Less than half, actually, if the so-called Senate G-20 gets their way. Joe Biden’s in a serious jam on his $2 trillion infrastructure plan, which he wants to pass in the Senate through reconciliation — a process that requires budget neutrality. To get there, Biden wants to hike the corporate tax rate from 21% to 28%, which some Democrats (Joe Manchin especially) oppose. Without Manchin, the entire package will grind to a halt.
Another alternative would be to find a bill that could get Republican votes, and the centrist G-20 caucus apparently has a plan ready to promote. That plan would focus on “core infrastructure” needs, shedding much of the Democrats’ hobby-horse agenda items, allowing for a significant investment package. That would also allow Manchin to generate the pay-for with a smaller hike in the corporate tax rates, doing less damage to American competitiveness in the global markets.
This comes up at the five-minute mark in yesterday’s Fox News Sunday talk with Sens. John Cornyn (R-TX) and Chris Coons (D-DE). After several minutes of bickering over the meaning of bipartisanship, Chris Wallace asks why Republicans would go along with this idea when Democrats might just pass the other half-plus on reconciliation anyway. Oddly, Cornyn sounds pretty sanguine about this — but there’s a good reason why:
Why would Cornyn so easily dismiss the idea of a separate reconciliation package? Mainly, Democrats would have to find another way to pay for it. The corporate tax-rate hike would be used to fund the “core infrastructure” bill, and that would pre-empt its use in a new reconciliation package. Either Democrats would have to raise other taxes, or they would have to cut spending to pay for an additional $1.2 trillion in spending to make it on reconciliation … which would lose votes in their own caucus.
Furthermore, Manchin’s already acting on his plan to limit the corporate tax-rate hike to 25%, Axios reports. And it looks like Manchin isn’t bluffing when he says he has a significant number of his colleagues behind him.
While Manchin (D-W.Va.) has made clear his preference for a 25% rate, he’s far from alone.
Democrats who’ve privately hinted they may be uncomfortable with going to 28% include Sens. Tim Kaine and Mark Warner of Virginia, Kyrsten Sinema of Arizona and Jon Tester of Montana.
Axios had previously reported that Nancy Pelosi might have trouble passing a hike to 28% in the House, which would have made the whole thing moot. Moderates in both chambers are worried about the rush to raise taxes, especially when coming out of an economic catastrophe as 2020 turned out to be, thanks to the pandemic.
That alone would kill the $2 trillion “infrastructure” plan. Without the higher tax hike, Biden can’t show the pay-for necessary to qualify the bill under reconciliation. A hike to 25% would raise enough money (under static tax analysis) to pay for a $800 billion plan, but Biden wouldn’t need reconciliation for that bill if it got the G-20 blessing. It would pass through cloture and win on a bipartisan basis, but only with the pay-for attached, as Cornyn says. That’s the guarantee against a reconciliation work-around, along with clear reluctance among Democratic moderates to hike taxes any further.
Will Biden take the half a loaf rather than none — or in this case, 40% of the loaf? Axios says the White House is signaling assent on both the bill and the tax rate:
Democrats close to the White House expect Biden will accept 25% and pocket it as a political win.
A political win it might be, but it’s also a cap on spending aspirations, which won’t necessarily look like a win to Biden’s progressive wing. Politics has traditionally been the art of the possible, but lately the hardliners in both parties has made it the performance art of the unachievable. This would at least give Biden some claim of achievement heading into the midterms, and might smooth the waters for the upcoming budget talks as well. An embrace of this approach might show that both political parties have regained their senses a bit and have become more concerned with governance than fundraising.