“The Rebuild America Act” Section by Section Summary
Title 1: Invest in America to Create Jobs and Future Growth Section 1: Invest in America’s Infrastructure
Part 1: Modernize America’s Schools Too many of our nation’s schools were built over a half century ago and are not equipped to meet the needs of 21st Century students and teachers. The Act provides formula grants to states over 10 years for competitive matching grants to local entities for the modernization, renovation, and repair of early childhood education and care facilities, k-12 public schools, and community colleges. Grants are distributed to states based on poverty and population and States must describe how they will consider the impact of potential projects on job creation and give priority to eligible entities that use green practices and serve the largest percentages of low-income populations, among other things.
Part 2: Create 21st Century Renewable Energy Systems Widespread transformation of our energy systems to enhance energy security and lessen environmental impacts will require energy systems changes by citizens and communities across the country. This section establishes a program to support communities in efforts to undertake comprehensive energy systems renovation strategies. Communities will compete for funds to analyze current energy use, formulate strategies to increase use of energy efficiency and renewable energy, and implement those strategies. The program will be administered by the Department of Energy in collaboration with State Energy Offices.
Part 3: Invest in America’s Roads, Bridges and Infrastructure Our economy rose to greatness on the back of robust federal investment in our infrastructure. Yet in recent decades, we’ve failed to keep up. To help overcome our infrastructure gap and to improve the efficiency of our economy, the Act provides significant long-term investment in a wide array of existing infrastructure programs, including roads, bridges, sewer-water systems, levees, and rural infrastructure. The Act provides higher spending levels for the first two years to help create jobs while the economy remains weak.
Section 2: Support Great Teachers
Teacher effectiveness has a greater impact on student achievement than any other in-school factor. To help teachers develop the skills to prepare all children to graduate high school college and career ready, the Secretary of Education is authorized to offer grants to states for three to five years to work with school districts to provide intensive professional development to teachers and other school personnel. The professional development provided through this grant program will support teachers in teaching to the new rigorous standards states have adopted and improve student achievement.
Section 3: Rebuild America’s Manufacturing Power
Part 1: National Manufacturing Strategy The section requires the President to develop a national manufacturing strategy and submit that strategy to Congress. The goals of the strategy are to increase the number of manufacturing jobs, to identify manufacturing sectors in which the US is most competitive, and to develop policies to support those sectors. The President is required to make recommendations to accomplish the goals of the strategy and submit those to Congress.
Part 2: Sectoral Technology and Innovation Centers This provision authorizes the Secretary of Commerce to provide grants to establish sectoral technology and innovation centers. These nationwide centers will help small and medium sized manufacturers bridge the gap between research and product development and manufacturing efficiency. The Secretary will award grants to coalitions of stakeholders that partner with national labs or institutes of higher education, with a preference for those that work closely with a successful local industry cluster.
Part 3: Enhanced Funding for Manufacturing Extension Partnership This section provides additional funding that will double the budget for the Manufacturing Extension Partnership (MEP). Housed in the Department of Commerce, the MEP program works with small and mid-sized U.S. manufacturers to help them create and retain jobs, increase profits, and save time and money.
Part 4: Research & Development Tax Credit To improve the R&D tax credit, this section of the Act increases the credit up to 20% by providing a bonus for manufacturing companies that undertake research and increase employment in the United States over a select period of time. In addition, to provide greater certainty to businesses seeking to use the credit, the Act extends the credit for 5 years.
Part 5: Access to Credit for Small Manufacturers Particularly in the wake of the recession, small manufacturers are having a difficult time accessing credit from financial institutions. To help small manufacturers that have work-orders in hand get credit, the Act creates a 95% loan guarantee program for small manufacturers under the SBA 7(a) guarantee program.
Part 6: Pursue Fair Trade The demand created by America’s middle class is the engine of the world’s economy, but we won’t have a thriving middle class if we allow our trading partner to use unfair trade practices that undercut American workers and manufacturers.
Section 4: Prepare Americans For Jobs of the Future
Building on the model of successful sector partnerships, the Act provides for competitive grants to regional and statewide partnerships of employers, community colleges, and other essential education and training providers to support the development of career pathways and other evidence based strategies designed to ensure that Americans obtain the skills and credentials needed to enter into and advance in high-quality jobs in existing and emerging sectors.
Section 6: Create Middle Class Jobs and Protect Middle Class Communities
This provision provides significant funding over three years to state and local governments to help save and create jobs for teachers, cops, firefighters, and other middle class workers. These investments protect middle class communities by ensuring that we have police and firefighters to keep us safe and teachers to educate our children. These funds will be used to supplement state and local funds, and cannot be used for purposes other than hiring and preventing layoffs.
