WASHINGTON — House Speaker Nancy Pelosi told colleagues Wednesday that Democrats are in “pretty good shape” on President Joe Biden’s sweeping domestic plan and a related $1 trillion infrastructure bill as they race to wrap up talks ahead of his departure for global summits.
Her upbeat comments came as Biden and Democrats try to strike an agreement soon on his big proposal, now about $1.75 trillion in social services and climate change programs, in part to show foreign leaders the U.S. is getting things done under his still-new administration.
White House officials were meeting at the Capitol with two key holdout Democrats, Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona. But Manchin hit the brakes, saying he didn’t like the idea of “targeting” the wealthy and preferred a minimum 15 percent flat “patriotic tax” to ensure the wealthiest Americans don’t skip out on paying any taxes.
Nevertheless, he said: “We need to move forward — the president has made that very clear — he wants to move forward and we owe it to the president to move forward.”
The quickening pace of negotiations came as Senate Democrats pushed past skeptics Wednesday and unveiled a new billionaires’ tax proposal along with another on large corporations backed by Sen. Angus King, I-Maine, that are both designed to help pay for the package and edge his party closer to an overall agreement.
There is a Sunday deadline to approve the $1 trillion, bipartisan infrastructure bill or risk allowing funds for routine transportation programs to expire. But that has been held up by progressive lawmakers who are refusing to give their support without the bigger Biden deal.
The unveiling of the billionaires tax Wednesday could help resolve the revenue side of the equation as Democrats try to settle on a tax strategy. The proposed new tax would hit the gains of those with more than $1 billion in assets or incomes of more than $100 million a year, and it could begin to shore up the big social services and climate change plan.
That proposal, coupled with a new 15 percent corporate minimum tax for large businesses championed by King, who caucuses with Democrats, would provide alternative revenue sources that Biden needs to win over Sinema, who had rejected the party’s earlier idea of reversing Trump-era tax breaks on corporations and the wealthy to raise revenue.
“Our proposal is about simple fiscal sense and common fairness, creating a reasonable floor on tax payments to make sure profitable businesses with profits over $1 billion pay their fair share,” he said.
Biden met late Tuesday evening with Sinema and Manchin at the White House. The three made progress on the plans, according to a statement from a White House official.
Democrats are zeroing in on at least $1.75 trillion in health care, child care and climate change programs, scaling back what had been a $3.5 trillion plan, as they try to wrap up negotiations this week.
Taken together, the tax changes 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 paid for without piling on debt.
While the new tax proposals have appeared agreeable to Manchin and could win over Sinema, whose support is needed in the 50-50 split Senate where Biden has no votes to spare, the idea of the billionaires’ tax has run into criticism from other Democrats as cumbersome or worse.
Rep. Richard Neal, D-Mass., the chairman of the Ways and Means Committee, said he told Wyden the billionaires’ tax may be more difficult to implement than the route his panel took in simply raising rates on corporations and the wealthy.
It would require those with assets of more than $1 billion, or three consecutive years of income of $100 million, to pay taxes on the gains of stocks and other tradable assets, rather than waiting until holdings are sold. A similar billionaires’ tax would be applied to non-tradable 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 percent. Democrats have said it could raise $200 billion in revenue that could help fund Biden’s package over 10 years.
Republicans have derided the billionaires’ tax as “harebrained,” and some have suggested it would face a legal challenge. Key Democrats were also raising concerns about the billionaires’ tax, saying the idea of simply undoing the 2017 tax cuts by hiking top rates was more straightforward and transparent.
Manchin’s resistance may scuttle one other tax idea — a plan to give the IRS more resources to go after tax scofflaws. He said he told Biden during their weekend meeting at the president’s home in Delaware that that plan was “messed up” and would allow the government to monitor bank accounts.
Story by Lisa Mascaro, Aamer Madhani and Alan Fram. Associated Press writers Farnoush Amiri, Darlene Superville and Colleen Long and BDN writer Michael Shepherd contributed to this report.