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, for what he says are the middle-class values at the heart of his proposal.
Biden mentioned during the evening event the challenge he faces in wrangling the sharply divergent factions in 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 is navigating the competing demands of progressives, who want major investments in social services, 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.
“It’s all about compromise. Compromise has become a dirty word, but bipartisanship and compromise still has to be possible,” he said.
Biden later said the discussions are “down to four or five issues.”
On one issue—the taxes to pay for the package—the White House idea seemed to be making headway with a new strategy of abandoning plans for reversing Trump-era tax cuts in favor of an approach that would involve taxing the investment incomes of billionaires to help finance the deal.
Biden has faced 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 president was unusually forthcoming Thursday night about the sticking points in the negotiations with Sinema and another key Democrat, conservative Sen. Joe Manchin of West Virginia.
While the president said Sinema “will not raise a single penny in taxes” on the wealthy or corporations, a White House official later clarified that the president was referring to raising the top tax rates, not the range of tax proposals “which Senator Sinema supports.”
Biden said Manchin doesn’t want to “rush” the transition to clean energy so quickly it will result in major job losses in his coal-producing state.
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.
As long-sought programs are adjusted or eliminated, Democratic leaders are working to swiftly wrap up talks, possibly in the days ahead.
Talks between the White House and Democratic lawmakers 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.
“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.”
An abrupt change of course came late Wednesday when the White House floated new ways to pay for parts of the proposal.
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.
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.
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 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.
The president especially wants to advance the legislation 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.
Democrats also want to add funding to provide dental, vision and hearing aid benefits to people on Medicare proposed by Sen. Bernie Sanders, I-Vt.