Biden Pushes Democrats on Spending Deal

Biden Pushes Democrats on Spending Deal

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Plus - Dems scale back IRS bank plan
Tuesday, October 19, 2021

A flurry of meetings in Washington is giving Democrats hope that they can finally agree on a plan to spend roughly $2 trillion over 10 years on what President Joe Biden has called “human infrastructure.” But important policy differences remain, and lawmakers face a very tight calendar for getting things done this fall. Here’s what you need to know.

Biden Pushes Democrats on Spending Deal

President Joe Biden held multiple meetings with Democratic lawmakers Tuesday in an effort to forge a consensus on his sweeping social spending plan.

Biden met Tuesday morning with Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, key figures in an evenly divided Senate who oppose some elements of the Biden plan.

In the afternoon, along with Vice President Kamala Harris and Treasury Secretary Janet Yellen, Biden met with a group of liberal Democrats, including Reps. Pramila Jayapal (WA), Mark Pocan (WI), Debbie Dingell (MI), Katherine Clark (MA), Ritchie Torres (NY), Jimmy Gomez (CA), Jared Huffman (CA), Ro Khanna (CA) and Barbara Lee (CA).

Calling the meeting “really good, really productive,” Jayapal said that the group had discussed a bill focused on major priorities costing somewhere in the range of $1.9 trillion to $2.2 trillion – a substantial cut from the $3.5 trillion some Democrats have discussed in recent weeks, but likely a necessary reduction given the resistance to the higher number among some members of the caucus.

A post-meeting statement from the Congressional Progressive Caucus indicates that Democrats are reducing the duration of some of their proposed social programs in order to reduce the overall cost. “We … appreciate the President fighting for progress on all of these key priorities, even if it is for a shorter period of time, as the CPC had articulated weeks ago is our preferred option to bring down the overall price tag,” the group said.

Later in the day, a group of moderate or conservative Democrats who have expressed concerns about some parts of the Biden plan came to the White House, including Sens. Catherine Cortez Masto (NV), Jon Tester (MT) and Mark Warner (VA), and Reps. Ami Bera (CA), Mike Thompson (CA), Suzan DelBene (WA), Josh Gottheimer (NJ) and Tom O'Halleran (AZ).

“The new series of meetings reflect a fresh political urgency over Biden’s core promise to overhaul health care, education, immigration, climate and tax laws,” The Washington Post’s Tony Romm and Marianna Sotomayor say. “With negotiations stalled for months — and tempers at times flaring publicly between Democrats’ warring factions — the president hopes to rally the Capitol and hit the road to try to get his agenda back on track.”

Aiming for a framework this week: Given the current level of discord over specific provisions of the Biden plan, it seems unlikely that Democrats can produce a detailed bill in the near future. But several key Democrats said Tuesday that they hope to reach some kind of agreement in a few days.

After a lunch meeting with colleagues, Senate Majority Leader Chuck Schumer (D-NY) said Democrats recognized the need to resolve their disputes soon and agree on a “framework” for the bill. “We had a very spirited discussion at our lunch,” Schumer said. “There was universal agreement in that room that we have to come to an agreement and we have to get it done, we want to get it done this week.”

Sen. Bernie Sanders signaled that it’s time for the negotiations to produce results. “The American people are tired of these discussions never-ending,” he said.

Manchin seemed to agree. “There is a general feeling that negotiations have been going on month after month after month and that it is time that we brought this thing to a head as soon as we possibly can,” he said. “I would hope that we would see some real action this week.”

Manchin reportedly told colleagues that he would work with Sanders this week to hammer out a framework, with Sinema getting involved as well and Schumer coordinating the talks.

“There’s lots of meetings going on,” Schumer said. “There’ll be all kinds of meetings, together and separately to get this done, but we’re really — the pace has picked up. The desire to get it done is strong.”

Leader expects vote: House Majority Leader Steny Hoyer (D-MD) said he plans to stick to the schedule Democrats have agreed to, which means holding votes on both the bipartisan infrastructure bill and the larger reconciliation package in less than two weeks.

"On the Build Back [Better] agenda, we're committed to meeting the deadline of Oct. 31," Hoyer told reporters. "We're working very hard to have both of those bills ready to be passed by the House of Representatives before that date."

