Moderate and progressive Democrats are on a collision course over how to pay for President Joe Biden’s economic agenda, a disagreement that has the potential to stall the legislation or sink it entirely.
Biden has proposed an ambitious set of tax increases on wealthy households and corporations to pay for trillions of dollars in new spending. Congressional Democrats have set in motion a $3.5 trillion legislative vehicle to vastly expand the government’s role in health care, climate change, child care and education.
Taxes are emerging as a particularly contentious issue as lawmakers keep an eye on next year’s midterm elections, when Democrats’ razor-thin majorities are at risk. Moderates want a smaller overall package of tax increases and are hesitating on some of Biden’s plans. Progressives view a total rewrite of the tax code as a moral imperative in order to fund social programs and climate measures as well as address a widening wealth gap.
The debate will play out on Capitol Hill starting around the second week of September, when the tax-writing House Ways and Means Committee will take up its part of the massive bill and allow lawmakers to offer amendments. Further clashes may happen in coming months as the plan moves to the Senate, where the bill requires unanimous support from Democrats given the chamber’s 50-50 split with Republicans.
Keeping the tax portion on track will fall initially to Ways and Means Chairman Richard Neal, a moderate and key ally of House Speaker Nancy Pelosi. While his portion of the bill will include benefits with broad Democratic support such as extending tax credits for families with children, Neal said pairing those with tax increases is a tougher sell.
“Sometimes in congressional life people want their dessert without having their vegetables,” the Massachusetts Democrat said in an interview Tuesday. “That generally doesn’t work with revenue.”
Biden’s plans, unveiled in the spring, call for raising the corporate tax rate to 28% from 21%, higher rates on the incomes and investments of wealthy individuals and the elimination of some tax breaks for private equity and the fossil-fuel industry.
