Biden faces challenge with Democrats on infrastructure package

President Biden faces hurdles toward getting consensus among Democrats on an infrastructure package, regardless of if it’s bipartisan legislation or if Democrats pursue legislation on their own.

Progressives are getting frustrated with Biden’s ongoing talks with Republicans, and want the White House to start to pursue an infrastructure package that could pass without GOP support through the budget reconciliation process. 

But some Democrats have raised concerns about aspects of the tax proposals Biden has floated to pay for infrastructure legislation, so reaching a deal won’t necessarily be smooth sailing even if the president isn’t focused on attracting Republican support. Some Democrats have also brought up issues with Biden’s tax proposals that relate to regional interests. 

It will be important for Biden to have congressional Democrats united behind an infrastructure package since the party only narrowly controls the House and the Senate, and even if there’s a bipartisan bill, support from Democrats will be critical because there may still be opposition from some Republicans. 

Biden and the lead Republican negotiator, Sen. Shelley Moore Capito (R-W.Va.), met on Wednesday and spoke on the phone on Friday. They are planning to talk again on Monday. 

Capito on Friday floated a new offer to Biden that included an additional $50 billion in spending compared to Republicans’ previous offer, but the proposal was not satisfactory to the president, according to White House press secretary Jen Psaki.

“The President expressed his gratitude for her effort and goodwill, but also indicated that the current offer did not meet his objectives to grow the economy, tackle the climate crisis and create new jobs,” Psaki said in a statement. “He indicated to Senator Capito that he would continue to engage a number of Senators in both parties in the hopes of achieving a more substantial package.” 

Progressive lawmakers are urging Biden to move on from the talks with Republicans. They stepped up their calls for Biden to plow forward with a partisan bill after it was reported that the White House on Wednesday emphasized options other than raising the corporate income tax rate as ways to pay for a slimmed-down version of Biden’s initial $2.3 trillion proposal. Specifically, the White House focused on Biden’s proposal to create a minimum tax of 15 percent for large corporations’ income as it’s reported to investors.

But Biden risks losing progressive support for a proposal that differs substantially from his initial proposal.

“Hmm. When the GOP passed legislation to provide a $1 trillion tax break to corporations & the 1% without a single Democratic vote, I didn’t hear my Republican colleagues say ‘Wait. It has to be bipartisan.’ Please don’t tell me we can’t use the same tools to help working people,” Sen. Bernie Sanders (I-Vt.) tweeted Friday. 

Hmm. When the GOP passed legislation to provide a $1 trillion tax break to corporations & the 1% without a single Democratic vote, I didn’t hear my Republican colleagues say “Wait. It has to be bipartisan.” Please don’t tell me we can’t use the same tools to help working people.

— Bernie Sanders (@SenSanders) June 4, 2021

Rep. Jamaal Bowman (D-N.Y.) said in a statement Thursday that he’d have trouble voting for a smaller bill that didn’t undo the corporate tax cuts Republicans enacted in 2017. 

“$2 trillion was already the compromise,” he said. “President Biden can’t expect us to vote for an infrastructure deal dictated by the Republican Party.” 

Other progressive groups have also raised concerns about the talks between the White House and Republicans.

“We have no reason to believe that Republicans are coming to the table in good faith at all, so I don’t see any need to make concessions to Republicans at this point,” Maura Quint, executive director of the progressive group Tax March, told The Hill.

At the same time, Sen. Joe Manchin (D-W.Va.), a key moderate, said Thursday that he wants action on infrastructure to be bipartisan.

“We need to do something in a bipartisan way,” Manchin said on CNN.

It’s unclear how much longer Biden’s talks with Republicans on infrastructure are going to continue; they’ve already gone past an informal deadline of Memorial Day. 

However, there are some challenges for Democrats in going it alone, as well. 

If Democrats design a bill that’s not intended to get Republican support, differences between progressives and moderates are likely to be “more pronounced,” said Jorge Castro, a former congressional tax aide for Democrats who now practices tax law at the firm Miller & Chevalier.

Democrats may combine into one reconciliation package Biden’s $2.3 trillion American Jobs Plan, which is focused on transportation and addressing climate change, and his $1.8 trillion American Families Plan focused on issues such as education and child care. They may also seek to add in priorities that weren’t part of Biden’s proposals.

But the larger the package, the more revenue will be needed to offset the cost. 

Biden has proposed paying for the jobs plan through tax increases on corporations, and the families plan through tax increases on high-income individuals. While Democrats generally support higher taxes on the wealthy and corporations, some lawmakers have doubts about the specifics of Biden’s plans.

Manchin has expressed concerns about Biden’s proposal to raise the corporate rate from 21 percent to 28 percent, preferring instead a rate of 25 percent. And Democrats focused on agriculture issues have raised concerns about Biden’s proposal to tax capital gains at death. 

“While I appreciate that the proposal provides for some exemptions, the provisions could still result in significant tax burdens on many family farming operations,” House Agriculture Committee Chairman David Scott (D-Ga.) wrote in a letter to Biden this week.

There’s also a debate among Democrats about whether infrastructure legislation should include repeal of the cap on the state and local tax deduction (SALT.)

Democrats from high-tax states such as New York, New Jersey and California want infrastructure legislation to repeal the cap, arguing that doing so would help their states and residents recover from the coronavirus pandemic. However, repeal was not included in Biden’s proposals because of its cost, and some progressives oppose repealing the cap because doing so has been estimated to largely benefit high-income households. 

A number of polls have found support from the public for raising taxes on the wealthy and corporations. Still, Democrats may be worried that Republicans will argue in the 2022 midterm elections that the left raised taxes on the middle class, even if that’s largely not the case.

“Democrats I think are nervous about going it alone about a big tax increase, even if the tax increase is just on rich people and corporations,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

Despite some of the concerns that lawmakers have raised, congressional observers think that Democrats will ultimately reach a deal on an infrastructure bill that gets support from a majority of the caucus, though it’s unclear exactly how big such an agreement will be.

“Joe Biden has not taken this as far as he has to not come away with a bill,” Gleckman said.

Frank Clemente, executive director of the left-leaning group Americans for Tax Fairness, said that as an infrastructure package progresses, Democrats will be less worried about the specific aspects that concern them and more focused on the benefits of the spending on their states and districts. 

He said he thinks Democrats will recognize that their prospects in the midterm elections are linked to whether they’ve enacted legislation that substantially improves people’s lives.

“If they don’t deliver on that, their prospects at the ballot box are going to be much more limited,” Clemente said.