Senator Tells Biden GOP Won’t Back Tax Hike: Stimulus Update

(Bloomberg) -- President Joe Biden was told by a Republican senator at a White House meeting that the tax hike he’s proposed wouldn’t be approved by the GOP. Biden suggested some flexibility toward a smaller package than his $2.25 trillion infrastructure-focused economic plan, another meeting participant said.

Biden said before an Oval Office sit-down with a bipartisan group of lawmakers that he was “prepared to negotiate” on his so-called American Jobs Plan. The program spans traditional infrastructure like roads and bridges to investments in clean energy and funding for elderly care -- a package far broader than Republicans support. It also features corporate-tax hikes.

House Speaker Nancy Pelosi has targeted passage in her chamber by July 4. The legislation is likely to be reshaped by lawmakers through the process, not least because of moderate Democratic Senator Joe Manchin’s call for a smaller corporate-tax hike. Biden is expected to unveil another, social-program focused plan in coming weeks.

GOP Senator Tells Biden Tax Hikes ‘a Problem’ (5:14 p.m.)

Republican Senator Roger Wicker of Mississippi said he told Biden at Monday’s White House meeting on the administration’s infrastructure-focused proposal that GOP lawmakers wouldn’t support the tax hikes that the president has proposed to pay for the $2.25 trillion of spending.

“Clearly there are parts of his program that are non-starters for Republicans to pay for. The pay-for is a problem,” said Wicker, who described the tax cuts enacted under President Donald Trump in 2017 -- which Biden would in part roll back -- one of the greatest achievements of his career.

Wicker said, “It would be an almost impossible sell from the president to come to a bipartisan agreement that included the undoing of that signature” legislation.

Wicker, one of four GOP lawmakers in the Oval Office session along with four Democrats, told reporters that there was disagreement over a broader definition of infrastructure. “I’m willing to broaden it -- it does include ports, it does include rail. It includes passenger rail. I’ll give them all that, as roads, bridges and broadband,” he said. Wicker drew the line at “home health care and things of that nature.”

The White House meeting, which Wicker said lasted an hour and 40 minutes, and it included four senators and four representatives. -- Laura Litvan

Biden Discussed Gas Tax at White House Session, Congressman Says (5:11 p.m.)

Representative Donald Payne of New Jersey said the subject of the federal gasoline tax that funds highway projects came up during a meeting lawmakers had with Biden on Monday. Payne also said that Biden signaled he was open to a smaller magnitude of spending than what he proposed.

Biden talked about the potential of a gas-tax increase “of 5 cents or something like that and the amount of money that would generate,” Payne said.

Biden was raising the issue to suggest that there wasn’t sufficient money in a potential gas-tax hike to help make a large dent in funding the infrastructure program, according to a White House official. Biden still isn’t in favor of boosting the gas tax, the official said on condition of anonymity.

Payne also said that one of the Republican lawmakers brought up electric vehicles paying a tax and “the president was open to that.” He also said Biden “is really interested in putting down the infrastructure for electric vehicles.”

The congressman said at a press briefing that, “I think he is willing at a bit of a smaller package” for the infrastructure-focused plan. Nobody but the president talked about specific overall numbers for the package, Payne said. Asked about how genuine he thought Biden’s outreach to Republicans was, Payne said, “Based on the meeting, the president was much more flexible than I was.” -- Erik Wasson, Jennifer Jacobs.

Biden ‘Open to Negotiate’ on Infrastructure (2:30 p.m.)

Biden said “I’m prepared to negotiate” with regard to the $2.25 trillion infrastructure-led economic program he unveiled last month. He spoke at the start of a meeting with a bipartisan group of Senate and House lawmakers.

“I think everyone acknowledges we need a significant increase in infrastructure; it’s going to get down to what we call infrastructure,” Biden said in the Oval Office on Monday. Republicans have favored a much narrower plan that’s focused on the more traditional elements of an infrastructure package, such as highways and bridges, rather than elements such as strengthening the elderly care sector as Biden wants.

