White House, Democrats hurriedly reworking $2 trillion Biden plan
WASHINGTON – The White House and Democrats are hurriedly reworking key aspects of President Joe Biden’s $2 trillion domestic policy plan, trimming which social services and climate change programs to include 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 said are the middle-class values at the heart of his proposal. As longsought 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.
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 on Thursday, “It will pass soon.”
Talks between the White House and Democratic leaders are trying to reduce 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.
With stark Republican opposition and no Democratic votes to spare, Biden must keep all lawmakers in his party aligned.
An abrupt change 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 richest Americans.
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 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.
Pelosi indicated she preferred undoing those tax breaks, but appeared open to the alternative. “We’ll see,” she said.
The corporate tax rate is 21%. Democrats want to raise 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.
Instead, 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. Sinema did not respond to a request for comment. 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.
On a call with the administration and the White House, Wyden said he “stressed the importance of putting an end to America’s two tax codes, and finally showing working people in this country that the wealthiest Americans are going to pay taxes just like they do.”