Joe Manchin confirms he wants a reconciliation bill worth only $1.5 trillion, saying he believes the US can’t turn into ‘entitlement-based society’

Joe Manchin
Sen. Joe Manchin of West Virginia.

  • Sen. Joe Manchin told Chuck Schumer in July he wanted a $1.5 trillion social-spending topline, a document shows.
  • Other proposals include means testing for new spending and a 25% corporate tax rate.
  • Even though Schumer signed the document, his spokesperson told Politico he never agreed to it.
  • See more stories on Insider’s business page.

As Democrats are working to get their $3.5 trillion social-spending bill signed into law, West Virginia Sen. Joe Manchin has been clear he thinks his party’s proposal is too expensive. A document just came to light confirming that he felt that way in July – and he still feels that way now.

On Thursday, Politico first published a document, which a Senate Democratic aide later confirmed to Insider, that revealed Manchin had outlined his proposals for what Democrats’ reconciliation bill should look like to Senate Majority Leader Chuck Schumer in July.

In the document, Manchin proposed $1.5 trillion in spending as a topline for the bill, and proposed raising the corporate tax rate to 25%, the capital gains tax rate to 28%, and he wanted means testing – or threshold formulas – for any new spending.

Speaking to reporters on Thursday, Manchin said, “I believe in my heart” that $1.5 trillion is the most US can afford to spend right now and that it shouldn’t change into “an entitlement-based society.”

The July document said that Manchin “does not guarantee that he will vote for the final reconciliation legislation if it exceeds the conditions outlined in this agreement.”

And while both Manchin and Schumer signed the document, Schumer wrote that he will “try to change Joe on some of these,” referring to what Manchin had proposed. A spokesperson for Schumer told Politico that Schumer “never agreed to any of the conditions Sen. Manchin laid out; he merely acknowledged where Sen. Manchin was on the subject at the time.”

Earlier this month, Manchin suggested Democrats should “hit the pause button” on their reconciliation bill, writing in a Wall Street Journal opinion piece that “I can’t explain why my Democratic colleagues are rushing to spend $3.5 trillion,” citing inflation concerns.

Given progressive lawmakers’ firm stance they will not cut down their $3.5 trillion proposal, Manchin’s outline is unlikely to gain support from most of his Democratic colleagues. Leader of the Congressional Progressive Caucus Pramila Jayapal has made clear that progressives want to see their reconciliation bill passed before infrastructure to ensure the measures they are proposing, like universal pre-K and free community college, are not skimped on.

And progressives have also struck down Manchin’s request that all new spending should have thresholds, especially with the child tax credit. Manchin previously suggested that people should be required to work to access the child benefit, which Democrats like Sen. Bernie Sanders pushed back on, telling reporters that his “personal view is that would be counterproductive to the children who need help the most.”

The House is scheduled to vote on the bipartisan infrastructure bill on Thursday, but given progressive opposition, it’s unlikely to pass. As for the reconciliation bill, Manchin has made clear he will not support it as is, and he still believes in a “strategic pause” to ensure the best economic decision is made.

“While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot – and will not – support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces,” Manchin wrote in a Wednesday statement. “There is a better way and I believe we can find it if we are willing to continue to negotiate in good faith.”

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Here’s Biden’s tax plan that corporations like Apple, Disney, and ExxonMobil are scrambling to squash right now

joe biden
U.S. President Joe Biden.

  • Biden’s tax plan includes increasing the corporate income tax rate from 21% to 28%.
  • Although higher than the current rate, it wouldn’t be the highest rate seen over the years for the top bracket.
  • Some lobbying groups representing large companies are already fighting the plan on Capitol Hill.
  • See more stories on Insider’s business page.

President Joe Biden is looking to bump up the tax rates for corporations and wealthy Americans to help pay for a $3.5 trillion spending plan that includes universal childcare, tuition-free community college, and paid family leave.

But some large corporations aren’t too happy with it. As the Washington Post reported, lobbying groups that represent companies like Apple, Disney, and ExxonMobil are already swarming to Capitol Hill to fight against the tax hikes.

“When corporations and the wealthiest start to pay their fair share, it’s going to put millions of people – according to all the estimates – millions of people to work in jobs that are going to help them punch their ticket to the middle class and stay in the middle class,” Biden said on Friday. “And everyone will do better, including corporate America.”

So what exactly is Biden’s plan and why are large corporations against it?

