Biden Starts Infrastructure Negotiations, Disagreements Loom

13 Apr 2021 · 3rd Party Analysis

Biden Starts Infrastructure Negotiations, Disagreements Loom


In Summary

  • Joe Biden brings together bipartisan lawmakers to discuss his $2.3tn infrastructure plan
  • Negotiations sprout disagreements over cost and proposed rate hike

US President Joe Biden has begun the negotiations over his newly proposed $2.3tn infrastructure plan. The President gathered a group of bipartisan lawmakers in the White House to discuss the payment and the passage of the big-ticket spending. “We can’t let the divisions of the moment stop us from doing right by our future,” the President tweeted late Monday. “That’s why this afternoon, I brought together a bipartisan group of lawmakers to discuss how we can build America’s infrastructure back better with the American Jobs Plan,” he added.

During the meeting, which lasted about two hours, Republicans disagreed over the proposed corporate tax rate hike from 21% to 28%. Moreover, they remain opposed to the size of the spending and push for a narrower package. Opposition from the Republicans comes as no surprise as they were against the already approved $1.9tn stimulus package and they made clear they will not support further advancement of Joe Biden’s “Build Back Better” campaign.

Lawmakers remain at loggerheads over the possible ways to pay for the plan. On that issue, Joe Biden has expressed willingness to consider breaking his proposal into smaller parts and lowering the rate hike to а level, acceptable by the bipartisan group of Senators.

Reconciliation and Renegotiations on the Horizon?

During the meeting in the Oval Office, Mr. Biden said he remains open to negotiating different ways to pay for the spending package. “I think everyone acknowledges that we need a significant increase in infrastructure. It’s going to get down to what we call infrastructure,” he said, citing fixing roads and expanding broadband internet. “I’m confident that everything is going to work out perfectly.”

The infrastructure fiscal spending has dedicated $621bn to transportation improvements, $300bn for domestic manufacturing efforts, $111bn to water-related infrastructure, and $100bn to providing better broadband internet access, among other measures.

The plan in its current form relies heavily on raising the corporate tax rate to return the funds. The proposed rate hike to 28%, according to the White House, should cover the cost of the infrastructure plan over 15 years. During the previous White House administration, former President Donald Trump lowered the corporate tax rate from 35% to 21%. Republicans then sought to make US companies more competitive globally.

If no support is received from the Republicans, Democrats have the option to pass the infrastructure bill by using the process of reconciliation, which was used for the passage of the American Rescue Plan last month. That method would require all 50 Senate Democrats to support the bill. However, some Democrats have expressed concerns over some provisions, including the rate hike, and for them to vote in favor of the package, the questionable provisions would need to be amended.

Other ways to pass legislation on infrastructure include Republicans and Democrats coming together on a smaller package. Another option, for which some Progressive Democrats are calling, is to combine the infrastructure bill with a package focused on anti-poverty and education.

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