Biden Narrows Infrastructure Request, but Hurdles Remain for Bipartisan Deal

 

Biden Narrows Infrastructure Request, but Hurdles Remain for Bipartisan Deal

 

The president offered new concessions this week, including dropping his plan to reverse some of the 2017 tax cuts, as he tries to win support from Senate Republicans.

 

President Biden has cut more than $1 trillion from his initial infrastructure proposal, while Republicans have added less than $100 billion in new spending to their first offer.

 

Jim TankersleyEmily Cochrane

By Jim Tankersley and Emily Cochrane

June 3, 2021

https://www.nytimes.com/2021/06/03/business/economy/biden-infrastructure-senate-republicans.html

 

WASHINGTON — President Biden offered a series of concessions to try to secure a $1 trillion infrastructure deal with Senate Republicans in an Oval Office meeting this week, narrowing both his spending and tax proposals as negotiations barreled into the final days of what could be an improbable agreement or a blame game that escalates quickly.

 

A deal still appears to be a long shot, with potential tax increases the biggest hurdle to winning the kind of Republican support that Mr. Biden has said he is seeking. But the continued movement underscored his hopes for a revival of bipartisanship.

 

The talks are being sustained by a desire among lawmakers in both parties to reach agreement over what has been a longstanding but elusive goal in Congress: repairing and enhancing the country’s network of roads, bridges, water pipes and other physical infrastructure. Both sides are trying to win favor with the moderate congressional Democrats, particularly in the Senate, who will ultimately decide the fate of the president’s $4 trillion economic agenda.

 

Yet Republicans said on Thursday that Mr. Biden was seeking more spending than they were likely to support. They privately panned his continued attempt to fund the bill with increased tax revenue from corporations and high earners even if those plans do not cross the Republicans’ red line of reversing parts of President Donald J. Trump’s signature tax cuts in 2017. Mr. Biden has also insisted on including some spending provisions, like building 500,000 new charging stations for electric vehicles, that have little Republican support in Congress.

 

The president has now cut more than $1 trillion from his initial $2.3 trillion infrastructure proposal, while Republicans have added less than $100 billion in new spending to their first offer, which contained about $200 billion in new spending by many estimates. Mr. Biden said this week that for now he would exclude several of his proposed tax increases, including raising the corporate income tax rate to 28 percent.

 

Senator Shelley Moore Capito of West Virginia, the lead Republican negotiator, visited the White House on Wednesday. Mr. Biden outlined a potential package of $1 trillion financed largely by cracking down on tax evasion by corporations and the rich, closing a small number of business tax loopholes and imposing a new minimum tax on large companies like Amazon that pay little or no federal income taxes, according to people familiar with the discussions.

 

Republicans said on Thursday that it did not amount to a large concession because he was still seeking to raise taxes on businesses.

 

“I don’t think that’s going to appeal to members of my party, and I think it’ll be a hard sell to the Democrats,” Senator Mitch McConnell of Kentucky, the minority leader, said of the overall proposals for tax increases. “Let’s reach an agreement on infrastructure that’s smaller but still significant and fully paid for.”

 

Republicans and Democrats alike expect Mr. Biden to revive his more sweeping corporate tax plans even if a deal is reached.

 

Jen Psaki, the White House press secretary, told reporters that the president had decided to focus in the negotiation on plans that “should be completely acceptable to a number of Republicans who said that they — they want to leave — their bottom line is they want to leave the 2017 tax law untouched.”

 

She later added that raising the corporate tax rate above 21 percent was still a key goal.

 

The discussions have unsettled some progressive Democrats, who are pushing Mr. Biden to abandon talks and move his economic plan through the budget reconciliation process, which would allow it to pass with only Democratic votes. They questioned whether a compromise struck with Ms. Capito could secure the 10 Republican votes needed to pass a bill through normal Senate procedures and argued that Republicans had done little to move closer to the White House on the amount of new spending or how to finance it.

 

“No Republican vote in favor of an infrastructure package should supersede our mission: to build an America that works for the people, not for massive corporations,” Representative Jamaal Bowman, Democrat of New York, said in a statement. “Getting Republicans on board is not necessary. Getting the American people back on their feet is.”

 

Republicans have complained that Mr. Biden is not willing to reduce his spending demands to a degree they could support, and they have been surprised at his continued resistance to raising gas taxes and other fees that have traditionally supported some infrastructure programs. As of Thursday afternoon, it was unclear whether Republicans would compile another counterproposal.

 

Both sides have a stake in prolonging the negotiations.

