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Biden floats a lower price tag for infrastructure but wants GOP concessions
03:57 - Source: CNN
Washington CNN  — 

President Joe Biden has entered a critical moment where the decisions he makes will dictate the success of his sweeping $4 trillion legislative agenda – and potentially his first term in office.

On its face, that may appear hyperbolic, just four months into Biden’s presidency.

But as he continues infrastructure negotiations with Senate Republicans on Friday, this moment is underscored by how interlocked each action Biden takes has become amid a convergence of policy, procedure, legislative logistics, sequencing and, of course, politics.

Biden can’t afford to ditch a process that is viewed as a necessity for moderate Democrats like Sen. Joe Manchin of West Virginia to support Biden’s broader agenda. He basically can’t be seen as walking away from the ongoing talks, or he risks imploding all his goals ahead. And that’s why his most recent proposal, made on Wednesday, was an important step – it intentionally avoided the primary GOP red line (changes to the 2017 tax law) and dropped Biden’s topline to roughly $1 trillion, a level some Republicans indicated would be a space for real talks.

All those factors together mean the White House is now facing a tense high-wire act as it weighs its next steps.

Bottom line

There is nothing simple or straightforward about this moment, despite what various interested parties may claim. Biden is weighing factors across the Democratic caucuses, Republican negotiators and his own team. His overarching priority hasn’t shifted: he wants to enact a sweeping economic agenda that would transform the scale of the federal government’s role in the US economy. But with the narrowest of congressional majorities, nothing can move forward until Democrats are aligned on next steps. And right now, they simply aren’t in the same place

Exhibit A

Manchin to CNN’s Manu Raju: “I know everyone’s in a hurry right now. If anyone understands the process, it’s President Joe Biden. … We’ve got to bring our country together. We can’t continue to split and go further apart. We just can’t do that; we’ve got to work together. That takes a lot of time and energy and patience.”

What to watch

Biden and West Virginia Sen. Shelley Moore Capito, the lead Senate GOP negotiator, are scheduled to speak again by phone on Friday afternoon, a source familiar with the plan told CNN’s Kaitlan Collins, in what will be the latest round of the weeks-long back and forth. Capito and the members of the Senate GOP negotiating group spent the last 24 hours weighing how and whether to counter the proposal Biden laid out in the Oval Office this week. While there was strong consideration inside the group to increasing their topline offer, multiple GOP sources said anything put on the table would still remain far apart from where Biden sits. “There aren’t GOP votes for what he put on the table, and the White House knows that,” one GOP source told CNN.

What’s on the table

White House

Biden, in his Oval Office meeting, outlined a proposal that sat at roughly $1 trillion in new spending (above the $400 billion baseline), financed in large part by major new efforts to crack down on tax evasion by the wealthy and corporations. He also proposed a minimum tax of 15% on large corporations that largely avoid federal taxes.

Senate Republicans

The GOP group proposed a $928 billion plan last week, but one that contained only $257 billion above the baseline (in other words, above the expected spending levels currently assumed for the future based on current policy). The proposal was largely financed by repurposing Covid relief funds.

Where the GOP stands

For Republicans, the topline has gone about as high as it can go with the blessing of rank-and-file members, according to multiple sources. Throughout this entire process, Capito hasn’t been operating as a free agent. Senate Minority Leader Mitch McConnell of Kentucky has been privy to the talks every step of the way, helping guide where he thinks the Republican conference can get to and still maintain support. The pay-for red line for Republicans has been clear from the start: no changes to the 2017 GOP tax law. How much to spend? That has been a place for negotiation in these talks. One thing guiding these discussions has been the fact that many Republicans are uncomfortable with any infrastructure spending going beyond $1 trillion. For some, even that’s too high.

When GOP Mississippi Sen. Roger Wicker told CNN that last week’s $928 billion offer was just about as high as Republicans could go, he meant it. He wasn’t saying it because a few members wouldn’t be willing to go higher, he said it because much more and they start to hemorrhage GOP votes.

That’s why you heard McConnell on Thursday signal loud and clear in Kentucky that he doesn’t know if Republicans and Biden can get there on a deal.

Here are the actual dynamics

To walk through the considerations Biden and his team face, based on conversations with multiple sources on both sides of Pennsylvania Avenue, here’s a rundown:

  • Biden wants to enact his entire $4 trillion agenda, the vast majority of which will receive zero GOP support.
  • The only way to move anything without GOP support in a 50-50 Senate is through the budget reconciliation process
  • Manchin has made clear he’s not ready to move forward on that process. Without Manchin, there aren’t 50 votes for … anything.
  • Also, and this in the weeds a bit, but there are several key infrastructure elements that likely can’t be done through reconciliation. Very important elements (think Highway Trust Fund transfers, larger/longer-term projects).
  • Congressional Democrats are increasingly antsy about the speed of the process, many with visceral memories of 2009 legislative negotiations where they believe Republicans deliberately slowed down and muddied efforts to the political (and policy) detriment of then-President Barack Obama and congressional Democrats.
  • Democrats are keenly aware that major legislative items need to be done before the calendar enters a midterm election year. They’re also very aware that an actual Democrat-only legislative process ahead is complex, filled with political and policy pitfalls and far from a guaranteed outcome.
  • Biden is aware of those concerns (he was Obama’s vice president, of course) and has made clear he has no plan to let things linger. But, according to multiple advisers, he also sees distinct value in a bipartisan agreement for the country. Some Democrats scoff, as one House Democrat called it, at “laudable yet unrealistic idealism.” But Biden sees value in the process and possibility, advisers said.
  • White House officials know Biden’s latest proposal could unsettle some Democrats, but they also believe it gives them a clear upper hand if Republicans reject it out of hand. “We’re giving them what they want. How can they say no?” one White House official asked.
  • But here’s the thing: The White House knows Republicans won’t accept the proposal. The corporate minimum tax is a non-starter, and the scale of Biden’s tax enforcement plan has already been rejected by Republicans.
  • So why put it on the table? For one, it does get closer to Republicans on each element and could jar loose a new GOP proposal that creates space for a deal. But if it doesn’t, and Republicans walk, then the White House can make it clear they gave it their best shot and now it’s time to move forward with Democrats. As one senior Democratic aide put it to CNN: “They aren’t idiots. People simplify Biden as naively pursuing nostalgic and non-existent bipartisanship and that’s missing some of the play here.” That said, the aide added, “this game needs to come to an end soon.”

