Northwest Arkansas Democrat-Gazette
Democrats push for spending deal
After talks progress, new setbacks arise
WASHINGTON — House Speaker Nancy Pelosi declared Wednesday that Democrats are in “pretty good shape” on President Joe Biden’s sweeping domestic plan, but hopes for a breakthrough quickly faded when a pivotal Democratic senator panned a new tax on billionaires to help pay for the $1.75 trillion package.
Biden and other Democratic leaders are racing to wrap up talks before the president departs this week for overseas summits. One potential new casualty — a paid family leave benefit — was being reduced to a more narrow program, perhaps for parents to care for new children.
Besides pressing for important party priorities, Biden is hoping to show foreign leaders that the U.S. is getting things done under his still-new administration.
With his package of social service and climate change proposals in the balance, Biden could yet visit Capitol Hill before traveling abroad today. House Democrats are set to meet this morning. The administration is assessing the situation “hour by hour,” White House press secretary Jen Psaki said.
By midday, Democrats appeared on the verge of clinching more than $500 billion in new money to combat climate change, even as they continued to hammer out some of the specifics. Some felt they were also close to a temporary program to expand Medicaid coverage for low-income Americans. Even before Wednesday, the party had neared consensus on a slew of other programs to aid families, including expanded tax credits for parents and new, free and universal prekindergarten for their children.
“We are on track now to
move forward once we get an agreement,” Psaki said.
But Biden’s proposal ran into new setbacks, chief among them how to pay for it all.
The just-proposed tax on billionaires could be scrapped after Democratic Sen. Joe Manchin of West Virginia objected, according to a senior party aide, who requested anonymity to discuss the private talks.
The billionaires-tax proposal had been designed to win over another Democratic holdout, Sen. Kyrsten Sinema of Arizona, but Manchin panned it as unfairly targeting the wealthy, leaving Democrats at odds.
“People in the stratosphere, rather than trying to penalize, we ought to be pleased that this country is able to produce the wealth,” Manchin told reporters.
Manchin said he prefers a flat “patriotic tax,” at a minimum of 15%, to ensure the wealthiest Americans don’t skip out on paying any taxes.
“I don’t like the connotation we’re targeting different people,” he said.
White House officials met at the Capitol with Manchin and Sinema, two senators who now hold enormous power, essentially deciding whether Biden will be able to deliver on the Democrats’ major campaign promises.
In the 50-50 Senate, Biden needs all Democrats’ support with no votes to spare.
“Making progress,” Sinema said as she dashed into an elevator.
The quickening pace of negotiations came as Biden pressed to have a deal in hand ahead of the global summits. There’s also a Sunday deadline to approve a smaller, bipartisan roads-and-bridges infrastructure bill or risk allowing funds for routine transportation programs to expire. But that $1 trillion bill has been held up by progressive lawmakers who are refusing to give their support without the bigger spending deal.
In an interview, Rep. Pramila Jayapal, D-Wash., said caucus leaders met Tuesday night and affirmed that they aren’t willing to move one economic package without the other. Otherwise, the congresswoman said, their signature economic initiative could fall victim to significant delays, which she described as “another way to kill the bill.”
“We have to have the full legislative text and the vote,” she said, noting that “dozens” of her members would vote against infrastructure if the House tried to move the two proposals independently. “What I want is the two bills moving together at the same time.”
Applying pressure, Pelosi announced a committee hearing today that opens the door for lawmakers to bring the still-forming tax-and-spending measure to the chamber floor — that is, once they finish writing it. But without Senate agreement, the House panel’s meeting is merely an effort to kickstart the process.
“Today, we move closer to passing the historic, transformative Build Back Better Act,” she said in a letter to Democrats.
Manchin was also objecting to a new paid family leave program that was already being chiseled back from 12 to four weeks. Sen. Kirsten Gillibrand, D-N.Y., had devised several new options for his review.
