Republicans Prepare $1 Trillion Infrastructure Counteroffer to Biden

Republicans Prepare $1 Trillion Infrastructure Counteroffer to Biden

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Plus, Elizabeth Warren wants to triple the IRS budget to help stop wealthy tax cheats
Tuesday, May 25, 2021

Republicans Prepare a Nearly $1 Trillion Infrastructure Counteroffer to Biden

Although there are growing doubts about the likelihood of reaching an agreement, Republican negotiators said they plan to make a substantial counteroffer on Thursday to President Joe Biden’s $1.7 trillion infrastructure proposal.

"This is going to be a very good offer," Senator Roger Wicker (R-MI) said Tuesday, adding that the proposal will come "close" to $1 trillion over eight years.

A significant increase over their initial $568 billion proposal over five years, the counteroffer will get the Republicans closer to Biden’s latest plan, while still leaving an enormous $700 billion gap between the two sides.

Enough for a deal? The lead Republican negotiator, Sen. Shelley Moore Capito (WV), said Tuesday that Biden had previously signaled a willingness to accept a proposal in the neighborhood of $1 trillion, and that she may request another in-person meeting to try to seal the deal, Politico reports.

"We were pretty universal on this, I mean there was no dispute with what he said to us in the room that day," Capito said, referring to her first meeting with Biden last week. "That’s why I think, when we left there, we were pretty optimistic that this is doable."

Wicker also referred to what he saw as Biden’s willingness to accept a $1 trillion deal. "We’re going to hit a figure very close to what the president said he would accept," he said.

The White House, though, pushed back against that version of events, with Press Secretary Jen Psaki saying the latest $1.7 trillion offer correctly represents the president’s stance on the matter, casting doubt on Biden’s purported interest in accepting a much smaller deal.

Financing the GOP proposal will also likely be an issue. Wicker said that Republicans want to repurpose funds already authorized for Covid relief to help pay for their plan, an option that will not likely be embraced by Democrats, who want to use corporate tax hikes to fund their programs.

Bipartisan end run? Meanwhile, a bipartisan group of senators is working on its own infrastructure proposal, Sen. Mitt Romney (R-UT) said Tuesday. The group reportedly includes Sen. Joe Manchin (WV), a moderate Democrat who could be a key vote on any eventual package.

Romney told The Washington Post that the group is close to agreement on a plan that focuses on traditional elements of infrastructure such roads and bridges. "We’re not very far from the Biden proposal on areas where we both think it’s appropriate for an infrastructure bill," he said.

The more expansive set of programs included in Biden’s proposal, such as money for elder care and electric vehicles, are not part of the bipartisan blueprint, Romney said. Also being left out is Biden’s proposal to undo parts of the 2017 Republican tax cuts in order to help pay for his plan.

Clock is ticking. Pressure to reach a deal is building as negotiators run up against Biden’s self-imposed deadline of Memorial Day. Leaning into that pressure, Senate Majority Leader Chuck Schumer (D-NY) said Tuesday that he plans to take up infrastructure in July.

In the meantime, negotiators will continue to make offers and counteroffers, all in the hope – or at least the appearance – of trying to reach a bipartisan deal.

Point-Counterpoint: The ‘Blame Game’ Politics of Infrastructure Talks

As the kabuki theater of infrastructure plays out this week, here’s a look at the "blame game" politics involved from the perspective of a conservative and a liberal:

Biden is trying to make sure Republicans get blamed for failed bipartisanship: Biden’s $1.7 trillion counteroffer to Republicans, slimmed down from an initial $2.25 trillion, wasn’t really a good-faith effort to negotiate, writes conservative Washington Post columnist Marc A. Thiessen.

"First of all, it is simply insanity that anyone would consider Biden’s plan to spend $1.7 trillion a major concession — or Republicans offering to spend $800 billion chump change," Thiessen says. "Second, Biden didn’t really cut his plan at all. … His original plan included just $821 billion in actual infrastructure spending, which he has now reduced to $747 billion. That means, to increase their offer above $800 billion, Republicans would have to go along with Biden’s Orwellian redefinition of ‘infrastructure’ and agree to spend hundreds of billions on the non-infrastructure items in his package."

