Democrats in Congress and White House officials believe they can pass a more than $ 3 billion economic stimulus package funded by tax hikes on businesses and the wealthy, even in the absence of Republican support.
Joe biden, the US president, said this week that his next “big step” after the enactment of $ 1.9 billion budget stimulus bill would be a multibillion-dollar plan to fund long-term spending on infrastructure, education and child care – partially funded by tax increases.
He is expected to lay out more details of the package during a visit to Pittsburgh, Pa. On Wednesday, ahead of negotiations with Capitol Hill which are expected to dominate the political agenda in the coming months.
While talks on Capitol Hill are expected to take longer than in the case of the stimulus bill, officials in the Biden administration and Congressional Democrats believe that sufficient support is emerging within their party to pass the stimulus bill. Recovery plan without needing Republican votes, according to people familiar with the matter.
Revenue estimate for Biden 2020 campaign proposals (over ten years)
Increase in the tax on the wages of high-income households $ 740 billion
Increase in corporate income tax from 21% to 28% $ 730 billion
Minimum Tax on Foreign Profits of U.S. Corporations 440 billion dollars
Rise in capital gains and dividend taxes for the ultra-rich $ 370 billion
Personal income tax increase for high incomes 310 billion dollars
Source: Tax Policy Center
“I have a 90% confidence that by the fall we will have passed one or more major infrastructure bills,” said Don Beyer, Chairman of the Joint Economic Committee and member of the Democratic Congress from Virginia.
“Everyone would like it to be bipartisan – and that’s sincere. But we are not going to say that in the efforts of bipartisanship, we are not going to do anything, or do far too little. “
If successful, Biden’s new $ 3 billion plan would add a massive new layer of budget support to the U.S. economy at a time when global investors, leaders and policymakers are still digesting the implications of the current expansion. of US government spending to combat the induced pandemic. slow-down.
The Biden administration envisioned an increase in the corporate tax rate from 21% to 28% and a minimum foreign income tax for U.S. multinationals. He is also considering a series of personal income tax increases as long as they do not apply to households earning less than $ 400,000 a year. These proposals include payroll tax hikes, an increase in the top tax rate, and an increase in capital gains taxes for the ultra-rich earning more than $ 1 million a year.
Administration officials have considered splitting the economic stimulus package in half, with corporate tax increases offsetting investments in infrastructure and green energy, and individual tax increases offsetting the rest of the measures. But at the end of the day, the two sections may end up being combined into one piece of legislation.
A passage based solely on Democratic support would echo the political strategy used successfully by the White House and party leaders earlier this year to pass the $ 1.9 billion stimulus bill with a slim majority in the polls. two chambers of Congress.
In the Senate, it would again be a question of adopting a parliamentary maneuver called “reconciliation” reserved for budgetary measures, to escape the threshold of the super-majority of 60 votes to advance ordinary legislation in the upper house.
Biden has already met with some Republican lawmakers to discuss infrastructure spending. But he’s not counting on their support after many have already criticized tax increases on businesses and the wealthy that would partially reverse Donald Trump’s tax cuts to pay for the plan.
Meanwhile, hopes of bypassing the Republican opposition with unanimous support from the Democrats on Capitol Hill have grown. Joe Manchin, the centrist Democratic senator from West Virginia, told NBC this week that he would back a “huge” infrastructure package funded in part by tax increases.
Biden is hoping to build political momentum for the package due to the popularity of the plan’s content, given that measures like infrastructure spending, universal preschool education, and even taxes on the wealthy have been well scrutinized. Additionally, Democrats believe this is their greatest opportunity to correct the chronic underinvestment in public goods in America which they believe has caused the U.S. economy to slow down for decades, contributing sluggish growth and increasing inequalities.
“I think we fear it is still a long time before we have this perfect storm of not just votes but the political will to act,” Beyer said.
Lindsay Owens, acting executive director of Groundwork Collaborative, a liberal think tank, said Democrats were “excited to do more” on top of the stimulus package. “There’s a lot of enthusiasm and the raw politics on a lot of this stuff is really good.”
Many political analysts say the outlook is looking good for the White House now.
“Biden still has wind in his back, he has a high poll count, politicians have a high approval count, and I think they’re going to make $ 3 billion and that will be done by the break.” August, ”said Chris Krueger, a director. director of the Cowen Washington Research Group.
The biggest hurdle on Capitol Hill could come if Republicans and business groups get their message across that tax hikes will hurt the recovery just as the economy begins to rebound strongly. But many Democrats and left-wing economists say those arguments are less effective now amid skepticism about the benefits of the trickle-down economy.
“You could say that the only policy adopted by the Republicans [during Trump’s presidency] was a pretty substantial tax cut, ”said Steph Sterling, vice president of the Roosevelt Institute, a progressive think tank.
“And it was overall unpopular because the Democrats did. . . a very successful and specific case that the benefits accruing to the rich were far greater than those accruing to ordinary people. “