US president Joe Biden is set to announce a $1.75tn framework agreement with fellow Democrats on his economic agenda in an effort to stoke momentum after weeks of fraught negotiations, senior administration officials have said.
Biden is expected to unveil details of the proposed deal during a meeting with House Democrats on Thursday morning, before speaking about it from the White House. The US president had hoped to reach a compromise on the legislation before he heads to Italy for the G20 summit later on Thursday.
Senior administration officials said they were “confident” that the proposed deal would garner the support of all Democrats on Capitol Hill, including senators Kyrsten Sinema and Joe Manchin, two moderate Democratic senators who have been resisting many elements of Biden’s agenda.
The framework to be presented by Biden on Thursday sharply pares back the president’s ambitions to reshape the US economy with government investment. Biden had originally hoped for the package to be worth up to $3.5tn in spending over a decade, but its size has fallen below $2tn.
Still, senior administration officials have touted the importance of the measures that have been retained, including free universal pre-kindergarten education, the extension of a tax credit for children, large investments in climate action and the expansion of government healthcare for seniors to include hearing benefits.
The officials also said the plan would be fully paid for through higher taxes on the wealthiest Americans and large corporations. The White House and senior Democrats have been scrambling to find ways to increase taxes in recent days, including a new levy on billionaires that was subsequently dropped.
Biden is now proposing a new 5 per cent surtax on incomes over $10m and an additional 3 per cent surtax on incomes above $25m, according to senior administration officials.
The proposed deal would also include a new 1 per cent levy on share buybacks by the largest corporations, as well as a minimum tax to prevent large businesses from taking advantage of multiple tax breaks to lower their tax bills.
If the framework is well-received by Democrats in the House — particularly progressives who have argued against scaling it back — it could pave the way for the passage of a $1.2tn bipartisan infrastructure deal that was agreed earlier this year.
But it remained unclear on Thursday morning whether the president’s plan would garner enough support from Democratic lawmakers to pass both chambers of Congress.
Dick Durbin, the Senate Democratic whip, said he was not confident that all 50 Senate Democrats were “on board” with the president’s revised framework.
“I wish I could say yes, but there is a great deal of uncertainty within the caucus as to what is contained in the deal,” Durbin told reporters on Capitol Hill.
Within the House, which Democrats control by a slim margin, House Speaker Nancy Pelosi indicated that she wanted to push ahead with a vote by the end of the day on the separate $1.2tn bipartisan infrastructure package. House progressives have said they would not vote for the infrastructure bill without a simultaneous vote on the bigger budget bill.
After Biden spoke to House Democrats on Thursday morning, several progressives suggested that they were still unprepared to move ahead with the infrastructure vote.
“We have had a position of needing to see the legislative text and voting on both bills,” said Pramila Jayapal, the Democratic congresswoman who chairs the congressional progressive caucus. “We’ll see where people are, but I think a lot of people are still in that place.”
At a glance: what’s in and what’s out of Biden’s proposed spending plan
In: The largest single chunk of spending — worth $555bn — is on climate measures, in a bid to bolster US commitments heading into the COP26 summit in Glasgow next week. Clean energy tax credits account for $320bn of that money, in addition to $105bn worth of measures to cope with extreme weather events and $110bn in subsidies for green manufacturing.
Out: The Clean Electricity Performance Program, which offered incentives to power companies that transitioned away from fossil fuels and penalties for those that did not, has been ruled out.
Childcare and education
In: The plan funds free universal pre-kindergarten schooling plus subsidies for childcare expenses and care for the elderly, as well as a one-year extension of a tax credit for children that was expanded during the pandemic.
Out: Excluded from the plan was a measure to introduce paid family and medical leave, which exists in many countries around the world but not in the US. Biden wanted to fund it for up to 12 weeks, but it was cut to four weeks during talks and then ruled out completely. Higher funding for community colleges was also stripped out.
In: The proposed deal would expand access to medical coverage under Barack Obama’s signature healthcare reform, bringing over 3m more Americans into the system. It would also allow senior citizens to be covered for hearing benefits under Medicare, the government health plan for the elderly.
Out: The plan failed to expand Medicare to include benefits for dental coverage and did not lower the age threshold of the government health scheme from 65 to 55 — something many progressive lawmakers had called for. It also does not include a measure to allow Medicare to negotiate drug prices, which was expected to lower the cost of prescription medication.
In: The plan includes a new 5 per cent tax on annual income over $10m plus an additional 3 per cent surtax on annual income over $25m to hit the top 0.02 per cent of taxpayers. It also hits companies with a 15 per cent minimum tax to ensure that they do not overuse tax breaks and loopholes plus introduces a 1 per cent levy on share buybacks.
Out: The plan fails to undo the core elements of Donald Trump’s 2017 tax cuts. It does not increase the top individual income tax rate, which is currently at 37 per cent, nor the corporate income tax rate, which is 21 per cent. Neither does it increase taxes on capital gains, which have a preferential rate of 20 per cent. Lawmakers considered a special tax on billionaires this week, but rapidly dismissed it.