Biden’s real goal here is to look like he’s trying to reach a bipartisan consensus while forcing Republicans to walk away from talks first, all with the aim of securing the support of Sen. Joe Manchin (D-WV), who has pushed for bipartisanship — and whose vote is critical if Democrats ultimately want to pass their massive social spending plans without any Republican backing.

No, it’s Republicans who aren’t serious about a deal: A bipartisan infrastructure bill would be a double victory for Biden, liberal Washington Post columnist Paul Waldman says: "He can claim a big legislative win, and also tell voters that he has achieved his goal of bringing cooperation back to Washington."

Republicans, on the other hand, want Biden and his infrastructure bill to fail. That would be "a huge win for the GOP, a black eye for Biden, and proof that Democratic rule isn’t delivering for people," Waldman says. "While Republicans can’t guarantee that outcome (since Democrats can still pass the bill through the reconciliation process with a simple majority), by withholding their votes they reduce the margin for error Democrats have down to zero. … There is no outcome, substantive or political, that Republicans would rather have than to see the infrastructure bill go down in flames."

Number of the Day: 50%

Half of U.S. adults age 18 and over are now fully vaccinated against Covid-19, according to the Centers for Disease Control and Prevention. Nearly 74% of seniors age 65 and over are fully vaccinated, according to the CDC, and nearly 62% of adults have gotten at least one dose of vaccine. President Biden earlier this month announced a goal of getting 70% of adults at least one vaccine shot by July 4th.

Quote of the Day

"If you think of public health as a building, we haven't quite built the foundation yet. We've flooded public health money for the covid response atop this crumbling foundation."

– Dara Lieberman, director of government relations at Trust for America's Health, an organization dedicated to boosting community health, in a piece by The Washington Post’s Dan Diamond on concerns surrounding the hundreds of billions of dollars lawmakers provided for public health in response to the coronavirus pandemic. "Now officials have a new challenge: responsibly spend the money — while convincing Congress to set aside funds for future priorities too," Diamond writes.

Elizabeth Warren Proposes Tripling the IRS Budget to Help Stop Wealthy Tax Cheats

Sen. Elizabeth Warren (D-MA) on Monday introduced a bill that would remove the Internal Revenue Service’s base funding from the annual appropriations process and provide the agency with a mandatory $31.5 billion a year, nearly triple its current budget.

Warren said that her bill, the Restoring the IRS Act of 2021, would help stop wealthy tax cheats and close the tax gap, or the difference between taxes owed and those collected each year, which the Treasury Department recently estimated to be $600 billion as of 2019. Other estimates have put the annual gap at $1 trillion or more.

Warren pointed to a recent study from the National Bureau of Economic Research that showed that the top 1% of Americans fail to report more than a fifth of their income on tax returns and account for more than a third of all unpaid federal income tax. Audit rates for taxpayers making more than $10 million a year, meanwhile, are nearly 80% lower than they were a decade ago, while audit rates for corporations with more than $20 billion in assets have fallen by nearly half.

President Biden has proposed boosting the IRS budget by $80 billion over 10 years, and the Treasury Department estimated in a report last week that the increased funding and enforcement measures would raise an additional $700 billion over a decade. Warren’s plan calls for providing the IRS with even more funding — and would do so annually instead of through a one-time boost spread out over 10 years.

"Strengthening the IRS’s ability to go after wealthy tax cheats will not only require more funding, but more stable funding," Warren said in a summary of her legislation. "Most of the IRS’s funding is discretionary, meaning Congress decides every year how much money the agency receives. This leaves the IRS budget unpredictable and vulnerable to cuts. By contrast, mandatory funding would provide funding on an ongoing basis, ensuring that the IRS budget is steady, predictable, and sustained – money that lobbyists can’t easily strip away."

Warren’s press release said that the legislation would boost tax compliance by:

  • Requiring new third-party reporting from financial institutions to help verify tax filings for taxpayers with less visible income streams;
  • Requiring the IRS to shift audits toward corporations and wealthy individuals;
  • Requiring the IRS to report annually on the tax gap;
  • Requiring the IRS to analyze racial disparities in its enforcement;
  • Increasing underpayment penalties for taxpayers earning more than $2 million.

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