Biden says he's open to compromise with Republicans on $2 trillion infrastructure plan

President Joe Biden answers questions during his first formal news conference on March 25, 2021, in the East Room of the White House in Washington.


By JEFF STEIN AND TONY ROMM | The Washington Post | Published: April 7, 2021

WASHINGTON — President Joe Biden on Wednesday said he was open to compromise with Republicans on how to pay for his approximately $2 trillion jobs and infrastructure package but insisted that inaction was unacceptable.

"Debate is welcome. Compromise is inevitable. Changes to my plan are certain," Biden said. He added that he would soon invite Republican lawmakers to the White House and that the administration is "open to good ideas and good-faith negotiations."

He said, for example, that he was willing to agree to a lower corporate tax rate than his proposal of 28% if Republicans had other ideas that would work. Such a change could be politically necessary for the measure's success. Sen. Joe Manchin, D-W.Va., said this week that he supported raising the corporate rate from 21% to 25%, but not to 28%.

The remarks reflect a rapidly changing political calculus for Biden as he seeks to build momentum for another of his top campaign promises. Biden signed a $1.9 trillion stimulus bill into law in March without Republican support. His comments on Wednesday suggest that he might not try the same approach with his proposed infrastructure package.

Some Republicans, such as Senate Minority Leader Mitch McConnell, R-Ky., have said they support a more scaled-back infrastructure plan, but they have criticized the proposed tax hikes and the large scale of Biden's pitch.

Biden on Wednesday was unapologetic about the scope of his proposal, saying the money needed to finance projects beyond just roads and bridges. He said, for example, that new spending was needed to do things like improve waste treatment plants and remove asbestos from schools.

"Maybe it's because I come from a middle-class neighborhood, but I'm sick and tired of ordinary people being fleeced," he said.

Biden has not backed down on his insistence that the proposed spending increases be offset by a range of corporate tax hikes. This has prompted bipartisan unease. The Treasury on Wednesday outlined the proposed tax increases on businesses that Biden is seeking in his initial plan. It would raise about $2.5 trillion over 15 years, meant to offset the costs of the infrastructure package. These changes would have to be approved by Congress. They would also amount to one of the largest tax increases in decades.

"I'm open to ideas about how to pay for this plan," Biden said. Biden added that he would not raise taxes on households earning less than $400,000 per year, a pledge he'd made during the presidential campaign.

In a 19-page report, Treasury officials called for more than a half-dozen tax measures affecting U.S. companies, including an increase in the corporate tax rate and subjecting the overseas earnings of businesses to higher tax rates.

Unlike the $1.9 trillion stimulus plan that passed in March, the cost of which was almost entirely added to the national debt, the White House has said it will seek to pay for the infrastructure plan through tax hikes on businesses and corporations.

Fifty-five corporations saw zero federal tax liability in 2020, according to a report released this week by the Institute on Taxation and Economic Policy, a left-leaning think tank. The amount of corporate tax revenue raised by the government has fallen by half from above 2% of U.S. Gross Domestic Product before the GOP tax law, the Treasury report says.

"Here you have 51 or 52 corporations of the Fortune 500 haven't paid a single penny in taxes for three years," Biden said this week. "Come on, man. Let's get real."

Biden's plea arrived as House and Senate leaders forged ahead with their early work to enact his multitrillion-dollar blueprint. The process of writing infrastructure spending into law is one that spans much of Congress, where many Democrat-led committees already have held hearings to examine federal funding for roads, bridges, pipes and other policy priorities, such as housing and climate change.

In doing so, Democratic leaders have echoed Biden's pledge to compromise and work with Republicans. But they have also threatened to try to move forward without Republicans if they must. Democrats passed the $1.9 trillion coronavirus stimulus package in March without GOP support through a budget process known as reconciliation, which in the Senate requires 51 votes to pass legislation. The Democratic caucus has 50 members; Vice President Kamala Harris can break a tie.

Democrats have signaled that they could use reconciliation again to adopt some or all of Biden's infrastructure proposals, seeking to bypass a potential Republican filibuster. They gained an additional political advantage Monday, when the Senate's parliamentarian appeared to open the door for the party to use reconciliation at least three more times than they initially anticipated between now and the 2022 midterms. Senate Majority Leader Chuck Schumer, D-N.Y., has declined to say how he plans to take advantage of the ruling.

"The American people want bold action to address our country's many challenges, and Democrats now have more options to overcome Republican obstruction and get things done," Ron Wyden, D-Ore., the chairman of the Senate Finance Committee, said in a statement Monday.

First, Democrats face the task of passing major tax hikes to fund their infrastructure push. The centerpiece of Biden's tax proposal is in increasing the corporate rate from 21% to 28%, after President Donald Trump's 2017 tax law cut it from 35% in 2017. Trump compromised on his tax proposal after insisting for months that the rate needed to be lowered to 15%. He eventually softened his proposal.

The Treasury report released Wednesday projects more than $700 billion in new government revenue through revamping America's international tax system. The plan would increase the global minimum tax paid by U.S. firms operating abroad from about 13% to 21%. It would also repeal provisions from the Republican tax law that the Biden administration says encourages outsourcing of U.S. manufacturing and production.

Parts of corporate America have appeared open to Biden's push. John Zimmer, the CEO of the ride-hail company Lyft, told CNN that the company supported the 28% corporate tax rate and Biden's push for electrical vehicles and infrastructure. Amazon founder and CEO Jeff Bezos said Tuesday that the e-commerce giant supports a rise in the corporate tax rate; he also calling for a "balanced solution that maintains or enhances U.S. competitiveness." (Bezos owns The Washington Post.)

Biden's plans have been criticized by American business groups and congressional Republicans.

"What the president proposed this week is not an infrastructure bill," Sen. Roger Wicker, R-Miss., said this month. "It's a huge tax increase, for one thing. And it's a tax increase on small businesses, on job creators in the United States of America."

The Treasury report included an analysis showing a rising share of income from multinational corporations ending up in tax havens, along with data showing that few countries collect less revenue from corporations than the Unite States.

Conservatives have called these measures misleading. Donald Schneider, who served as chief economist to Republicans on the House Ways and Means Committee, said the revenue declines are overstated because of temporary provisions in the GOP tax law. Schneider said the analysis also misses the rise in pass-through entities, which make the fall in corporate revenue appear larger than it is.

The administration has countered with estimates from Moody's projecting that the spending from Biden's infrastructure proposal would grow the economy by about 1.6%. The Treasury plan also calls for beefing up corporate tax enforcement at the IRS, shifting subsidies for fossil fuel production to cleaner energy production, and pushing a global minimum tax through international negotiations.

"By choosing to compete on taxes, we've neglected to compete on the skill of our workers and the strength of our infrastructure," Yellen wrote in a Wall Street Journal opinion article announcing the plan. "It's a self-defeating competition, and neither President Biden nor I am interested in participating in it anymore. We want to change the game."