President Joe Biden offered to bring his price tag on an infrastructure package down to $1 trillion but wants to ensure it amounts to “new money” – not redirected from funding already approved by Congress as Senate Republicans have been demanding, a GOP source briefed on the talks said.
Biden also reiterated his call for new taxes to pay for much of his plan, the source said. But this latest effort marks the first concrete proposal that would take into account the firmest Republican redline: changes to the 2017 tax law.
Biden, in past private discussions, has broached the idea of shifting his proposed financing mechanism – a series of corporate tax increases, including raising the rate to 28% from the 21% level set in 2017 – to address GOP concerns.
But the proposal put on the table in the meeting with Republican Sen. Shelley Moore Capito of West Virginia on Wednesday would explicitly avoid the issue, relying instead on and significantly ramped up tax enforcement and implementing a minimum corporate tax of 15%, which would target corporations that have utilized loopholes to avoid paying a significant share of taxes, a source said.
The idea was explicitly engineered not to cross the central GOP redline, the source added, and, paired with a topline number that has been dropped by more than $1 trillion, represents the clearest effort yet to try and bridge a cap between the two sides that has hardly narrowed despite weeks of discussions.
It was made clear, however, that the offer didn’t mean Biden was jettisoning his proposed corporate tax increases altogether, the source said. Instead, it was made specifically in the context of the ongoing negotiations in an effort to unlock a path forward. The administration remains committed to pursuing Biden’s proposed tax increases on corporations and wealthy individuals as it pursues the entirety of its $4 trillion economic agenda.
The offer made to Capito amounts to a reduction of the Biden administration’s most recent $1.7 trillion proposal but still marks a dramatic difference in new spending from the latest offer made by Republican senators. Capito and her group of fellow Senate Republicans have proposed a $928 billion infrastructure package, with $257 billion in new spending.
Two sources familiar with Wednesday’s discussion between Biden and Capito, who is leading negotiations on behalf of Senate Republicans, said any new infrastructure money would be on top of a baseline of $400 billion over five years, putting the total at $1.4 trillion. The White House declined to comment.
On Wednesday, a White House official described the conversation as “constructive and frank,” and Republicans are considering making another counteroffer on Friday, one of the sources said.
The $1 trillion figure is in line with what Republicans said Biden had floated privately to them, CNN has reported. The White House has opposed redirecting unused Covid-19 relief money to pay for an infrastructure package, as Republicans have proposed.
Not a ‘best and final’ offer
Biden’s intent on Wednesday wasn’t to explicitly put a “best and final” offer on the table, a source with knowledge of the White House strategy told CNN. Instead, it was to underscore that he was willing to come substantially off his initial $2.3 trillion topline figure and attempt to thread the needle on how to pay for the proposal, but only if Republicans would move significantly off their most recent offer.
The goal of the one-on-one meeting was to try and get a sense of where the broader Republican group would be willing to go to reconcile those differences and for Biden to get a read on where Capito personally thought a deal could be made.
Capito didn’t provide any sense that Republicans were going to come off their positions in a significant way, this source said, only that she would discuss the meeting with the other Republicans on her negotiating team, which she did on Wednesday night. Biden and Capito announced publicly they will speak again on Friday.
Inside the White House, Biden’s meeting with Capito was considered as the moment to try and figure out what’s actually possible. A prior Oval Office meeting with the Senate GOP group, the trading of proposals and staff discussions were all viewed as part of the process to winnow down where – or whether – there was space for an actual agreement, the source said. But the White House views the window on that process as closed, and Biden has made clear he wants to know if an outcome is possible. That was the genesis behind the Capito meeting, the source said.
White House officials acknowledge Biden walking away from the talks if no deal comes to pass isn’t exactly a straightforward option. Moderate Democrats have made clear they want the talks to continue and Democrats can’t move anything unilaterally without their support. Key infrastructure elements also wouldn’t be allowed to move through the budget procedure that allows bills in the Senate to pass with a simple majority. It’s partly why White House officials have made clear they are talking to Republicans outside of the Capito group as well.
White House officials have pointed to the June 9 markup of the House surface transportation legislation as a key date – it’s a central component of any infrastructure plan and could serve as a vehicle for a pared-back agreement with Republicans if efforts to strike a broader deal fail.
Capito briefed fellow Republicans
Kelley Moore, Capito’s communications director, said the West Virginia Republican was “encouraged that negotiations have continued.” Capito briefed other Senate Republicans who are negotiating on infrastructure about the White House meeting.
“Senator Capito reiterated to the President her desire to work together to reach an infrastructure agreement that can pass Congress in a bipartisan way,” the statement continued. “She also stressed the progress that the Senate has already made.”
White House press secretary Jen Psaki had indicated earlier on Wednesday that the meeting with Capito was not likely to be “an exchange of paper” but “more of a discussion.” She also said “at least a portion” of the meeting would be one on one, “if not the whole meeting.”
Transportation Secretary Pete Buttigieg said over the weekend that there needs to be “a clear direction” on infrastructure talks by the time Congress returns from its recess next Monday.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Wednesday he is hopeful GOP negotiations with the Biden administration on a giant infrastructure package will be successful and that Republicans believe the key to a deal is to “repurpose” large amounts of unspent funds allocated to spur the economy during the Covid-19 pandemic.
This story and headline have been updated with additional reporting.
CNN’s John Harwood, Ryan Nobles, Ted Barrett, Kate Sullivan and Donald Judd contributed to this report.