Gillibrand told reporters late in the evening: “It’s not out, and it’s not over until it’s over.”
Democrats had hoped the unveiling of the billionaires tax Wednesday would help resolve the revenue side of the equation after Sinema rejected the party’s earlier idea of reversing Donald Trumpera tax breaks on corporations and the wealthy, those earning more than $400,000.
Sinema declined to say if she supported the new proposal, stating: “I don’t want to comment.”
The new proposal would tax the gains of those with more than $1 billion in assets or with incomes of more than $100 million over three consecutive years.
It would hit the wealthiest of Americans, fewer than 800 people, starting in the 2022 tax year, requiring them pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.
A similar billionaires tax would be applied to nontradeable assets, including real estate, but it would be deferred with the tax not assessed until the asset was sold, though interest would have to be paid.
Overall, the billionaires tax rate would align with the capital gains rate, now 23.8%. Democrats have said it could raise $200 billion in revenue that could help fund the spending package over 10 years.
Democratic Sen. Ron Wyden of Oregon, chairman of the Senate Finance Committee, said the billionaires tax remains on the table.
“I’ve not heard a single United States senator — not one — get up and say, ‘Gee, I think it’s just fun that billionaires pay little or nothing for years on end,’” Wyden said Wednesday.
Taken together, the new billionaires proposal and a plan for a new 15% corporate minimum tax are designed to fulfill Biden’s desire for the wealthy and big businesses to pay their “fair share.” They also fit his promise that no new taxes will hit those earning less than $400,000 a year, or $450,000 for couples. Biden wants the package fully paid for without piling on debt.
Republicans have derided the billionaires tax as “harebrained,” and some have suggested it would face a legal challenge.
Among Democrats, Rep. Richard Neal of Massachusetts, the chairman of the Ways and Means Committee, said he told Wyden that the billionaires tax may be difficult to implement. He expects Democrats to stick with the approach that his panel took in simply proposing to raise rates on corporations and the wealthy, undoing the 2017 tax cuts.
“There’s a lot of angst in there over the billionaires tax,” Neal said.
Under the House bill advanced by Neal’s panel, the top individual income tax rate would rise from 37% to 39.6% on those earning more than $400,000 a year, or $450,000 for couples. The corporate rate would increase from 21% to 26.5%.
The House bill also proposes a 3% surtax on the wealthiest Americans with adjusted income beyond $5 million a year, and Neal suggested that could be raised to $10 million to win over the holdouts.
The uncertainty between the tax-rate increase and the billionaires levy appeared to rile Sen. Bernie Sanders, I-Vt., who told reporters earlier in the day that he is “not quite clear in terms of the revenue package,” adding: “Every sensible revenue option seems to be destroyed.”
“Should we raise corporate tax rates, personal income taxes for the very wealthy? Of course, we should, but at least one person in the caucus doesn’t want to do that,” he said. “Should we demand that the billionaires pay their fair share of taxes? Yes, there’s another person who doesn’t want to do that.”
Other progressive Democrats expressed frustration at the political calculus.
“Of course I don’t like it,” said Sen. Mazie Hirono, D-Hawaii, of the outsize influence moderates have had in compressing the package and erasing some of its provisions. “These are all things that we’ve been fighting for. For decades.” But she said that with Democratic unity needed, the party should use the bill to “open the door” to its priorities and then try extending and expanding them later.
“At some point, you have to realize that legislating requires respect for the rest of the people you’re working with,” Rep. John Yarmuth, D-Ky., a progressive and chairman of the House Budget Committee, said of Manchin and Sinema. “And when you have forced a 50% cut essentially in a giant program, I think you’ve done a disservice to all the people you serve with.”
“I’m p****d off, man,” said Rep. Jamaal Bowman, D-N.Y., one of the party’s most progressive members, singling out Manchin. “It’s just unacceptable to me that one person from one state can have all this power and make these decisions that will crush my district and districts like mine across the country.”