Biden, Democrats may limit free college, childcare to shrink reconciliation bill -sources

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Sept 27 (Reuters) - The White House and U.S. Democrats are weighing attaching or strengthening income caps to a number of key agenda items, including electric vehicle rebates and free community college, to shrink the $3.5 trillion reconciliation bill and pacify spending hawks, according to two officials familiar with the discussions.

Discussions about these income limits, known as means tests in Washington lingo, come as Democrats struggle to agree on the size of the sprawling social safety net and climate change package, a signature piece of President Joe Biden's agenda.

White House press secretary Jen Psaki declined to comment on whether the administration would agree to income caps on things like free community college, but did note that means tests are common and that the president has supported placing income restrictions on government programs.

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"Every family is not eligible for the child tax credit in this country. Every person is not eligible for the earned income tax credit," Psaki noted.

The $3.5 trillion Biden proposal outlined earlier this year included free community college, expanded child tax credits and universal preschool for any U.S. citizen. But Democrats are now considering whether to cap eligibility based on income, the two sources told Reuters.

They're also discussing limiting who can receive tax credits for electric cars.

The White House, for example, want to create a $7,500 tax credit for any taxpayers who purchase electric cars.

A House Democratic version of the bill said individual taxpayers must have an adjusted gross income of no more than $400,000 to get the credit, but Senate Democrats are considering a lower threshold that could go as low as $100,000, sources said.

Democrats are also considering whether to lower the income threshold for eligibility of the expanded child tax credit, which is set to expire at the end of the year unless Democrats make good on their promise to extend the added benefit by four years.

Currently, the tax credit phases out for married couples making over $400,000, but Democrats are considering lowering the cap, sources say.

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Reporting By Jarrett Renshaw; Editing by Heather Timmons and Jonathan Oatis

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