Biden’s Hopes for GOP Backing on Next Economic Plan Shrinking
(Bloomberg) -- President Joe Biden’s next major economic package will almost certainly have to rely once again on a Democrat-only approach after Senate Minority Leader Mitch McConnell shut the door Tuesday on Republican support for tax hikes to pay for it.
While West Virginia Democrat Joe Manchin has insisted Democrats at least try to work with Republicans on an infrastructure package -- and Biden also continues to hold out hope -- there’s little expectation now that such a bipartisan path exists for anything close to the scale the White House wants, and certainly not for the taxes on the wealthy and corporations they envision will pay for it.
“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” McConnell said Tuesday.
That means for a big portion of Biden’s plan, Democrats would have to employ the same budgetary maneuver, known as reconciliation, that they used to pass his $1.9 trillion stimulus package with a simple majority vote.
As with that legislation, Biden would have to keep every Democrat on board in the Senate and nearly every Democrat in the House to pass his still-emerging “Build Back Better” proposal, his ambitions limited largely by what Manchin and House moderates will support.
There are pitfalls to the partisan approach, given special budget rules that already quashed Biden’s attempt to raise the $7.25 minimum wage and stripped an extension of the San Francisco Bay area transit system as part of the stimulus legislation.
Those rules could also kill earmarks Democrats want to include in an infrastructure package and force assorted other clumsy workarounds for spending infrastructure money — giving them some incentive to keep trying to pass at least a portion of the plan with bipartisan support.
Democrats of all stripes are likely to see the package -- whether in one massive piece of legislation or two -- as one of the last must-pass items before the 2022 midterm elections.
The White House is looking at a broad plan that includes longer-term economic stimulus and could run into the trillions of dollars. In addition to physical infrastructure, Biden has put forward “social” infrastructure ideas such as expanding access to child and elder care, making the refundable child tax credit permanent and dealing with climate change. Progressives are talking about including items like an Obamacare public option, lowering the Medicare age to 55 and comprehensive immigration reform.
The administration intends to pay for it in part through a wide swath of tax increases on businesses and individuals earning more than $400,000, including rolling back some of former President Donald Trump’s 2017 tax cuts. A corporate tax increase to 28%, higher levies on offshore business profits, a broader estate tax, and higher capital gains taxes for wealthy individuals are all under consideration. Nearly every tax increase on the White House wish list is anathema to GOP lawmakers.
White House Press Secretary Jen Psaki told reporters Tuesday that Biden believes “there can be and should be bipartisan support” for infrastructure. “And as conversations continue, he’s certainly hopeful there’s an opportunity for that.”
While McConnell doesn’t have complete control over all of his conference, his position against tax increases makes it unlikely that Democrats can convince 10 Republicans to vote for a levy-financed plan. In order to avoid reconciliation constraints, 60 votes are needed for the legislation to pass the Senate.
It’s also not clear yet how much of a tax increase Manchin and moderates in the House would accept, and the Democrats have narrow margins in both chambers. New Jersey Representative Josh Gottheimer said that moderates like him aren’t interested in tax increases.
“There’s not a lot of enthusiasm for that,” Gottheimer said.
If the larger effort ultimately falls apart, there are some smaller areas that could raise some money and potentially win bipartisan support. Some Republicans have gone along with higher user fees of various kinds, and increasing the budget for Internal Revenue Service enforcement of existing tax law could raise billions more.
A vehicle-miles-traveled fee is being explored, as well as long-term bonds and public-private partnerships to shift some of the costs to companies or local governments.
Senate Budget Chair Bernie Sanders of Vermont said he’s skeptical of getting any GOP support.
“If Republicans are prepared to support a significant and important piece of legislation that deals with climate change, deals with infrastructure, that’s great,” he told reporters Tuesday. “My own feeling is at this point I doubt that that will be the case.”
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