Negotiations over President Joe Biden’s $2.25 trillion jobs and infrastructure spending package have barely begun, but Biden’s complicating matters by introducing a second expensive and expansive proposal, dubbed the “American Families Plan.”
Biden will unveil his next trillion-dollar plan during Wednesday’s address to a joint session of Congress after his $1.9 trillion spending package, billed as coronavirus relief, passed in March. Yet, speculation regarding how he will pitch paying for the social welfare-heavy legislation has already spooked the private sector.
And this week’s stock market dip forms only part of the backdrop against which talks over Biden’s loosely defined “infrastructure” agenda will start in earnest once he lays out the full scope of his ideas to lawmakers and the public.
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Biden’s “American Families Plan” is expected to cost $1.5 trillion in new spending and tax credits. And it will likely seek to make child care cheaper through $225 billion in funding, offer free prekindergarten and community college for $200 billion-plus, and create a $225 billion 12-week national paid family and medical leave program.
The White House, however, warns that “American Families Plan” discussions are ongoing. Proposals, for example, to expand healthcare coverage and decrease prescription drug prices through the measure were reportedly scrapped in favor of separate legislative efforts.
The White House may have pushed back on reporters this week, calling the “American Jobs Plan” and “American Families Plan” infrastructure packages after being mocked for a broad interpretation of the policy area. But Biden’s anticipated pay-fors will be as divisive as his “Build Back Better” agenda’s contents as he brings more Democrats and Republicans to the bargaining table.
White House press secretary Jen Psaki did not deny this week that Biden was considering returning the top marginal income tax rate from 37% to 39.6%, nor that he was contemplating taxing capital gains as ordinary income, effectively doubling the levy for people earning more than $1 million a year. That federal government revenue could be supplemented by increasing the corporate tax rate from 21% to 28%, as floated in Biden’s “American Jobs Plan.”
Psaki reiterated Biden’s campaign promise not to raise taxes on households with a combined income of $400,000 a year in response to questions. And on Friday, she specifically dismissed Wall Street’s reaction to the rumors.
“I did see data, factually, that it went back up this morning,” she said.
The other prickly tax issue is Biden’s idea to extend the child tax credit through 2025. Democrats want to render the benefit permanent. The child tax credit was already enhanced to $3,600 per young child and $3,000 per older child this fiscal year through the “American Rescue Plan.”
Republican strategist Lanhee Chen described GOP negotiators as feeling “burned” after they were shut out of talks over Biden’s coronavirus package earlier this year.
Back in February, the White House quickly shrugged off a $618 billion coronavirus counteroffer from 10 Republican senators as “too small.” Instead, Biden forged ahead without GOP support by relying on Congress’s reconciliation process. That prompted criticism concerning whether Biden was a serious bipartisan deal-maker.
Now, another group of Republican senators is suggesting a $568 billion infrastructure compromise. Simultaneously, Delaware Democratic Sen. Chris Coons, a Biden ally, has openly backed two bills, a bipartisan traditional infrastructure piece and a second vehicle Democrats can laden with social liberal infrastructure initiatives that can clear the evenly divided Senate using reconciliation.
“There is the possibility for bipartisanship,” said Chen, Mitt Romney’s 2012 presidential campaign policy director. “The question is, would Republicans deal in a bipartisan fashion because they feel burned, quite frankly, by Biden’s unwillingness to come to the table on other occasions?”
Chen indicated potential for a corporate tax compromise, given West Virginia Democratic Sen. Joe Manchin has asserted his preference for a lower 25% rate.
“I don’t know if you find a bunch, but you might find enough to get to where you need to go,” he said of the Senate’s 60-vote filibuster-proof threshold.
Republicans behind the second counteroffer would be invited to the White House next week, according to Psaki on Friday.
“There’s more time to move forward. There’s more time to discuss and negotiate. And we’ll take advantage of that, that time available,” she said.
Meanwhile, Republican senators, such as Florida’s Rick Scott, are advising Biden that reckless spending on liberal priorities has consequences, inflation is real, and America’s debt crisis is worsening.
“Sen. Scott will always fight to rein in Washington’s wasteful spending and make sure American taxpayers get a return on their money,” an aide told the Washington Examiner.
Others, including Louisiana’s John Kennedy, are pointing to more general problems with Biden’s approach to the country’s coffers and purse strings.
“President Biden’s budget proposal makes no attempt whatsoever to spend less taxpayer money by spending it more efficiently,” he said, referring to Biden’s discretionary spending outline, the “skinny budget,” which was released this month. The full document, which will fold in the “American Jobs Plan” and the “American Families Plan,” is expected to be published in May.
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Kennedy added, “Until Ritz Carlton Democrats and big-government Republicans make a serious attempt to scrub the budget, American taxpayers are being ill-served.”
