Biden Offers to Slash Infrastructure Plan, Adjust Corporate Tax Hike in Bid for GOP Support
In his meeting Wednesday with the top Republican negotiator on infrastructure, President Joe Biden reportedly insisted that the GOP must accept about $1 trillion in new spending as part of any deal but indicated that he was open to shifting his corporate tax proposals in an attempt to win bipartisan support.
Biden has proposed raising the corporate tax rate from 21% to 28%. Republicans have said that rolling back their 2017 tax cuts, which reduced the corporate rate from 35% to its current level, is a non-starter.
In talks Wednesday with Sen. Shelley Moore Capito (R-WV), Biden outlined a plan that would leave the corporate tax rate unchanged, at least for now, but would instead rely on a minimum corporate tax of 15%, aiming to ensure that profitable companies can’t avoid paying federal taxes, according to reports in The Washington Post and other outlets.
"Biden still wants to raise the corporate tax rate to 28 percent, but that effort could now be pursued outside of the infrastructure negotiations," the Post’s Seung Min Kim and Tony Romm report. Biden reportedly also proposed increasing IRS enforcement on corporations and top earners who use loopholes to avoid taxes.
Those two revenue-raising measures were already part of Biden’s tax plans, but the offer to set aside the corporate tax rate increase "amounted to a major concession," Kim and Romm say — and represented "an attempt by the White House to thread a delicate political needle" by raising revenue while avoiding the GOP’s red line on the 2017 tax law.
Republicans are still likely to oppose the revenue plans. Some have criticized Biden’s proposal to increase IRS funding by $80 billion over 10 years. And the 15% minimum corporate tax "has been criticized by Republicans and some economists for being an inefficient way to increase taxes," Justin Sink and Laura Davison report at Bloomberg News. "Critics have said that imposing a minimum tax on profits would mean that companies would be less incentivized to spend money on things that Congress wants to promote, such as R&D or renewable energy, because they wouldn’t be able to claim those tax breaks."
Biden’s call for $1 trillion in new infrastructure spending is also about four times as high as the new spending included in Republicans’ latest offer. Republicans have said that Biden told them previously that existing spending plans could count toward the total, and their most recent $928 billion plan included about $257 billion in new outlays. The GOP plan calls for using unspent Covid relief funds and user fees for drivers to cover the costs of the infrastructure package.
What’s next: "The GOP is considering another counteroffer that could come as soon as Friday, when Capito will be talking to Biden again, this time likely by phone. It’s unclear what that would look like — or even whether Republicans will make a new proposal," Politico reported Thursday morning, noting that some Republicans involved in the talks "are starting to feel discouraged."
Number of the Day: 25 Million
The Biden administration has announced that it plans to send at least 80 million doses of Covid-19 vaccine from U.S. stockpiles to other countries, and on Thursday the White House released its plan for sharing the first 25 million doses.
About 19 million doses will be shared through COVAX, the global vaccine initiative affiliated with the World Health Organization; 6 million will go to South and Central America, 7 million to Asia and 5 million to Africa. The other 6 million doses will be sent directly to what the White House referred to as "regional priorities and partner recipients," a group that includes Mexico, Canada, the Republic of Korea, West Bank and Gaza, Ukraine, Haiti, Egypt, Jordan, India, Iraq, and Yemen.
Moving forward, the White House plans to share about 75% of its donated vaccines through COVAX, with the other 25% going toward "immediate needs and to help with surges around the world."
More Progress in the Labor Market
Initial jobless claims hit another pandemic low last week, the Labor Department announced Thursday, with applications in state systems falling to 385,000. Another 76,000 people applied for Pandemic Unemployment Assistance, the temporary federal program that aids self-employed and gid workers, bringing the total to 461,000.
"Claims are steadily coming down as the labor market strengthens," said Heidi Shierholz of the Economic Policy Institute. "Total initial claims are now around 40% what they were the first week of March, just shy of three months ago. This is a remarkable improvement."
Joseph Brusuelas, chief economist at the consulting firm RSM, said the report is another sign that the U.S. economy is making a transition from recovery to growth, with full employment on the horizon.
Still, initial claims are still more than twice what they were before the pandemic, and the labor market still shows signs of unusual distress. "While the initial jobless claims report is encouraging," Brusuelas wrote, "there are still 15.4 million people on some form of unemployment insurance, including 3.46 million on regular state benefits, 6.3 million on federal Pandemic Unemployment Assistance and 5.29 million on Pandemic Emergency Unemployment Compensation."
Government to Small Business Owners: No Relief for You, You’re Dead!
The Shuttered Venue Operators Grant program, a federal effort created by Congress last year to provide $16 billion in aid to performance spaces that had to shut down during the Covid pandemic, has started to distribute funds, providing a lifeline to a subset of small business owners across the country. But the program took months to get off the ground and continues to be hounded by an odd problem: the federal government thinks some of its applicants are dead, even though they are very much alive.
The New York Times’ Ben Sisario, Stacy Cowley and Julia Jacobs report:
Bob Hansan, the managing partner of Bobby McKey’s, a piano bar near Washington, received a cryptic email Tuesday afternoon that began: "Your name appears on the Do Not Pay list with the Match Source DMF."
A few minutes of frantic Googling revealed that was a reference to the government’s Death Master File, a record of more than 83 million people whose deaths have been reported to the Social Security Administration.
Mr. Hansan immediately called Social Security’s headquarters, which referred him to his local office, which told Mr. Hansan that they could find no record of his name anywhere on the death list. The office agreed to send him a form affirming that he’s alive, but the document can only be sent by mail, he was told — a process he worries will be slow.
"It’s this continual drip-drop of delays," he said.
Another applicant, Michael Swier, the founder of the Bowery Ballroom and the Mercury Lounge in New York City, also was recently told that he is dead as far as the government is concerned, resulting in a denial of his grant application.
"What do I do? What kind of proof do they need?" Swier asked the Times. "Can I say over the phone, ‘It’s me’?"
The Small Business Administration, which runs the grant program, told him the problem was out of their hands.
Read the full story at The New York Times.
- Why Republicans' Main Attack on Biden's Infrastructure Plan Doesn't Work – Matt Egan, CNN
- The U.S. Economy Is Sending Confusing Signals. What’s Going On? – Ben Casselman, New York Times
- The Economic Recovery Is Here. It’s Unlike Anything You’ve Seen – Gwynn Guilford and Sarah Chaney Cambon, Wall Street Journal
- America’s Cruel Unemployment Experiment – Emily Stewart, Vox
- Giving People Money Works. Honestly – Jennifer Rubin, Washington Post
- 4 Ways States Can Use $195 Billion in COVID Relief Funds to Spur Innovation and Growth – Marillyn Hewson and David McCormick , CNBC
- U.S. Inflation Isn’t Scary Yet, But It Could Be – Bill Dudley, Bloomberg
- Can a Subscription Model Fix Primary Care in the US? – Bernard J. Wolfson, Washington Post
- The Declining US Birthrate Has Implications Beyond Social Security – Megan McArdle, Washington Post
- Partial Student Debt Cancellation is Poor Economic Stimulus – Committee for a Responsible Federal Budget