership between the federal government and states.

It also tackles the rising costs of childcare, which is often beyond the reach of many families. Most have to pay the majority of those care expenses on their own. The Biden plan aims to keep a family’s childcare spending at no more than 7% of monthly income.

(2) Biden wants the wealthiest Americans to pay up with tax hikes

The package includes tax hikes on the richest Americans. A central element in the administration’s revenue plans appears to be $80 billion set aside for the IRS to crack down on tax evasion. The White House projects raising $700 billion from the agency over a decade.

As reported by Insider’s Ayelet Sheffey, that would represent a huge jump over current collections, but still leave hundreds of billions on the table very year. It would also only partially reverse a dramatic decline in IRS audits over the past decade.

Biden also wants to raise the top marginal income-tax rate to 39.6% from 37% and hit investors earning above $1 million with a new tax on capital gains, among other things.

(3) Permanently maintaining some emergency stimulus programs

The plan includes a permanent extension of subsidies for people to buy health insurance from exchanges set up under the Affordable Care Act. It would also make permanent the Earned Income Tax Credit, a step to benefit essential workers like

The administration is likely to face pressure from Democrats to keep the boosted child tax credit. It was enlarged to $3,600-per-child under age 6 and $3,000 per kid between 6 and 17. Starting in July, parents will be able to get a monthly payment.

The current plan only extends the elevated levels until 2025, while leaving untouched the monthly payment component. Rep. Rosa DeLauro, a lead architect of the expansion and chair of the House Appropriations Committee, said in a statement to Insider that lawmakers would take up the Biden blueprint and advocate for changes.

“I look forward to turning the framework of the American Families Plan into legislation and working with Chairman Neal to enact our shared desire to include a permanent extension of the expanded Child Tax Credit in the final bill,” she said, referring to Rep. Richard Neal, chair of the House Ways and Means panel.

(4) The ‘families plan’ is unlikely to attract GOP support

Republicans were largely opposed to Biden’s first infrastructure plan, arguing it went beyond the scope of physical infrastructure spending that they could back. Some lawmakers, however, favor a slimmed-down spending plan, and negotiations are ongoing.

The GOP appears likely to resist the newest plan on the basis of its tax hikes and spending priorities.

“Even if the spending’s popular -a lot of it probably will be – the tax increases I think are going to be a hard sell, not just with people in the country or with Republicans, but I think for some Democrats too,” Sen. John Thune told reporters on Wednesday.

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Biden will unveil $1.8 trillion spending plan to extend cash payments for parents, set up universal pre-K and free community college

Joe Biden
President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck at the South Court Auditorium of the Eisenhower Executive Office Building March 10, 2021 in Washington, DC.

  • Biden is unveiling $1.8 trillion in new economic programs for families on Wednesday.
  • The plan extend cash payments for parents and set up universal Pre-K – paid for with tax hikes on the wealthy.
  • Biden’s spending plans would rank among the largest in US history.
  • See more stories on Insider’s business page.

President Joe Biden will unveil a $1.8 trillion economic aid plan during his address to a joint session of Congress on Wednesday, seeking to devote massive new federal spending on families through new initiatives in childcare, education, and healthcare.

The proposal is designed as the second part of a massive infrastructure package to overhaul the American economy, following the release of a $2.3 trillion plan last month concentrated on repairing roads and bridges, domestic manufacturing, and in-home elder care. It’s offset with tax increases on rich Americans.

Taken together, they would rank among the largest spending programs in the nation’s history, totaling nearly $4 trillion. A senior administration official called them “once-in-a-generation investments in our nation’s future.”

“The American Families Plan invests in our children and our families, helping families cover the expenses that so many struggle with now, lowering health insurance premiums, cutting child poverty and producing a larger, more productive and healthier workforce in the years ahead,” the official told reporters on a Tuesday phone call.

The plan is patterned with an emphasis on recasting the role of government to slash inequality and shore up the middle class in an eight-year spending program consisting of:

  • $225 billion in childcare funding.
  • $225 billion for paid family and medical leave.
  • $200 billion for free universal Pre-K.
  • $200 billion to permanently extend Obamacare insurance subsidies.
  • $109 billion for two years of free community college.
  • $45 billion in nutrition-related spending.

The plan also attempts to make permanent some elements of Biden’s $1.9 trillion stimulus law – mainly, the expanded tax credits for families as well as subsidies to purchase health insurance in marketplaces under the Affordable Care Act.

The lowest-earning families will be able to tap into the child tax credit through monthly payments, but the bigger benefit level expires in 2025. At that point, it would fall to $1,000 without additional action in Congress.

The White House seeks to work with lawmakers to overhaul unemployment insurance and tie benefits to economic conditions, though the plan does not offer specifics. Sens. Ron Wyden and Michael Bennet recently unveiled a bill to permanently boost jobless benefits.

Administration officials are also envisioning 12 weeks of a national paid family and medical program with two-thirds wage replacement for most workers, a measure endorsed on Tuesday by Rep. Richard Neal, a powerful House Democrat.

But the Biden measure would be set up over a decade. Advocates are likely to pressure the president to accelerate the timeline since the US lacks a national leave program in stark contrast to other developed nations. The pandemic forced two million women out of the labor force as it devastated the economy, shuttering schools and pushing many of them to pick up the majority of childcare duties at home.

