President Joe Biden drew a red line on his $ 2.3 trillion infrastructure plan on Wednesday, saying he was prepared to compromise on how to pay for the package, but inaction is unacceptable.
The president got fiery in an afternoon speech, saying the United States is not building, investing or researching for the future and adding that not doing so is giving up “leading. the world”.
“Compromise is inevitable,” Biden said. “We will be open to good ideas when negotiating in good faith. But this is what we will not be open to: We will not be willing to do nothing. Inaction, quite simply, is not an option. “
Biden took issue with the idea that low tax rates would do more for growth than investing in healthcare workers, roads, bridges, clean water, broadband, school buildings, the grid. electric, electric vehicles and veterans hospitals.
The president took the heat from Republican lawmakers and business groups for proposing that corporate tax increases should fund an infrastructure package that goes far beyond the traditional focus on roads and roads. bridges.
“What the president has proposed this week is not an infrastructure bill,” Senator Roger Wicker, R-Miss., Said on NBC’s “Meet the Press,” one of many quotes that Republican congressional aides emailed reporters ahead of Biden’s speech. “It’s a huge tax increase, on the one hand. And that’s an increase in taxes on small businesses, on job creators in the United States of America. “
Last week, Biden offered to fund his $ 2.3 trillion infrastructure plan, largely through an increase in the corporate tax rate to 28% and an expanded overall minimum tax set at 21%. . But he said on Wednesday he was prepared to agree to a rate below 28% as long as the projects are funded and taxes are not increased for people earning less than $ 400,000.
“I’m ready to listen to this,” Biden said. “But we have to pay for it. We have to pay for it. There are many other ways to do this. But I am ready to negotiate. I have come up with the best, most rational, in my opinion, the fairest way to pay for it, but there are many other ways as well. And I am open.
He stressed that he had been open to compromise on his $ 1.9 trillion coronavirus relief plan, but Republicans never moved beyond their $ 600 billion counter-offer.
“If they had come up with a plan that did the basics and it was $ 1.3 billion or $ 4 billion … that allowed me to have pieces of everything that was in there, j ‘would have been willing to compromise,’ Biden said. “But they didn’t. They haven’t moved an inch. Not an inch. “
The president added that America’s position in the world is to take aggressive action on modern infrastructure that serves a computerized age. Otherwise, the county would lose to China in what it believes is a fundamental test of democracy. Republican lawmakers counter that higher taxes would make the country less competitive globally.
“Do you think China is waiting to invest in this digital infrastructure or in research and development? I promise you. They don’t wait. But they rely on America’s democracy, too slow, too limited and too divided to keep pace.
His administration on Wednesday was pushing for tax increases. Treasury Secretary Janet Yellen said it was “doomed” for then-President Donald Trump to assume that reducing the corporate tax rate from 35% to 21% by 2017 would make the economy more competitive and trigger growth. Yellen said competition over tax rates comes at the expense of investing in workers.
“Tax reform is not a zero-sum game,” she told reporters on a call. “Win-win is an overused phrase, but now we have a win-win ahead of us.”
Yellen said the tax increases would produce about $ 2.5 trillion in revenue over 15 years, enough to cover the eight years of proposed infrastructure investments.
The roughly $ 200 billion gap between what taxes would raise and what the administration wants to spend suggests there is room for criticism, as West Virginia Senator Joe Manchin votes key Democrat, who would prefer a 25% rate.
Commerce Secretary Gina Raimondo said businesses and lawmakers should come to the negotiating table, noting that there may be room to negotiate the rate and timeframe.
“There is room for compromise,” Raimondo said during a White House briefing. “What we can’t do, and what I implore the business world not to do, is say, ‘We don’t like 28. We’re walking away. We do not argue. ”
The key to the Biden administration’s rhetoric is to bring corporate tax revenues closer to historical levels, rather than raising them to new heights that could make American businesses less competitive globally.
Trump’s tax cuts in 2017 halved corporate tax revenues to 1% of gross domestic product, which is a measure of the economy’s total income. Income previously represented 2% of GDP. That higher figure is still below the 3% average for the Organization for Economic Co-operation and Development peer countries, the Treasury Department said in its summary of the plan.
Still, some say the administration’s claim is misleading.
“The administration should use statistics that directly measure the burden on the business sector,” said Kyle Pomerleau, a fellow conservative American Enterprise Institute. “In fact, many effective tax rate measurements show that the burden on the United States is pretty close to the middle of the road. Biden’s plan would certainly push higher end among our major trading partners.
Business groups such as the US Chamber of Commerce and the Business Roundtable argue that higher taxes would hurt US businesses operating around the world and the economy in general.
The Penn-Wharton Budget Model released a report on Wednesday that said spending and taxes combined would lead to an increase in public debt by 2031, then a decrease by 2050. But under the plan, GDP would be lower by 0.8% in 2050.
Calling all HuffPost superfans!
Sign up to become a Founding Member and help shape the next chapter of HuffPost