The corporate income tax rate could rise from 21% to 28% – which is lower than many previous years’ rates

The corporate tax rate has been 21% since 2018, when former President Donald Trump signed into law the Tax Cuts and Jobs Act of 2017 that reduced the rate from the previous 35% for those in the top taxable income bracket.

But, thanks to legal loopholes and exemptions, some of the largest corporations in America don’t pay a cent in federal income taxes. Biden said after August’s weak job report on Friday that “it’s about time they begin to pay their fair share” citing that at least 55 of the largest corporations in the US, including Nike and Salesforce, paid no federal income taxes in 2020. During that year, when millions of Americans lost their jobs or were worried about their financial situation, corporate profits have seen a massive spike.

As the following chart shows, corporate profit before taxes was $1.8 trillion annualized during the second quarter of 2020, less than the almost $2 trillion annualized in the first quarter of the year. However, profits have climbed ever since the second quarter and were over $3 trillion annualized in the second quarter of this year.

As Insider’s Juliana Kaplan previously reported, Biden has waffled on the exact rate for a corporate tax hike – saying it could be somewhere between 25% and 28%.

Either way, the marginal tax rate for corporations in the top tax income bracket would not be as high as it has been in previous years, as the following chart shows. It’s important to note that the top income bracket has changed over time. For instance, from 1993 to 2017 the top bracket included companies that made roughly $18 million in taxable income. From 1988 to 1992, the highest bracket included companies that made over $335,000 in taxable income.

The chart only includes the years from 1946 to 2020 to illustrate just how the federal corporate tax rates have changed over this time period. As the chart highlights, the lowest rate was from 2018 to 2020 after Trump’s law dropped the rate from 35% to 21%. So although the proposed tax hike would be higher for corporations than it was after Trump’s law, it wouldn’t be as high as the top tax rate seen in previous years.

But companies still aren’t happy. Business Roundtable, which includes Apple CEO Tim Cook as part of the board, is one group planning to squash the hike.

“It’s a massive tax increase on US business, which is really damaging, not just to the shareholders of all those businesses but to the employees and customers as well,” Josh Bolten, the CEO of Business Roundtable, previously said.

Biden’s plan also includes other taxes on the wealthiest Americans

Biden’s plan does not include increasing taxes for anyone making under $400,000. The individual tax rate would increase from 37% to 39.6% for individuals making over $452,700 and for married couples making over $509,300. That means those at the top will see the marginal tax rate go back to the 39.6% seen before Trump’s law.

Additionally, those with an income of over $1 million would have to include long-term capital gains and dividends as ordinary, taxable income under the plan.

“President Biden’s proposal to tax capital gains at higher, ordinary income tax rates would lead the U.S. to have the highest top marginal tax rate on capital gains in the Organisation for Economic Co-operation and Development (OECD),” Tax Foundation’s Clifton Painter wrote.

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Elizabeth Warren wants to jack up taxes on Amazon, Microsoft and other companies making over $100 million in profits

senator elizabeth warren
Sen. Elizabeth Warren.

  • Elizabeth Warren and Angus King want a profits tax on corporations to be included in the reconciliation bill.
  • They want to require companies to pay a 7% tax on earnings over $100 million reported to investors.
  • Warren originally proposed the tax during her presidential campaign in 2020.
  • See more stories on Insider’s business page.

A tax on the profits of the nation’s wealthiest corporations was a key element of Massachusetts Sen. Elizabeth Warren’s presidential campaign. She wants it to become reality in the Democrats’ $3.5 trillion reconciliation package.

On Monday, Warren and Sen. Angus King, an independent from Maine who caucuses with the Democrats, announced in a press call they are planning to include a real corporate profits tax in the reconciliation bill, which would require companies to pay a 7% tax on earnings they report to investors above $100 million. This tax wouldn’t apply to the earnings that companies report to the Internal Revenue Service, which are typically diminished to lower tax liability.

“I believe the revenues should come from billionaires and giant corporations that have evaded paying their fair share for far too long,” Warren said during a press call.

“Our Real Corporate Profits Tax Act would create a fairer system and strengthen our economy by ensuring that highly profitable corporations stop getting away with cheating the system,” she added.

Amazon reported $21.3 billion in profits last year, and Microsoft reported $61.2 billion.

King emphasized during the call that “$100 million is the starting point,” meaning small businesses wouldn’t be impacted.

“All we’re saying is that large profitable corporations that are reporting these profits to their shareholders should pay some minimum amount,” King said. “7% is what we’re talking about. I see this as simple tax fairness.”

