President Joe Biden, in a meeting with the Republican chief negotiator on Wednesday, proposed a $ 1 trillion infrastructure package in new spending that would be funded without increasing the corporate tax rate.
The new pitch aims to avoid Republican disdain by bypassing the corporation tax hike previously proposed by the president. Instead, it would introduce a minimum corporate tax rate of 15% aimed at some of the country’s most profitable companies.
The proposal is a concession to the total cost of the bill from Biden, the last pitch of which was worth $ 700 billion more.
But Biden didn’t win over Republicans with that modified tax proposal, a GOP source familiar with negotiations told ABC News.
The Republicans have made it clear from the start of the negotiations that they do not support a rise in the corporate tax rate because they do not want to change the characteristic tax reform law of former President Donald Trump. During a briefing Thursday White House Press Secretary Jen Psaki argued that raising the minimum rate would not change the 2017 tax law.
“This should be perfectly acceptable to a number of Republicans who have said that they – they want to quit – their bottom line is that they want to leave the 2017 tax bill untouched,” said Psaki.
But, according to the Republican source, GOP lawmakers see Biden’s revised proposal, which includes several other tax changes in addition to the 15% minimum rate, as just a corporate tax increase under a different name.
A Republican rejection of the Biden tax changes would stall negotiations on proposed funding models again. The president has made it clear that he does not support tax hikes for those earning less than $ 400,000 a year, which Republicans sought to overcome by suggesting that income be raised by reallocating funds from previous COVID-19 relief laws achieve. The government said these funds are not as generous as Republicans think they are.
“There’s a tiny, minimal amount left,” said Psaki on Thursday. “It certainly won’t pay off for the majority – the vast majority – of these proposals.”
Senator Shelley Moore Capito, who is leading Republican infrastructure negotiations, is due to get back in touch with Biden on Friday. A Republican source familiar with conversations told ABC News that Republicans expect to make a counteroffer during Friday’s meeting.
Psaki said Thursday government-Republican talks would continue in “good faith” and refused to set a deadline for talks, but Monday’s deadline for progress set by Transport Secretary Pete Buttigieg last Sunday is getting closer.
The back and forth about the infrastructure has been going on for weeks, with the top line numbers of both parties gradually converging.
The most recent Republican offer was $ 928 billion in infrastructure spending, but included only about $ 250 billion in new spending over what would have already been federally approved for infrastructure.
The White House’s latest $ 1 trillion offer is all-new money. The significant difference in cost between the packages is due in part to fundamental disagreements about the scope of the bill.
Republicans have argued that things like childcare, home care, job training, and other elements of the White House’s “human infrastructure” have no place in an infrastructure bill. A source familiar with negotiations said Biden’s new proposal cuts spending on some of the things Republicans have objected to, such as care, electric vehicles, and school and home construction costs, but the cost differential is still significant.
The $ 928 billion GOP package includes $ 506 billion for roads, bridges and major projects, $ 98 billion for local public transport, $ 46 billion for rail freight and funds for ports, airports, Water storage, broadband and infrastructure funding – elements they branded as “core” infrastructure
Senate minority leader Mitch McConnell has hired Capito to lead the negotiations on behalf of the Republicans, but his hand in the back and forth is clear. McConnell has been campaigning for a tightly tailored infrastructure package for weeks that discards all suggestions related to human infrastructure.
In Kentucky, McConnell said Thursday he spoke with Capito before and after their meeting at the White House and warned of tax increases.
“Once you get into that area of tax hike, you’re going to create a huge controversy,” said McConnell. “So I don’t think my party members will like this, and I think it will be a hard sell to the Democrats.”
McConnell predicted that if the bipartisan talks fail in the coming days, he expects the Democrats to go alone, put together a multi-trillion dollar package and try to use Reconciliation, a procedural tool to get it passed, that could enable them to bypass minority resistance. McConnell warned, however, that this would be “extremely controversial because of the taxes they are trying to collect”.
Biden threads a difficult needle as he continues to make concessions to appease the Republicans. He can only afford to lose four Democratic votes in the House of Representatives, and while removing Democratic priorities from the law to please Republicans, he risks losing the most progressive members of his own faction in the House of Representatives.
New York MP Jamaal Bowman, a progressive freshman who is among the most liberal Democrats in the House of Representatives, responded to reports that Biden sought a compromise with Republicans over infrastructure by threatening to oppose any future deal.
“If what I read is correct, it would be very difficult for me to vote for this bill. $ 2 trillion was already the compromise. @POTUS can’t expect us to vote for an infrastructure deal dictated by the Republican Party. ”Bowman tweeted Thursday.
The White House previously signaled its willingness to try to pass a second bill that would include some of the more controversial elements of Biden’s infrastructure package through reconciliation, but that would require the support of all 50 Democrats in the Senate and at least now two Democrats, Sens. Joe Manchin and Kyrsten Sinema oppose using the procedural circumvention.
Manchin has also made it clear that it does not support a 28% corporate tax rate, despite Psaki on Thursday saying Biden is unwilling to give up on his corporate tax hike efforts entirely.
It’s not exactly clear how Biden could move forward if bipartisan talks stall, but Psaki added that Biden stuck to his belief that companies should pay more for infrastructure.
She stressed that the president had “absolutely not” given up his larger goal of raising the corporate tax rate and was only willing to take him off the table for this round of negotiations to lure the Republicans.
ABC News’ Justin Gomez, Molly Nagle, Trish Turner, and Benjamin Siegel contributed to this report.
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