WASHINGTON (AP) — The White House and Democrats are hurriedly reworking key aspects of President Joe Biden’s $2 trillion domestic policy plan, trimming the social services and climate change programs and rethinking new taxes on corporations and the wealthy to pay for a scaled-back package.
The changes come as Biden more forcefully appeals to the American public, including in a televised town hall Thursday evening, for what he says are the middle-class values at the heart of his proposal. As long-sought programs are adjusted or eliminated, Democratic leaders are showing great deference to Biden’s preferences to swiftly wrap up talks and reach a deal in the narrowly held Congress.
But Biden on Thursday night mentioned the challenge he faces in wrangling the sharply divergent factions within the Democratic party to agree to the final contours of the bill. With an evenly divided Senate, he can’t afford to lose a single vote, and he has spent recent days navigating the competing demands of progressives, who want to see major investments in new social services and expansions to existing ones, and centrists, who want to see the price tag on the package come down.
“When you’re president of the United States, you have 50 Democrats — every one is a president. Every single one. So you gotta work things out,” he said during a CNN town hall.
Still, he expressed optimism about the process, saying “I think so” when asked if Democrats were close to a deal. But he emphasized the need for both factions of the Democratic Party to come together to hammer out a final agreement.
“It’s all about compromise. Compromise has become a dirty word, but bipartisanship and compromise still has to be possible,” he said.
Even a new White House idea abandoning plans for reversing the Trump-era tax rates in favor of a approach that would involve taxing the investment incomes of billionaires to help finance the deal appears acceptable to top Democrats. The leadership is racing to finish negotiations, possibly by week’s end.
“We have a goal. We have a timetable. We have milestones, and we’ve met them all,” said House Speaker Nancy Pelosi, D-Calif., who predicted Thursday, “It will pass soon.”
Talks between the White House and Democratic leaders are focused on reducing what had been a $3.5 trillion package to about $2 trillion, in what would be an unprecedented federal effort to expand social services for millions and address the rising threat of climate change.
Even as he seemed encouraged by progress, Biden acknowledged major reductions to his original vision. He signaled the final plan would no longer provide free community college, but said he hoped to increase Pell Grants to compensate for the loss of the policy.
“It’s not going to get us the whole thing, but it is a start,” he said.
He also said that what had been envisioned as a federally paid, months-long family leave program would be just four weeks.
An abrupt change of course came late Wednesday when the White House floated new ways to pay for parts of the proposal by shelving a long-planned increase in corporate and top income tax rates but adding others, including a tax on the investment gains of the very richest Americans.
Biden himself signaled flexibility on the tax provisions of the bill, as long as it’s paid for and it doesn’t increase taxes on those earning $400,000 or less.
“I’m willing to make sure that we pay for everything,” he said, when pressed on what tax proposal he’d support.
Biden faces resistance from key holdouts, in particular Sen. Kyrsten Sinema, D-Ariz., who has not been on board with her party’s plan to undo President Donald Trump’s tax breaks for big corporations or individuals earning more than $400,000 a year.
The White House believes Sinema “is working with us in good faith and we are working with her in good faith,” deputy press secretary Karine Jean-Pierre said Thursday.
The newly proposed tax provisions, though, are likely to sour progressives and even some moderate Democrats who have long campaigned on scrapping the Republican-backed 2017 tax cuts that many believe unduly reward the wealthy and cost the government untold sums in lost revenue at a time of gaping income inequality. Many are furious that perhaps a lone senator could stymie that goal.
The chairman of the tax-writing Ways & Means Committee, Rep. Richard Neal, D-Mass., said he spoke for more than 30 minutes with the centrist Arizona senator, whose closely held views are a mystery to her colleagues.
“I said, Kyrsten, you and I both know this has got to pass. She said: ‘I couldn’t agree more,’” Neal told reporters at the Capitol.
Sinema’s office did not respond to a request for comment.
Under existing law passed in 2017, the corporate tax rate is 21%. Democrats had proposed raising it to 26.5% for companies earning more than $5 million a year. The top individual income tax rate would go from 37% to 39.6% for those earning more than $400,000, or $450,000 for married couples.
Under the changes being floated the corporate rate would not change. But the revisions would not be all positive for big companies and the wealthy.
The White House is reviving the idea of a minimum corporate tax rate, similar to the 15% rate Biden had proposed this year. That’s even for companies that say they had no taxable income — a frequent target of Biden, who complains they pay “zero” in taxes.
The new tax on the wealthiest individuals would be modeled on legislation from Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee. He has proposed taxing stock gains of people with more than $1 billion in assets — fewer than 1,000 Americans.
Other tax options are also being considered, and Democrats are almost certain to include a provision to beef up the Internal Revenue Service to go after tax dodgers.
Another key Democrat, conservative Sen. Joe Manchin of West Virginia, has said he prefers a 25% corporate rate, but his resistance to the bill lies chiefly in other areas such as climate change and social services.
Overall, the emerging package, while slimmer than the original, would represent the most substantial overhaul of the federal balance sheets in at least a generation.
Biden and his party are trying to shore up middle-class households, tackle climate change and stem the trend toward rising income inequality.
In the mix are at least $500 billion to battle climate change, $350 billion for child care subsidies and free prekindergarten, a new federal program for at least four weeks of paid family leave, a one-year extension of the $300 monthly child tax credit put in place during the COVID-19 crisis, and money for health care provided through the Affordable Care Act and Medicare.
Likely to be eliminated or shaved back are plans for tuition-free community college, a path to permanent legal status for certain immigrants in the United States and a clean energy plan that was the centerpiece of Biden’s strategy for fighting climate change.
Democrats are growing anxious they have spent much of the year on the package and have had difficulty explaining what’s in it, made up of so many different pieces.
The president especially wants to advance it by the time he departs next week for a global climate summit in Scotland.
Manchin has made clear he opposes the president’s initial energy plan, which was to have the government impose penalties on electric utilities that fail to meet clean energy benchmarks and provide financial rewards to those that do.
Instead, Biden is focused on providing at least $500 billion in tax credits, grants and loans for energy producers that reach emission-reduction goals.
In other areas, Pelosi appeared on board with Biden’s plan to extend the $300 monthly child tax credit for another year, rather than allow it to expire in December, but that’s not as long as Democrats wanted.
Biden also wants to ensure funding for health care programs and add a new one to provide dental, vision and hearing aid benefits to people on Medicare proposed by Sen. Bernie Sanders, I-Vt.