Title 2: Create Financial Stability and a Better Future for Middle Class Families Section 1: Alleviate the High Cost of Child Care
Child care costs comprise a significant portion of the annual budget for most middle class families. The Act provides formula grants to states to improve the quality of child care, subsidize the cost of child care for poor and working families, and to encourage the development of high quality child care programs and services in poor and otherwise deserving communities. A State applying for a grant must use 10% of funds to enhance the skills, knowledge, and credentials of the child care workforce, 10% of the funds to support quality improvements, and remaining funds to increase the quality and availability of child care throughout the state.
Section 2: Help Americans Enjoy their Golden Years
Part 1: Improve the Private Retirement System The United States faces a retirement crisis. This section outlines the principles needed to create a better private retirement system going forward. To develop solutions, the Act establishes a Commission on Retirement Security composed of 31 members. Two members will be chosen by each of the Chair and Ranking Members of the Senate HELP, Senate Finance, House Education and Workforce, and House Ways and Means Committees. The President will appoint 15 members. The Commission will review the state of the retirement system, identify problems, and analyze potential solutions. One year after enactment, the Commission shall submit a report to the Congress with recommendations on how to address the retirement crisis.
Part 2: Strengthen Social Security To improve benefits for current and future Social Security beneficiaries, the Act changes the method by which the Social Security Administration calculates Social Security benefits. Social Security benefits are based on a progressive formula which provides certain replacement factors for certain segments of earnings. That formula currently provides a 90% replacement factor for Average Indexed Monthly Earnings (AIME) up to the first $767 in earnings. The Act expands the amount of earnings covered under this high replacement factor by 15% in order to increase the amount of AIME that receives the 90% replacement rate. When fully phased in, this change will increase Social Security benefits by approximately $60 per month, or $800 per year.
In addition, the Act changes the way the Social Security Administration calculates the Cost of Living Adjustments (COLA). Currently, the annual adjustment is tied to the Consumer Price Index for all Urban Wage Earners (CPI-W) for the purposes of calculating inflation. To ensure that benefits better reflect cost increases facing seniors, future COLAs will be based on the Consumer Price Index for the Elderly (CPI-E).
Social Security is not in crisis, but does face a long-term deficit. To help extend the life of the trust fund, and decrease the 75 year actuarial deficit, the Act phases out the current taxable cap of $110,100 so that payroll taxes apply fairly to every dollar of wages. This will ensure more balance in the Social Security system, so that all Americans contribute to Social Security taxes fairly. To preserve the progressivity and universality of the system, the Act creates a new replacement factor of 5% for income over the current wage cap. Combined with the benefit increases in the Act, these steps will strengthen the life of the Trust Fund to 2052 and reduce the 75 year actuarial deficit by approximately 50 percent.
Section 3: Protect Overtime Pay for Working Americans
The Act ensures that workers called on to work long hours receive the fair pay they deserve. To do so, it updates the threshold used to determine which “white collar” workers automatically qualify for time-and-a-half when they work beyond a normal workweek. This threshold – which is currently $455 a week, or $23,660 annually – will be raised and indexed to inflation to ensure that low- and mid-wage workers are not taken advantage of by being forced to work longer hours for meager pay.
Section 4: Prevent Americans from Having to Choose Between Their Health and Their Paycheck
To ensure that Americans don’t have to choose between their health and their paycheck, and to keep American workplaces healthy, the Act provides Americans with paid sick days they can use to care for themselves or a family member. Specifically, the Act includes the text of S. 984, the Healthy Families Act. The Healthy Families Act allows workers to earn up to 7 days of paid sick time annually by accumulating 1 hour of paid sick time for every 30 hours worked. Workers can use this time to stay home and get well when they are ill, to care for a sick family member, to obtain preventative or diagnostic treatment, or to seek help if they are victims of domestic violence.
Section 5: Establish a Fair Minimum Wage
This section increases the federal minimum wage in three annual increments to $9.80 per hour and indexes it to inflation thereafter. In addition, it also increases the minimum wage for tipped workers to 70% of the federal minimum wage.
Section 6: Empower Hardworking Americans
The Act addresses two fundamental problems that limit workers’ ability to stand up for fair treatment. First, many workers are excluded from the protections of the National Labor Relations Act altogether, either because employers circumvent the law, or because courts have improperly narrowed the law’s protections. The Act would restore the original intent of the NLRA by clarifying that workers who are currently mischaracterized as supervisors or independent contractors are entitled to basic workplace rights. Second, the penalties for violating workers’ rights under the NLRA are currently so weak that employers can violate the law with impunity. The Act would restore real teeth to the law, providing greater incentives for employers to respect workers’ rights.