 

Mr. Biden is seeking to achieve bipartisanship or exhaust its possibilities, in part to secure votes from Democratic senators like Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, who have insisted on including Republicans in the infrastructure effort.

 

“At any moment, it’s very possible the Republicans say, ‘Wait a minute, either we’re going do it our way or we’re not going do it at all,’” said Senator Benjamin L. Cardin, Democrat of Maryland. The next 10 days would be critical, he said. “It’s also possible the Democrats are going to say, ‘You do it our way all, and if not we’ll go through it ourselves.’ I hope that’s not the case.”

 

Leading Democrats say a compromise that falls short of Mr. Biden’s ambitions could pave the way for a reconciliation bill that includes many of the spending proposals and tax increases in his broad agenda, like affordable child care, universal prekindergarten and additional efforts to fight climate change.

 

If talks break down and moderate Democrats blame Republicans, a reconciliation bill would most likely be easier for Mr. Biden to push through. Advancing an infrastructure package through reconciliation and its strict budgetary requirements will be far more difficult than when Democrats passed a $1.9 trillion economic aid bill this year. It would be impossible without the support of all 50 Democratic senators and nearly every Democratic representative.

 

Republicans are trying to stop the president from reversing the tax cuts for high earners and corporations in Mr. Trump’s tax law, including Mr. Biden’s plans to raise the corporate income tax rate to 28 percent from 21 percent and to increase a variety of taxes on income that multinational companies earn outside the United States.

 

But the resistance extends beyond the 2017 tax cuts. Republicans immediately opposed the president’s narrowing of his proposal this week, criticizing his plan to raise funding for the I.R.S. by $80 billion.

 

Many Republicans, including Mr. Trump, have also pushed for years for increased infrastructure, though they did not prioritize it when they last controlled Congress.

 

Speaking about Republicans to reporters at the Capitol on Thursday, Mr. Cardin said that there were some infrastructure funds that “I think they’d like to be able to vote yes on.”

 

Business leaders have told Republican lawmakers that their best chance to block corporate tax increases is to cut a spending deal of $1 trillion or more with Mr. Biden that is financed by something other than business tax increases, such as raising gas taxes or federal borrowing. Their hope is that passage of such a deal could allow moderate Democrats to oppose a reconciliation bill that includes corporate tax increases as an offset.

 

Business lobbyists have urged Republicans to agree to more spending than they would normally be comfortable with, including in areas like advancing low-carbon energy deployment. They have also pushed the White House to drop its tax-increase proposals.

 

Even if Republicans agreed to Mr. Biden’s plans for how to pay for the bill, a wide gulf remains in terms of how much new money should go toward an infrastructure package.

 

The figure that Mr. Biden gave Ms. Capito at their meeting is nearly four times the $257 billion in new spending that Republicans included in their latest counteroffer. That totaled $928 billion, but two-thirds came from what amounted to an expected continuation of existing federal spending patterns.

 

The president started the discussions by proposing a $2.3 trillion American Jobs Plan, which includes spending on roads, bridges and broadband, and replacing lead water pipes, overhauling the electric grid, supporting emerging industries like advanced batteries, and providing home health care for older and disabled Americans — a measure Republicans have targeted in particular, complaining that Mr. Biden was abusing the definition of infrastructure.

 

The president cut his proposal to $1.7 trillion in a formal counteroffer last month, then reduced it again in his discussions with Ms. Capito this week.

 

He said any new spending should be in addition to the $400 billion he wanted to maintain for existing programs over the next five years, according to a second person familiar with the discussions. Politico first reported some details of the new offer. The Washington Post reported some components of the president’s offer on taxes.

 

It was unclear if Ms. Capito and the five Republican senators who have been involved in the talks would assemble another counterproposal before she is scheduled to speak to Mr. Biden on Friday. Administration officials and Democratic congressional leaders have suggested that they would decide as early as next week on whether there would be a bipartisan compromise or if they must proceed on their own.

 

But moderate Democrats have warned against abandoning the bipartisan talks and are quietly discussing possible alternatives with some of their Republican colleagues. If the talks with Ms. Capito’s group break down, Mr. Biden could find himself negotiating with that bipartisan band.

 

Jim Tankersley is a White House correspondent with a focus on economic policy. He has written for more than a decade in Washington about the decline of opportunity for American workers, and is the author of "The Riches of This Land: The Untold, True Story of America's Middle Class." @jimtankersley

 

Emily Cochrane is a reporter in the Washington bureau, covering Congress. She was raised in Miami and graduated from the University of Florida. @ESCochrane