Biden touts ‘historic economic framework’ after spending compromise

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Biden touts 'historic economic framework' after spending compromise

WASHINGTON — President Biden on Thursday said he brokered a “historic economic framework” after he and Democratic leaders on Capitol Hill settled on a blueprint for nearly $2 trillion in new social and environmental spending — despite some Democratic members, including progressives, still withholding their support.

“I think we have a historic — I know we have a historic economic framework,” Biden said at the White House after an early morning visit with House Democrats, where he pleaded with them to go along with the compromise.

“We spent hours and hours and hours over months and months working on this. No one got everything they wanted, including me,” he said.

The deal sets the stage for passage as early as Thursday of a $1.2 trillion, Senate-passed bipartisan infrastructure plan. The social spending and environmental bill likely will take days to write after Biden departs DC on Thursday afternoon for a trip to Europe.

“I don’t think it’s hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week,” Biden told House Democrats behind closed doors Thursday morning.

According to the White House, the framework for an intra-Democratic deal will cost $1.75 trillion and will be financed through $1.995 trillion in new revenue through new taxes and increased IRS enforcement.

President Joe Biden announced on October 28, 2021 that he and other Democrats have finally reached a compromise on a  nearly $2T new social and environmental spending plan.
President Biden announced on October 28, 2021, that he and other Democrats have finally reached a compromise on a nearly $2 trillion social and environmental spending plan.
Jonathan Ernst/REUTERS
Despite reaching the "compromise" some Democrats like Sen. Tom Suozzi have said they still plan to vote against it.
Despite reaching the “compromise,” some Democrats like Rep. Tom Suozzi have said they still plan to vote against it.
Lev Radin/Sipa USA

The package, which Democrats can pass with no Republican support using special budget reconciliation rules, contains significant elements of Biden’s original plan, but significantly doesn’t include free community college or paid parental and family leave for private-sector workers due to opposition from centrists including Sen. Joe Manchin (D-WV).

The compromise contains $555 billion in environmental spending and $400 billion for universal preschool and child care subsidies that cap the expenses of most families at 7 percent of income.

The deal has $150 billion for low-income housing, $150 billion for home health care, $130 billion in ObamaCare tax credits and $35 billion for Medicare to cover the cost of hearing treatment. It would put $200 billion toward extending for one year a bump in the annual child tax credit for families that earn up to $150,000 — from $2,000 to $3,000 per kid, or $3,600 for those under 6.

US President Joe Biden and Speaker of the House Nancy Pelosi depart following a meeting with the Democratic caucus at the US Capitol.
President Biden and House Speaker Nancy Pelosi depart following a meeting with the Democratic caucus at the US Capitol.
MANDEL NGAN/AFP via Getty Images

The spending is offset by a raft of delicately negotiated tax hikes on wealthier people and businesses, as well as $400 billion in projected gains from heightened IRS enforcement.

Proposed tax hikes include a new 15 percent minimum tax on large corporation profits and new taxes on corporate stock buybacks and offshoring of work. A new income surcharge of 5 percent on annual income above $10 million and an extra 3 percent on income above $25 million.

The framework would close a loophole that Biden himself exploited to avoid Medicare taxes on about $13 million of his income in 2017 and 2018 — a policy the White House projects will raise $250 billion. Critics say Biden should reimburse the IRS for $500,000 he avoided paying.

US First Lady Jill Biden looks on as US President Joe Biden speaks about his administration's social spending plans.
First lady Jill Biden looks on as President Biden speaks about his administration’s social spending plans.
Nicholas Kamm/AFP /etty Images

The White House framework doesn’t include repeal of the 2017 “SALT cap” of $10,000 on state and local taxes that residents of high-tax jurisdictions like New York can deduct from federal taxes.

But a source close to Senate Majority Leader Chuck Schumer (D-NY) said the SALT cap repeal — estimated to cost about $160 billion over two years — will be in the final deal. House Ways and Means Committee Chairman Richard Neal (D-Mass.) also said that.

A group of New York-area House Democrats led by Rep. Tom Suozzi (D-NY) have vowed to oppose the package that doesn’t address the SALT cap, potentially tanking a deal due to the extremely narrow Democratic majority in the House.

Rep. Rashida Tlaib (D-Mich.), meanwhile, told reporters Thursday that she’s a “hell no” on proceeding to a vote on the infrastructure bill if the social spending package isn’t passed at the same time.

Although 19 Senate Republicans supported the infrastructure bill, House Republicans are whipping against it, meaning that Biden and House Speaker Nancy Pelosi (D-Calif.) must keep most Democrats in line and likely win over a handful of GOP votes.

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