Section 7: Increase Job Opportunities for Americans with Disabilities
The employment participation rate for people with disabilities has been stagnant for over 20 years. Only one-third of adults with disabilities participate in the workforce today. In order to encourage hiring of individuals with disabilities, the Act expands the Work Opportunity Tax Credit. Traditionally, the Work Opportunity Tax Credit has provided employers with a credit of 40% of the first $6,000 of covered wages for select groups. This section of the Act increases the WOTC for individuals with disabilities to 40% of the first $30,000 in wages and permits the WOTC for individuals with disabilities for two years, instead of one year. In addition, it expands the WOTC to also include individuals with disabilities on SSDI and those who are eligible to receive vocational rehabilitation services, but are not receiving such services. In addition to these changes, the Act also extends the entire WOTC through December 31, 2015 for all groups.
Title 3: Restore Fairness to the Tax Code and Ensuring Fiscal Responsibility Section 1: Institute the Buffet Rule
The Act incorporates legislation authored by Senator Sheldon Whitehouse, the Paying a Fair Share Act of 2012, which institutes President Obama’s proposed “Buffett Rule.” This provision will ensure that the highest-earning Americans, those with annual income over $1 million, pay no less than a 30% effective tax rate. This proposal is estimated to raise $47 billion over 10 years according to the Joint Committee on Taxation.
Section 2: Adopt a Wall Street Trading and Speculators Tax
The section includes the text of S. 1787, the Wall Street Trading and Speculators Tax Act, which places a small tax of 3 basis points (3 pennies on $100 in value or 0.03%) on trading of financial securities, including stocks, bonds and other debt securities, except for their initial issuance. The tax would also cover all derivative contracts at their actual cost, rather than the notional cost of their underlying security. This proposal is estimated by the non-partisan Joint Committee on Taxation to generate $352 billion over 10 years.
Section 3: End Tax Breaks for Companies that Ship Jobs Overseas
The section includes four provisions similar to those proposed in President’s budget to eliminate excessive tax benefits that are used to lower U.S. taxes related to foreign earned income. These include deferring deductions of interest expenses related to foreign deferred income, determining foreign tax credits on a pooling basis, limiting excess returns on intangible assets and modifying the rules for duel capacity taxpayers. The Joint Committee on Taxation estimates these items will raise about $120 billion over 10 years.
Section 4: Make Wall Street to Take Responsibility
This section includes the Administration’s FY 12 request to acquire $65 billion over 10 years from large financial institutions with assets of more than $50 billion that received emergency financial assistance through the Troubled Asset Relief Program or Emergency Economic Stabilization funds.
Section 5: Make Hedge Fund Managers Pay the Same Taxes as the Rest of Us
This section includes the text of the Congressmen Levin-Rangel bill on “carried interest.” It considers carried income that does not involve investments by the recipient to be earned income taxable at the regular rate on which payroll taxes would be owed.
Section 6: Raise the Capital Gains Rate
This section of the Act raises the rate on capital gains to 28%, effective for 2013 for those in higher tax brackets.
Section 7: Protect Pensions
Part 1: Improve the PBGC The Pension Benefit Guaranty Corporation (PBGC) plays a critical role in helping to protect the retirement security of the 44 million workers and retirees with defined benefit pension plans. However, the Corporation has struggled over the years to address deficiencies and implement long-term strategies for success. The Corporation also faces long-term fiscal challenges, which have been exacerbated by the recent financial crisis. This section takes immediate steps to protect workers and retirees by improving the Corporation’s governance, guaranty, and solvency.
Part 2: Improving the Financial Stability of the Pension System Defined benefit pension plans are a critically important to providing retirement security to middle class Americans. However, the ongoing effects of the financial crisis have put enormous stress on the pension system. This section improves the financial stability of the system by reducing contribution volatility and encouraging employers to continue provide pensions. It also provides participants with additional protections should their pensions be terminated in bankruptcy.
Section 8: Close Loopholes to Prevent Worker Misclassification
Many employers – either purposefully or because they lack guidance – improperly classify their employees as ‘independent contracts.’ As a result, the employers fail to withhold income taxes, pay the employer’s share of Social Security and Medicare taxes, and pay for unemployment insurance for millions of Americans. This section of the Act is identical to S.2145, and will provide a fairer playing field to America’s businesses and workers by helping employers to properly classify their workers. That will ensure that all workers are afforded the protections already in the law and that employers who play by the rules are not forced to compete against businesses that don’t.
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