The two senators estimated the tax would bring in nearly $700 billion in revenue over 10 years.

The Senate is expected to pass the bipartisan $1 trillion infrastructure package this week, but given that it leaves out many care-economy measures, such as universal pre-K and free community college, Senate Democrats, led by Bernie Sanders, laid out a blueprint for a separate $3.5 trillion reconciliation bill on Monday to encompass everything that got left out of the infrastructure plan, including a tax hike on the wealthiest Americans.

King noted during the press call that this corporate profits tax would help pay for universal pre-K and free community college, among other things.

Along with a profits tax, Warren proposed an ultramillionare tax in March on the top 0.05% of American households – another core component of her presidential campaign. Her argument for a wealth tax was bolstered by a ProPublica report in June that detailed how the wealthiest Americans, including Amazon’s Jeff Bezos and Tesla’s Elon Musk, managed to pay little to nothing in federal taxes.

Given that Republican lawmakers have been in strict opposition toward raising taxes on the wealthy, including the profits tax in the reconciliation bill is the best shot for Democrats since it can be passed without any Republican votes.

“This is about basic fairness,” Warren said. “And if the big corporations are going to continue to exploit loopholes in the ways they have done, then we think there needs to be a backstop against that.”

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Biden’s big jobs plan will actually hurt low-income and minority Americans’ chances of owning a home

compromises buying home
The Biden administration’s proposed American Jobs Plan would create new hurdles for minority and low-income first-time homebuyers.

  • The American Jobs Plan would make home ownership less accessible for low-income and minority home buyers.
  • If you can’t put 20% down when you buy a house, you have to pay mortgage insurance.
  • Biden’s plan would make private mortgage insurance more expensive.
  • Jerry Theodorou is the director of the Finance, Insurance and Trade Policy Program at the R Street Institute.
  • This is an opinion column. The thoughts expressed are those of the authors.
  • See more stories on Insider’s business page.

Homeownership is a pillar of the American dream. Last year, the pandemic made many Americans realize they wanted that dream sooner rather than later. Many turned to Redfin and Zillow, swiping through home after home as travel was restricted. News reports quickly followed of surging housing prices and increasing demand as renters turned into buyers and people looked for more living space.

On the surface, this news sounds like a boon to the American economy. Owning a home builds equity and intergenerational wealth, and it can be a cushion against financial setbacks. Yes, there are risks, as shown from the 2008 financial crisis, but American homeownership is still on the rise.

It baffles the mind, then, that as the economy continues to recover, the Biden administration’s proposed American Jobs Plan would create new hurdles for minority and low-income first-time homebuyers. In an effort to pay for the plan, the government would raise the cost of private mortgage insurance, potentially squashing the dreams of millions of Americans.

Inequity in homeownership

Minority and low-income families would be hit hardest by the new legislation because 40% of loans with private mortgage insurance are for families with annual incomes below $75,000, and 60% go to first-time homebuyers. The disparity between homeownership by Black families and white families is already significant – 42.3% of Black families own homes compared with 72.2% of white families. The Biden plan would only widen this gap.

Home buyers can pay as little as 3% of a home purchase price as a down payment. But for those who supply less than 20%, mortgage insurance must be purchased to protect lenders against a borrower defaulting. But private mortgage insurers must have sufficient financial strength to withstand the inevitable peaks and valleys in the cyclical housing market. Since the 2008 financial crisis, new regulations have required insurers to maintain sufficient capital levels to survive another downturn.

Insurers have strengthened their capital base by purchasing reinsurance – insurance for insurance companies. Think of it like a financial shock absorber that spreads risk globally and acts as a bulwark against crippling losses from catastrophic events. Reinsurance is so important for mortgage insurers that in 2020, US insurers shared more than 30% of their mortgage insurance risk with non-US sources. Bermuda reinsurers alone, for example, accounted for just over 50% of such cessions.

The failure of the Jobs Plan

This is where the American Jobs Plan enters the picture. First, it would increase the corporate tax rate from 21% to 28%. Second, it would impose a global minimum tax rate that dilutes the benefits of Bermuda reinsurance. For mortgage insurers, this will inevitably lead to higher prices. Currently, Bermuda reinsurers do not impose taxes on corporate income, allowing mortgage insurers to benefit from the availability of low-cost mortgage insurance.

