WASHINGTON — House Speaker Nancy Pelosi declared Wednesday that Democrats are in “pretty good shape” on President Joe Biden’s sweeping domestic plan, but hopes for a breakthrough quickly faded when a pivotal Democratic senator panned a new billionaires’ tax to help pay for the $1.75 trillion package.
Biden and Democrats are racing to wrap up talks before the president departs this week for overseas global summits. Besides pressing for important party priorities, he’s hoping to show foreign leaders the U.S. is getting things done under his still-new administration.
A signature package of proposals in the balance, the president could yet visit Capitol Hill before traveling abroad Thursday. The administration is assessing the situation “hour by hour,” White House press secretary Jen Psaki said.
“We are on track now to move forward once we get an agreement,” Psaki said.
But Biden’s big proposal of social services and climate change programs ran into stubborn new setbacks, chief among them how to pay for it all.
A just-proposed tax on billionaires could be scrapped after Democratic Sen. Joe Manchin of West Virginia objected, according to a senior party aide, who requested anonymity to discuss the private talks.
The billionaires’ tax proposal had been designed to win over another Democratic holdout, Sen. Kyrsten Sinema of Arizona, but Manchin panned it as unfairly targeting the wealthy, leaving Democrats at odds.
“People in the stratosphere, rather than trying to penalize, we ought to be pleased that this country is able to produce the wealth,” Manchin told reporters.
Manchin said he prefers a minimum 15% flat “patriotic tax” to ensure the wealthiest Americans don’t skip out on paying any taxes.
Nevertheless, he said: “We need to move forward.”
White House officials met at the Capitol with Manchin and Sinema, two senators who now hold enormous power, essentially deciding whether or not Biden will be able to deliver on the Democrats’ major campaign promises.
In the 50-50 Senate, Biden needs all Democrats’ support with no votes to spare.
“Making progress,” Sinema said as she dashed into an elevator.
The quickening pace of negotiations came as Biden pressed to have a deal in hand ahead of the global summits. There’s also a Sunday deadline to approve a smaller, bipartisan roads-and-bridges infrastructure bill or risk allowing funds for routine transportation programs to expire. But that $1 trillion bill has been held up by progressive lawmakers who are refusing to give their support without the bigger Biden deal.
Applying pressure, Pelosi announced a Thursday committee hearing to spur the Biden package along toward a full House. But without Senate agreement, the House panel’s meeting is merely an effort to kickstart the process.
Democrats had hoped the unveiling of the billionaires tax Wednesday could help resolve the revenue side of the equation after Sinema rejected the party’s earlier idea of reversing Trump-era tax breaks on corporations and the wealthy, those earning more than $400,000.
The new billionaires’ proposal would tax the gains of those with more than $1 billion in assets or incomes of more than $100 million over three consecutive years.
It would hit the wealthiest of Americans, fewer than 800 people, starting in the 2022 tax year, requiring them pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.
A similar billionaires’ tax would be applied to non-tradeable assets, including real estate, but it would be deferred with the tax not assessed until the asset was sold, though interest would have to be paid.
Overall, the billionaires’ tax rate would align with the capital gains rate, now 23.8%. Democrats have said it could raise $200 billion in revenue that could help fund Biden’s package over 10 years.
Democratic Sen. Ron Wyden of Oregon, chairman of the Senate Finance Committee, said the billionaires tax remains on the table.
“I’ve not heard a single United States senator — not one —get up and say, ‘Gee, I think it’s just fun that billionaires pay little or nothing for years on end,’” Wyden said Wednesday.
Taken together, the new billionaires’ proposal, coupled with a new 15% corporate minimum tax, are designed to fulfill Biden’s desire for the wealthy and big business to pay their “fair share.” They also fit his promise that no new taxes hit those earning less than $400,000 a year, or $450,000 for couples. Biden wants his package fully paid for without piling on debt.
“I’ve been talking about this for years,” said Sen. Elizabeth Warren, D-Mass., who campaigned for the presidency on a wealth tax, and backs Wyden’s approach. “I’ve even made billionaires cry over this.”
Resolving the revenue side has been crucial, as lawmakers figure out how much money will be available to spend on the new health, child care and climate change programs in Biden’s big plan.
Republicans have derided the billionaires’ tax as “harebrained,” and some have suggested it would face a legal challenge.
Among Democrats, Rep. Richard Neal of Massachusetts, the chairman of the Ways and Means Committee, said he told Wyden the billionaires’ tax may be difficult to implement. He expects Democrats to stick with the approach his panel took in simply raising rates on corporations and the wealthy, undoing the 2017 tax cuts.
“There’s a lot of there’s a lot of angst in there over the billionaires’ tax,” Neal said.
Under the House bill approved by Neal’s panel, the top individual income tax rate would rise from 37% to 39.6%, on those earning more than $400,000 a year, or $450,000 for couples. The corporate rate would increase from 21% to 26.5%.
The House bill also proposes a 3% surtax on the wealthiest Americans with adjusted income beyond $5 million a year, and Neal suggested that could be raised to $10 million to win over the holdouts.
Together, Manchin and Sinema’s objections have packed a one-two punch, throwing Biden’s overall plan into flux, halving what had been a $3.5 trillion package, and infuriating colleagues along the way.
Their opposition is forcing difficult reductions, if not the outright elimination, of policy priorities — from child care assistance to dental, vision and hearing aid benefits for seniors.
The once hefty climate change strategies are less severe, focusing away from punitive measures on polluters that raised objections from coal-state Manchin, in a shift toward instead rewarding clean energy incentives.
A family leave program, once envisioned as 12 weeks of paid time off to care for loved ones, is now being floated as only parental leave for new children.
Tempers are running short as Democratic colleagues tire of the repeated objections form Manchin and Sinema blocking a deal.
Said Sen. Bernie Sanders, the Vermont Independent: “You got 48 out of 50 people supporting an agenda that works for the American people.”