The president highlighted his view that broadband provision is defined as infrastructure in the modern-day economy, and argued for other items including replacing lead pipes for drinking water.

Further making the case for the breadth of the proposal, the White House on Monday released “state-by-state fact sheets” listing items including the numbers of roads and bridges in poor condition, broadband coverage gaps and drinking-water funding requirements. The data are “laying out the critical necessity” for the president’s program, White House Press Secretary Jen Psaki said.

Psaki separately said the administration welcomes other ideas to help fund the plan, saying “it’s all open to negotiation.” Asked about moderate Democratic Senator Joe Manchin’s opposition to the proposed 28% corporate-tax rate, favoring 25%, Psaki said it was encouraging that he was “open” to raising it. -- Josh Wingrove

Goldman Says Congress to Pass $3.3 Trillion in Biden-Plan Spending (11:50 a.m.)

Goldman Sachs Group Inc. analysts said that for now they’re penciling in congressional passage of measures worth $3.3 trillion over 10 years that follow through on Biden’s American Jobs Plan and forthcoming American Families Plan proposals.

“We expect Congress to pass most of this spending later this year, including nearly all of the ‘hard infrastructure’ spending that President Biden proposes, as well as most of the research, manufacturing, and ‘green’ incentives,” Goldman analyst Alec Phillips wrote in a note to clients Sunday. “We expect Congress to approve the social benefits the White House proposes but in a scaled-back form.”

As for the corporate-tax hikes Biden has proposed, and the individual income-tax increases expected in coming weeks, Goldman does see higher levies coming, although the bank doesn’t expect as much as the administration has proposed. The corporate tax rate will rise to around 25%, not the 28% Biden floated, the bank said.

“Individual tax rates look likely to rise, but we would expect capital gains taxes to stop short of the near-doubling the White House is likely to propose,” Phillips wrote. “We also expect little net increase in individual taxes, as new revenue is likely to be used for new tax benefits.”

The legislative path will become clearer by next month, but for now Goldman expects Congress to group all of the elements into a single large bill, passing it in the third quarter. “Alternative scenarios are possible,” Phillips wrote.

Biden to Meet Bipartisan Group of Lawmakers at White House (10:15 a.m.)

Biden is scheduled to meet with eight lawmakers to discuss his infrastructure-and-jobs plan at the White House, starting at 1:45 p.m. The group includes four senators and four representatives, equally divided between Republicans and Democrats.

From the Senate side are Democrats Maria Cantwell of Washington and Alex Padilla of California, along with Republicans Deb Fischer of Nebraska and Roger Wicker of Mississippi. All but Padilla are members of the Senate Commerce Committee, which is chaired by Cantwell. Wicker is the ranking Republican on the panel. The Commerce Committee will play a key role in the manufacturing research and broadband Internet aspects of the legislation.

From the House side are Republicans Garret Graves of Louisiana and Don Young of Alaska and Democrats Donald Payne of New Jersey and David Price of North Carolina, who chairs the House Appropriations subcommittee for transportation.

Business Roundtable Starts Major Ad Campaign Opposing Tax Hikes (6:00 a.m.)

The Business Roundtable is starting a multimillion-dollar campaign aimed at stopping tax increases proposed as part of Biden’s $2.25 trillion infrastructure plan.

The group’s radio and digital advertisements, airing within the Washington D.C. market, will extol the benefits of the current tax regime and contend that the Biden administration shouldn’t attempt to raise corporate tax rates during an economic downturn.

According to a copy of the 30-second script obtained by Bloomberg News, the ad will say: “We’re not out of the woods on Covid-19, but we’re getting there. And as we emerge, we need an economy that grows and creates opportunity. That requires a reliable, consistent and competitive tax code for America’s businesses.” -- Nancy Cook

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With assistance from Bloomberg