It appears the Biden administration has realized their ambitious tax hikes have a snowball's chance in hell of passing, given the slim majority Democrats hold in both chambers of Congress - which include two serious moderates (Manchin and Sinema) and a parliamentarian who won't let them get away with forcing legislation through via reconciliation (a simple majority).
Now, according to the Washington Post, Biden has outlined a plan for $1 trillion in new spending financed through tax changes which would not focus on raising the top corporate rate - a major concession to Republicans who opposed an earlier proposal to raise the corporate tax rate from 21% to 28%.
Instead, Biden on Wednesday recommended a new, minimum corporate tax of 15 percent, seeking to take aim at dozens of profitable U.S. corporations that pay little to nothing to the federal government annually, according to a person familiar with the talks who requested anonymity to describe them. The White House also proposed stepping up enforcement on corporations and wealthy earners who rely on loopholes to lessen their tax burdens, the person said.
The offer marked an attempt by the White House to avert the “red line” that Republicans laid down earlier in negotiations over infrastructure reform, though the source maintained that Biden has not strayed in his overall belief in raising rates on both corporations and wealthy individual earners. The president presented his plan, a revision of his total $2.2 trillion American Jobs Plan, during a meeting Wednesday with the GOP’s chief negotiator on infrastructure, Sen. Shelley Moore Capito (R-W.Va.). -WaPo
The news immediately sent markets higher:
Still, even with the new tax concession, the White House's $1 trillion plan is around four times as much as Republicans have been willing to spend, particularly since Biden's "infrastructure" deal contains minimal improvements for actual infrastructure. GOP leaders instead endorse a $257 billion package which continuing to oppose funding it with tax hikes. Instead, they have called on the Biden administration to repurpose unspent pandemic funds now that the situation has improved - an idea Biden has largely opposed.
On Friday both sides are set to meet again, however GOP leaders are still contemplating whether to put together another counter-offer, or to walk away from negotiations entirely, according to the Post.
"Patience is not unending, and he wants to make progress. His only line in the sand is inaction," said White House press secretary Jen Psaki on Wednesday. "He wants to sign a bill into law this summer."
Much as before, Biden could try to muscle infrastructure reform through Congress using only Democratic votes. But that path could be fraught with its own political challenges, given the wide array of opinions within the president’s own party over what infrastructure reform should entail, and how to pay for it.
Some moderates, including Sen. Joe Manchin III (D-W.Va.), also do not yet appear willing to abandon talks. Without their full support, Democrats would have no ability to advance infrastructure reform on their own in the Senate using a tactic known as reconciliation, which would require all 50 Democrats to vote in lockstep.
Good luck with that.