Biden Says He’s Willing to Compromise on Major Tax Hike

By Yuval Rosenberg

Biden Says He’s Willing to Compromise on Major Tax Hike

Claiming that President Joe Biden is trying to turn the U.S.
into "a socialist country," Senate Minority Leader Mitch McConnell
(R-KY) said Wednesday that he aims to prevent the new president
from achieving his goals.

"One hundred percent of my focus is on stopping this new
administration," McConnell told reporters at a press conference in
Kentucky. "I think the best way to look at what this new
administration is: The president may have won the nomination, but
Bernie Sanders won the argument about what the new administration
should be like."

McConnell’s comments drew comparisons to his statement in 2010
that the "single most important thing we want to achieve is for
President Obama to be a one-term president," while underlining
doubts that Republicans are interested in working with the White
House in a constructive, bipartisan manner.

Asked about McConnell’s comments, Biden said he thinks there’s
still room to work with the Republican leader. "Look, he said that
in our last administration ... he was going to stop everything –
and I was able to get a lot done with him," Biden told reporters in
Washington.

White House Press Secretary Jen Psaki also addressed McConnell’s
comments, saying that while the Biden administration wants to "work
with the Republicans," the administration is focused on Covid
relief and the economy, not political conflict. "I guess the
contrast for people to consider is 100 percent of our focus is on
delivering relief for the American people," she said.

Biden says he wants to pay for his plans: After
downplaying McConnell’s comments, Biden told reporters that he
plans to meet with GOP lawmakers led by West Virginia Sen. Shelley
Moore Capito in the coming days. "I'm going to meet the Republicans
next week when they get back in," Biden said, adding that he still
thinks there’s room for compromise on his proposals.

Biden made clear that, while he is willing to compromise on the
issues like the corporate tax rate, which he wants to increase to
28%, he is focused on passing legislation that will increase growth
while not increasing the deficit.

"My Republican friends had no problem in voting to pass a tax
proposal that expires in 2025 that cost $2 trillion, none of it
paid for, increased the deficit by $2 trillion, gave the
overwhelming percentage of those tax breaks to people who didn't
need it, the top one tenth of 1%," Biden said. "And it was argued
that what it would do is generate this great economic surge in
growth, it would increase productivity, it would pay for itself ...
Well, everyone from the Heritage Foundation on has pointed out it
hasn't done that."

Biden emphasized that he wants to pay for his proposals.
"I’m not willing to deficit spend," he said. "They already have us
two trillion in the hole. Again, look – everything I'm proposing
that be done to generate economic growth, employment, and put us in
a position where we can out-compete any other country in the world
with research and development, and moving ahead: I pay for
it."

Few Americans Would Be Affected by Biden’s Capital Gains Tax
Hike: Report

President Biden’s proposed increase in the capital gains tax
rate would take a big bite out of total capital gains in the U.S.,
but affect just a small fraction of the population, according to an

analysis by the Tax Policy Center.

Biden wants to roughly double the capital gains tax rate, but
only for households earning more than $1 million a year. Those
high-income taxpayers would see a significant increase in their
capital gains tax rates, to 43.4%, up from the current 23.8%.

In 2018, only 2.7% of tax returns that reported capital gains
also had adjusted gross incomes of more than $1 million, the Tax
Policy Center’s Robert McClelland says. But those returns — which
came from just 0.3% of all households — accounted for 62% of all
capital gains.

"A small amount of people are going to end up paying it,
but it could potentially affect a lot of the capital gains,"
McClelland told
The Wall Street Journal.

Treasury Sends Warning on Debt Limit

The debt limit is suspended through July, but another showdown
over raising it this summer could prove even more perilous than
usual: The Treasury Department said Wednesday that it is "very
difficult" to predict how long it may be able to avoid defaulting
on the debt by using the "extraordinary measures" it usually
employs to continue paying the government’s bills without borrowing
more.

"In light of the substantial COVID-related uncertainty about
receipts and outlays in the coming months, it is very difficult to
predict how long extraordinary measures might last," Brian Smith,
Treasury’s deputy assistant secretary for federal finance, said
Wednesday. "Treasury is evaluating a range of potential scenarios,
including some in which extraordinary measures could be exhausted
much more quickly than in prior debt limit episodes."

The extraordinary measures used by the department have typically
lasted several months, The Wall Street Journal
notes. Nancy Vanden Houten, a senior economist
with Oxford Economics, told the Journal that, based on the Treasury
Department’s projections for its cash balance at the end of July,
the government may have until late October before it stops being
able to cover its obligations. "However," she said, "there is more
uncertainty than usual about outlays given the unpredictable timing
of disbursements from Covid relief packages."

Why it matters: No one wants the U.S.
to default on its debt — experts have warned that it could spark a
crisis in financial markets. But Senate Republicans last month
agreed to a nonbinding rule that demands spending cuts in exchange
for raising the debt ceiling. If Republicans
insist on spending cuts to match any debt limit
increase, we could face another round of brinksmanship similar to
the
painful showdown between President Obama and
congressional Republicans in the summer of 2011. Lawmakers are also
scheduled to leave for their summer recess at the end of July,
meaning that they will face pressure to resolve the debt ceiling
issue before they depart.

Numbers of the Day

186,200: President Biden touted the newly launched
Restaurant Revitalization Fund Wednesday, saying that the $28.6
billion program has seen a "staggering" number of applications
since it started accepting them on Monday. The fund, which was
established as part of the $1.9 trillion Covid relief plan that
Biden signed into law in March, received 186,200 applications for
aid in its first two days, Biden said.

Under the program, restaurants and bars can receive grants equal
to their pandemic-related revenue loss, with a cap of $10 million
per business and $5 million per location. Funds from the program
can be used for payroll, rent, debt service and other costs related
to the business. Grant recipients don’t have to repay the money as
long as it is used for eligible purposes by March 11, 2023.

164 million: The Treasury Department
said Wednesday that it was disbursing another 1.1 million Economic
Impact Payments, the eighth batch under the American Rescue Plan
enacted in March. That brings the total number of "stimulus check"
payments so far to about 164 million, with a total value of
approximately $386 billion.

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