“This is a tremendous recognition of the centrality that paid leave plays in people’s lives and the gaps we have,” Vicki Shabo, a paid-leave expert at the think-tank New America, told Insider. “The country has invested almost nothing in paid leave up to this point.”

The Biden administration says it wants to fully pay for the programs with a series of tax hikes on the wealthiest Americans. Chief among them is strengthening the IRS’s ability to crack down on tax avoidance and ramp up the agency’s staffing levels. The White House projects raising $700 billion over ten years from the agency.

That step would be combined with raising the top marginal income tax rate to 39.6% from 37% and hitting investors earning above $1 million with a new tax on capital gains among others. The White House wants to avoid growing the national debt, which rose sharply as Congress signed off on $5 trillion in emergency COVID-19 relief spending in the last year.

Biden’s latest plan is unlikely to garner significant, if any, support from Republicans. The GOP quickly lined up against the first infrastructure plan from the White House, assailing it as a costly package that went far beyond only roads and bridges. However, the president’s spending plans are garnering strong majority support in public polling.

The American Family Plan’s path ahead in Congress remains unclear, and some Democrats say the infrastructure push could be split into two. That move may attract Republican votes on provisions popular in both parties, such as expanding broadband access.

At least some or the entire $4 trillion plan could be muscled through Congress under reconciliation, a procedural tactic allowing some budgetary bills to clear the Senate with a simple majority vote.

A group of Senate Republicans recently unveiled a $568 billion infrastructure plan largely directed at fixing roads and bridges last week. On Tuesday, Sen. Bill Cassidy of Louisiana announced he would soon unveil another bipartisan proposal that matched half of Biden’s spending.

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Democrats are pushing Biden at the last minute to put a permanently expanded child tax credit in his latest economic plan

Rosa Delauro
Rep. Rosa DeLauro (D-CT).

  • Democrats are doubling down on efforts for Biden to keep the expanded child tax credit.
  • “Kids don’t grow up in five years,” one House Democrat said.
  • Making CTC changes permanent could stumble in the Senate if Democrats decide to bypass the GOP.
  • See more stories on Insider’s business page.

As President Joe Biden’s $1.9 trillion emergency stimulus law was about to clear the House in late February, some Democrats started setting the stage for their next battle: Making the beefed-up child tax credit permanent.

Sen. Sherrod Brown told reporters that Democrats would press the Biden administration on the issue as soon as the stimulus law was signed, speaking as part of a group of other Democratic lawmakers.

He later tweeted an image of the group on Twitter. It included Sens. Michael Bennet and Cory Booker and Reps. Rosa DeLauro, Suzan DelBene, and Ritchie Torres. DeLauro recently dubbed the group “the CTC Six.”

The stimulus strengthened the child tax credit, increasing it to $3,600 per child under age 6 and $3,000 for kids between 6 and 17. Previously, the amount stood at $2,000, and families with little or no tax obligations could not tap into it.

Those Democrats are now ratcheting up the pressure on Biden as he gears up to unveil a massive new economic plan focused on families on Wednesday, particularly education and childcare. They are already warning against a temporary expansion until 2025, a five-year extension the White House is reportedly eyeing.

“Kids don’t grow up in five years. Parents need predictability to plan for their future over the long term,” DelBene told reporters on a Tuesday press call. “I asked the president in March if he supports permanently expanding the credit, and he said yes.”

The right-leaning Tax Foundation projects it would cost $1.6 trillion over a decade.

“Some have been concerned about the cost. I say the cost of inaction is too great,” DelBene said. “The president will propose his plan. Congress is going to write the bill.”

Democrats may move parts or the entirety of Biden’s $4 trillion infrastructure plan through reconciliation, a maneuver to guard legislation from the 60-vote threshold in the Senate and pave the way for a simple-majority vote. But it must comply with strict budgetary rules, such as barring any deficit increases after a decade.

“The issue really is budgetary score and permanence,” Zach Moller, a budget expert from the center-left group Third Way, told Insider.

Moller said making the child tax credit expansion permanent requires a finding a way to pay for it. “All of these things are competing for offsets. You can increase the deficit inside a 10-year window, outside that 10-year window or whatever budget window you want for the bill, you cannot increase the deficit.”

Meanwhile, other lawmakers said Republicans would fight to prevent an extension, or tie it to another conservative policy priority.

“We know that when this expires in five years … if we don’t do a permanent fix, we know in five years they will come after that and they will want huge corporate tax cuts, which they always do,” Brown told reporters.

Republicans largely oppose the child tax credit expansion, assailing it as a costly liberal priority. But some conservatives, Mitt Romney and Josh Hawley, have put out proposals over the last few months that include monthly cash benefits to families. Hawley’s plan was focused on married couples and it had a steep income requirement to qualify.

Still, many conservatives argue a program for monthly cash payments with no strings attached would foster dependency on the federal government.

“I still think its a bad idea to create a policy where large swaths of the population come to anticipate and look forward to the federal government sending them a check in the mail every month,” Scott Winship, director of poverty studies at the right-leaning American Enterprise Institute, said in an interview.

Democrats are gearing up to continue making their case to the Biden administration, focused on its benefits to families. Many believe that argument will be easier to make once the IRS begins distributing the checks in July.

“Just because it doesn’t make it in the plan, it doesn’t mean that door is completely closed,” a House Democratic aide told Insider.

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