Top Democrats said an agreement on President Joe Biden’s huge domestic package is close, but momentum faded late Wednesday and tempers erupted when a paid family leave idea was dropped and a billionaires’ tax looked to be discarded, largely to appease a critical member of the 50-50 Senate.
With his major domestic program on the line, Biden will travel to Capitol Hill on Thursday morning to encourage Democratic senators to “complete the job” on the social services and climate change package before he leaves for international meetings.
Expanded health-care programs, free pre-kindergarten, and $500 billion to combat climate change are all still in the mix in what is now at least a $1.75 trillion plan.
According to a person who asked anonymity to discuss the secret negotiations, Democrats are considering a new levy on the rich — 5% on earnings above $10 million and an extra 3% on incomes over $25 million — to help pay for it.
“They’re all within our grasp,” says the narrator. Let’s see if we can get these bills over the finish line.” Late Wednesday, Biden sent out a tweet.
Biden will address the House Democratic Caucus on Thursday morning to help drive legislators toward that objective, according to a source familiar with the plan who spoke on the condition of anonymity to The Associated Press. Aside from advocating for crucial party issues, the president hoped to demonstrate international leaders that his government was getting things done.
White House press secretary Jen Psaki said the government was reviewing the issue “hour by hour.”
House Speaker Nancy Pelosi stated that Democrats were in “very excellent shape” on Capitol Hill, setting the tone for a fast-paced day. But optimism swiftly evaporated as Biden’s massive program hit a slew of new roadblocks, the most serious of which was figuring out how to pay for it all.
According to a senior party official who asked anonymity to discuss the secret negotiations, a recently proposed tax on billionaires might be dropped when Democratic Sen. Joe Manchin of West Virginia opposed.
The billionaires’ tax plan was intended to sway another Democratic holdout, Arizona Senator Kyrsten Sinema, but Manchin slammed it as unjustly targeting the rich, dividing Democrats.
“Rather than attempting to punish those in the stratosphere, we should be proud that our country is able to generate riches,” Manchin told reporters.
Manchin has proposed a minimum 15% flat “patriotic tax” to ensure that the wealthiest Americans pay their fair share of taxes. “We need to move on,” he added, despite his reservations.
Fall was followed by a planned paid family leave scheme, which had already been whittled down from 12 to four weeks in order to appease Manchin. However, because of his reservations, it was unlikely to be included in the law, according to the source.
“It’s not over until it’s over,” said Sen. Kirsten Gillibrand, D-N.Y., who had prepared numerous fresh possibilities for Manchin’s assessment.
Manchin’s and Sinema’s concerns combined to deliver a one-two punch, tossing Biden’s broader proposal into doubt, halving a $3.5 trillion package, and enraging colleagues in the process.
In a Senate that is equally divided, Biden needs the backing of all Democrats with no votes to spare.
Officials from the White House met with Manchin and Sinema, two senators who now have considerable power, to see if Biden will be able to fulfill the Democrats’ big campaign pledges.
As she ran into an elevator, Sinema murmured, “Making progress.”
A Sunday deadline for passing a smaller, bipartisan road-and-bridges infrastructure plan loomed, or money for ordinary transportation programs would expire. However, progressive legislators are refusing to accept the $1 trillion plan unless the larger Biden proposal is included.
Democrats have been unable to reach an agreement among themselves despite a series of deadlines, while Republicans are strongly opposed to the proposal. At best, Democrats may strike an agreement on Thursday that would allow Biden to travel to the Middle East with a settlement in hand, allowing the process to move forward while the last details were ironed out.
Pelosi ratcheted up the pressure by announcing a Thursday committee hearing to push the Biden proposal closer to a full House vote, though the timetable was still unclear.
After Sinema rejected the party’s prior notion of overturning Trump-era tax advantages on companies and the rich, those making more than $400,000. Democrats believed the announcement of the billionaires tax on Wednesday would help address the revenue side of the problem.
The new billionaires’ plan would tax gains of individuals with more than $1 billion in assets or earnings of more than $100 million for three years — fewer than 800 people — by compelling them to pay taxes on stock and other tradeable asset gains rather than waiting until holdings are sold.
The tax rate for billionaires would be the same as the capital gains rate, which is currently 23.8 percent. Democrats claim that raising $200 billion in revenue over ten years may help pay Biden’s proposal.
Republicans have slammed the billionaires’ tax as “bizarre,” and some have speculated that it may be challenged in court.
The billionaires tax, though, is still on the table, according to Democratic Senator Ron Wyden of Oregon, who chairs the Senate Finance Committee.
“I haven’t heard a single US senator — not one — rise up and say, ‘Gee, I think it’s simply fantastic that billionaires pay nothing for years on end,'” Wyden added.
The accompanying plan, a new 15% corporate minimum tax, as well as the new surtax proposed on higher incomes beyond $10 million, were more probable in the mix.
They’re all geared to help Biden achieve his goal of the rich and large business paying their “fair share.” They also fit with his vow that no additional taxes would be imposed on anybody earning less than $400,000 a year, or $450,000 for a couple. Biden wants his package to be completely paid for without incurring more debt.
As lawmakers determine out how much money will be available to spend on Biden’s new health, child care, and climate change initiatives, resolving the revenue side has been critical.
The head of the House Ways and Means Committee, Rep. Richard Neal of Massachusetts, warned Wyden that the billionaires’ tax would be tough to impose. Despite Sinema’s opposition, he believes Democrats would adhere to the strategy taken by his committee, which was to simply raise rates on companies and the rich, thereby reversing the 2017 tax cuts.
“There’s a lot of anguish in there about the billionaires’ tax,” Neal explained.
The maximum individual income tax rate on people earning more than $400,000 a year, or $450,000 for couples, would climb from 37 percent to 39.6 percent under the House plan authorized by Neal’s subcommittee. The corporation tax rate would go up from 21% to 26.5 percent.
The House measure also includes a 3% surtax on the richest Americans with adjusted incomes of more than $5 million per year, which Neal indicated should be increased to $10 million to sway the holdouts.
The two senators’ opposition is requiring tough cuts, if not outright cancellation, of policy goals ranging from child care assistance to senior dental, vision, and hearing aid benefits.
As coal-state Manchin opposed, climate change measures are now less severe on polluters, concentrating instead on rewarding clean energy incentives.
“You have 48 out of 50 individuals supporting an agenda that works for the American people,” said Vermont Independent Senator Bernie Sanders.
