The White House says a new offer on an infrastructure package from Sen. Shelley Moore Capito of West Virginia is insufficient as the search for middle ground between President Biden and Republicans remains elusive.
Biden and Capito spoke on the phone Friday, the latest in a series of talks between the two. Capito is leading the group of GOP senators working with the White House on a potential agreement, and is tasked by her leaders to head the negotiations.
Capito's new offer upped spending levels by about $50 billion, White House press secretary Jen Psaki said in a statement. Capito's last offer was $928 billion, though only a fraction of that was new spending.
"The President expressed his gratitude for her effort and goodwill, but also indicated that the current offer did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs," Psaki said in Friday's statement. "He indicated to Senator Capito that he would continue to engage a number of Senators in both parties in the hopes of achieving a more substantial package."
Both the White House and Capito's office said she and Biden would talk again Monday.
Biden's shift on taxes
During their previous meeting, on Wednesday in the Oval Office, Biden opened the door to laying aside his original proposal to help pay for infrastructure investments by raising the corporate tax rate from 21% to 28%.
The White House said Thursday that Biden still supports raising the tax rate but is willing to find another measure to do it.
Instead, Biden offered to pay for an overhaul to roads, bridges and other parts of the economy through a 15% minimum tax for corporations and increased tax enforcement.
"This should be completely acceptable to a number of Republicans who said ... their bottom line is they want to leave the 2017 [tax cut] law untouched," Psaki told reporters Thursday.
Today President Biden hosted Senator Capito for a constructive and frank conversation about working together to grow the economy and benefit America’s middle class workers and families by investing in our infrastructure. pic.twitter.com/WrrFixomZC— The White House (@WhiteHouse) June 3, 2021
Biden's shift in tax strategies could avoid a fight over the main corporate rate, but Republicans have generally rejected the idea of using tax increases of any kind to pay for infrastructure, and so shifting the conversation to a minimum tax may not entice many GOP lawmakers.
Republicans are pushing for any infrastructure spending to be largely paid for with unspent money Congress already approved for coronavirus relief.
The two sides also continue to disagree on the overall scope of the legislation.
Senate Minority Leader Mitch McConnell, R-Ky., told reporters in his home state Thursday that he hopes for a deal of "maybe $1 trillion," but he wants it "fully paid for." He then repeated criticisms of Biden's other tax proposals, such as raising the capital gains tax and increasing the top income tax rate to 39.6% for taxpayers earning more than $400,000.
McConnell has been in touch with Capito throughout the negotiations, and the GOP leader's approval is critical for any deal to get widespread support among Senate Republicans.
Time constraints and progressive concerns
Capito and Biden are working against a tight time frame. Senate Majority Leader Chuck Schumer, D-N.Y., has promised that the Senate will take up an infrastructure bill in July. A deal must be in hand in the next few weeks if lawmakers hope to draft legislation and move through the many procedural hurdles necessary before a vote is possible in the Senate.
Biden also risks alienating progressive Democrats if he continues negotiations with Republicans. Some, such as Rep. Pramila Jayapal, D-Wash., the Congressional Progressive Caucus co-chair, are already urging Biden to move on and work on writing a plan that can pass without the support of any Republicans.
"No more wining and dining the party that voted 100% against survival checks and the American Rescue Plan," Jayapal tweeted after the Wednesday meeting with Capito. "We all know they're not gonna come around — let's stop pretending otherwise. It's time to go big, bold, fast, and alone to deliver for people across America."
That view is shared by a growing number of Democrats who worry that Biden may split the legislation into smaller bills that will have a harder chance of success. Those members are urging Biden to move ahead with his full, roughly $2 trillion proposal using the budget reconciliation process to avoid a filibuster in the Senate.
But some congressional Democrats privately admit that Biden's current plan likely does not have unanimous support within the party, which would be necessary to pass a bill in the Senate. Democrats would be forced to negotiate among themselves if they plan to use budget reconciliation — a process that could take weeks or longer.
New transportation proposal
Meanwhile, House Democrats are moving forward with a portion of Biden's plan as a separate package of investments in surface transportation.
The legislation, which was unveiled Friday and would spend $547 billion over five years, is the latest signal that not all Democrats are eager to focus on narrow bipartisan wins on infrastructure.
The bill includes more than $200 billion more in spending than a limited highway bill that the Senate Environment and Public Works Committee unanimously approved last week. McConnell called that legislation a model for "the approach that would let Congress build a successful big-picture infrastructure bill this year."
House Democrats chose a different route. Their legislation would triple funding for Amtrak to $32 billion and includes more than $100 billion in transit investments. The bill also has money for zero-emission vehicles and investments in walking, cycling and non-car infrastructure.
White House press secretary Psaki said Biden spoke Friday with Rep. Peter DeFazio, D-Ore., who authored the legislation. She said the president and DeFazio "agreed on the benefits of continued engagement with Democratic and Republican Senators as the House work on infrastructure advances this coming week."