Flashing back to this comment

Biden, at his first press conference in March, made a point on a macro level that is quite relevant to this moment. Asked about his legislative priorities, Biden said this:

“It’s a matter of timing. As you’ve all observed, the successful presidents, better than me, have been successful in large part because they know how to time what they’re doing. Order it. Decide priorities. What needs to be done.”

Biden was making a broader point about his decision to pursue his infrastructure and jobs proposals as his top priority, but it’s also applicable on a micro level now. Biden is trying to nail the timing here, at a moment when everyone around him thinks they know exactly when and how to act. Walk from negotiations at the wrong time and Democratic votes may not come through. Stay in them too long and the window for a complex legislative process ahead may shut before completion.

In other words, to paraphrase Biden a few months ago: The timing here is everything.

The off-ramp

Something to keep in mind as this process moves along – there’s a bipartisan deal in the waiting that has direct ties to infrastructure: the surface transportation reauthorization bill. Capito is a key player there and is the top Republican on the panel that already moved a bipartisan agreement on the bill through unanimously. There are several key steps to go, but if the White House and lawmakers wanted to, say, find a scaled-back bipartisan agreement they could point to, while also having the added benefit of addressing key transportation issues that couldn’t be moved through reconciliation, this sure would make a pretty good vehicle for that.

The timeline

So what is the timeline here? Administration officials went into this week making clear the days ahead were critical. Transportation Secretary Pete Buttigieg told CNN’s Jake Tapper on “State of the Union” that the infrastructure talks were “getting pretty close to a fish or cut-bait moment” and pointed to June 7. Other White House officials pointed to June 9, a key House Transportation and Infrastructure Committee markup, as the date they were keyed on.

The reality, multiple sources said, is there likely isn’t going to be any near-term moment where Biden announces a public end to negotiations. Instead, White House officials plan to continue discussions with members of both parties as lawmakers continue moving pieces of their proposals on Capitol Hill.

There is no shortage of Democrats on Capitol Hill who have already lost patience with the process, but most are still giving the White House space, understanding the overall dynamics. For now. And the White House is giving themselves space.

“We’re not here to set new deadlines,” White House press secretary Jen Psaki told reporters Thursday of talks with Republicans. “We’re going to continue those conversations.”

Dates to watch

House Speaker Nancy Pelosi of California has said she wants an infrastructure bill passed by July 4. Senate Majority Leader Chuck Schumer of New York has pegged July for infrastructure progress as well. In other words, things are going to start moving soon (and Democratic aides make clear a lot of work has been taking place behind the scenes to lay the groundwork for the next steps).

A reality check

Biden’s latest infrastructure proposal garnered some grumbling from Democrats who were concerned it was a signal the President was scaling back his overall ambitions. White House officials made clear to CNN that was exactly the wrong read of things.

They made clear tax increases on corporations and wealthy individuals are still the core financing mechanisms for their proposals they plan to pursue with Democrats only.

But also, just listen to Biden. He’s never hinted at backing off the scale of his goals. In fact, he doubled down on them in a major economic speech just last week in Cleveland.

“Now we’re faced with a question: What kind of economy are we going to build for tomorrow? What are we going to do? I believe this is our moment to rebuild an economy from the bottom up and the middle out, not a trickle-down economy from the very wealthy,” he said.

About that Democrat-only process

There’s plenty of justified focus on the bipartisan negotiations, but don’t lose sight of how messy this could be for Democrats. The schisms between moderates and liberals, Democrats who live in the middle of the country and those who live on the coasts, will come into sharp view if Democrats choose to move ahead without Republicans.

While the differences between moderate and liberal Democrats may not be as dramatic as those between Republicans and Democrats, they could imperil Biden’s infrastructure agenda in a Senate without a vote to spare and in a House where Pelosi has a narrow majority.

Add to it multiple committees, all with chairs who have their own priorities and power – with jurisdiction over pieces of the process – and it underscores that Republicans or not, this is a heavy lift ahead, and part of the reason Democrats are agitating for Biden to end talks and move forward now.

Whatever Democrats would come up with will closely track with the White House’s proposal, but it won’t be a carbon copy. This isn’t the Covid relief bill where lawmakers were deferring to a new President and under the crushing deadline of a once-in-a-lifetime pandemic no one anticipated.

This is infrastructure, the first major opportunity in decades for lawmakers to enact legislation on prescription drug costs or paid family leave. It’s a chance to earmark funding for a promised bridge or tunnel project that a member might have been promising constituents for years.

This is a moment when the broad strokes of the legislation will track with the White House, but every single lawmaker is going to want something for their vote and Democratic committee chairs have quietly been working for months on pieces of this bill that they will have ready to go in the event that talks with Republicans collapse.