At the same time, Hoyer said he recognized that the bill will have to be smaller, with Democrats focusing on fewer programs. “I continue to believe we ought to use the Build Back Better Act to do fewer things better. That, I think, is our principal responsibility,” he said. “Obviously, we have to create consensus, we have to create the votes to pass that bill. And in doing so I would urge all of us to focus on the most consequential of the items which we’re considering.”

The bottom line: Democrats seem to be gaining some momentum on their contentious social spending plan, but there are a lot of problems that still need to be solved.

Democrats Scale Back Controversial IRS Bank Reporting Plan

The Biden administration and congressional Democrats are scaling back a controversial proposal to have banks report more information to the Internal Revenue Service after their initial plan was met with a backlash from the financial services industry and Republicans.

The original proposal, part of a larger effort to generate more revenue by cracking down on tax cheats, called for financial institutions to provide data to the IRS on accounts with annual deposits or withdrawals totaling more than $600. But the plan generated a storm of criticism from Republicans, and a fierce lobbying campaign by banks, with both groups raising alarms about a government invasion of privacy. Some critics also falsely claimed that the IRS would be tracking individual transactions.

The revised plan, outlined Tuesday by Senate Finance Committee Chair Ron Wyden (D-OR) and Sen. Elizabeth Warren (D-MA) and endorsed by the Treasury Department, would set the reporting threshold at $10,000 a year and includes exemptions for payroll deposits and Social Security benefits, among other things. “We’re adding language to ensure enforcement efforts are focused on the very wealthy,” Wyden said.

Taking aim at tax dodgers: The Biden administration insists that the new reporting requirement is meant only to help collect unpaid taxes from the rich and that audit rates won’t go up for taxpayers making less than $400,000 a year. The requirement is aimed at addressing what the Biden administration describes as a two-tiered system in which wage earners, who have their incomes reported to the IRS, comply with tax rules at a far higher rate than people — mostly wealthy — who generate substantial income from sources that don’t get reported to the government, making it harder to suss out tax evasion.

“Under the current system, American workers pay virtually all their tax bills while many top earners avoid paying billions in the taxes they owe by exploiting the system,” Treasury Secretary Janet Yellen said in a statement Tuesday. “This two-tiered tax system is unfair and deprives the country of resources to fund core priorities. Today’s new proposal reflects the administration’s strong belief that we should zero in on those at the top of the income scale who don’t pay the taxes they owe, while protecting American workers by setting the bank account threshold at $10,000 and providing an exemption for wage earners like teachers and firefighters.”

Critics unmoved: The proposed changes did little to quell criticisms from Republicans and the banking industry.

“Even with the modifications announced today, this proposal still goes too far by forcing financial institutions to share with the IRS private financial data from millions of customers not suspected of cheating on their taxes. The exclusion of payroll and federal program beneficiaries does not address millions of other taxpayers who would be impacted by the proposal,” said Rob Nichols, president and CEO of the American Bankers Association, in a statement. “If enacted, this new proposal would still raise the same privacy concerns, increase tax preparation costs for individuals and small businesses, and create significant operational challenges, particularly for community banks.”

Sen. Kevin Cramer (R-ND) reportedly warned: “Marx is at the doorstep.”

The Treasury Department estimates that tax evasion among the top 1% of taxpayers costs the U.S. more than $160 billion a year, or about 28 percent of unpaid taxes.

Treasury officials had estimated that the original reporting requirements would generate $460 billion over a decade, while a narrower plan might raise $200 billion to $250 billion.

Manchin’s Income Limit for Child Tax Credits Would Reduce Coverage by 37 Million: Report

Sen. Joe Manchin has criticized numerous provisions in President Biden’s Build Back Better plan, including a proposal to provide refundable child tax credits to the majority of American families. Expressing fears about the country becoming an “entitlement society,” the conservative West Virginia Democrat has proposed limiting the program by imposing a $60,000 income cap for receiving the credit, a much lower cutoff than Biden has proposed.

According to an analysis by the Niskanen Center, a non-partisan libertarian think tank, 37.4 million children would lose the benefits of the tax credit under Manchin’s plan. The total includes 189,000 children in West Virginia, Manchin’s home state.

See Insider for more on the story.

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