These actions seem far upstream from the average home buyer, but the effects will trickle down quickly. A higher corporate tax rate for mortgage insurers will eat into their profits. To recoup these lost dollars, they will raise required mortgage insurance rates for all home buyers who put down less than 20%. Simple financial modeling suggests that rates could rise by approximately 10% overall, a significant increase for borrowers, pushing homeownership further away for those of lesser means.

The math is fairly straightforward. Mortgage buyers with excellent credit scores – more than 740 – who put 3% down on a $200,000 home pay approximately $9,500 for the mortgage insurance over eight and half years until the loan-to-value ratio drops below 80%. Borrowers with credit scores between 680 and 699, slightly below the national average, with the same down payment on the same home pay approximately $19,800 in mortgage insurance. Under Biden’s plan, those costs could increase by as much as 10%.

If the American Jobs Plan becomes law, the cost of insurance will rise, potential homebuyers will be affected directly, and, thus, the economy overall.

The Biden administration should stop building barriers to homeownership and instead support policies that will help first-time homebuyers, particularly the low-and-moderate- income families, especially in today’s low interest rate environment. One way to begin is to reconsider the proposed anti-free trade, anti-fair trade, globally-mandated minimum tax policies. The American dream depends on it.

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Amazon could sidestep new G7 corporate tax measures because its profit margins are below a 10% threshold

Jeff bezos
Amazon CEO Jeff Bezos.

  • Amazon could escape new G7 measures to further tax tech giants, The Guardian reported.
  • Amazon’s slim profit margin could put it below a 10% threshold being considered for the tax.
  • Treasury Secretary Janet Yellen has said separately that Amazon would be caught by the new measures.
  • See more stories on Insider’s business page.

Amazon may be able to avoid new taxes agreed by the G7 because its profit margins are below a 10% threshold, The Guardian reported.

The G7 group of wealthy nations announced a two-pronged agreement Saturday that tackles the tax contributions of the world’s biggest tech companies, including Amazon, Facebook, Google parent Alphabet, and Apple.

The deal seeks to introduce a 15% global minimum corporate tax rate. It also aim to address one of the key ways that global tech giants keep tax contributions to a minimum – by declaring corporate profits in tax havens, away from the countries where much of their business is done.

One criterion under discussion for selecting which companies to further tax is their profit margin, with a 10% threshold being discussed.

Above that margin, 20% of whatever profit they declare would be reallocated – and taxed – in the countries where they make sales.

This second aspect of the deal is where Amazon may have an advantage, The Guardian reported. Despite colossal sales, Amazon’s profit margin is low because of its strategy of aggressive growth and reinvestment, as Vox reported.

“Our profits have remained low given our continued investments across Europe,” the company wrote in a May blog post, which emphasizes the “millions” of dollars paid there by the company.

According to The Guardian, Amazon’s profit margin in 2020 was 6.3%, significantly below the 10% threshold.

Richard Murphy, visiting professor of accounting at Sheffield University in the UK, told the paper that the system could be “easily gamed.”

“This could turn out to be a false hope unless they get the detail right,” he told the paper.

G7 Finance Ministers
G7 finance ministers meet in London on June 5, 2021.

Asked on Saturday whether Amazon and Facebook would be captured by the G7 proposal, US Treasury Secretary Janet Yellen said: “It will include large profitable firms and those firms, I believe, will qualify by almost any definition,” Reuters reported.

In a statement sent to Insider, a spokesperson for Amazon said: “We believe an OECD-led process that creates a multilateral solution will help bring stability to the international tax system.

“The agreement by the G7 marks a welcome step forward in the effort to achieve this goal. We hope to see discussions continue to advance with the broader G20 and Inclusive Framework alliance.”

Big tech companies reacted positively to the G7 deal in a flurry of statements on Saturday, with Facebook saying it “welcomes” the deal, and a Google spokesperson telling Reuters the company “strongly supports” the measure.

The global minimum tax rate also has its critics, such as Oxfam. The campaign group said in a statement to Reuters that the G7 is “setting the bar so low that companies can just step over it.”

The global minimum “is similar to the soft rates charged by tax havens like Ireland, Switzerland and Singapore,” the Oxfam statement said.

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G7 leaders reach ‘historic’ agreement to crack down on tech giants by forcing Amazon, Facebook, and others to pay more tax

G7 Finance Ministers
G7 finance ministers meet in London on June 5, 2021.

  • The G7 group of wealthy nations has reached a “historic agreement” on taxing multinational companies.
  • The agreement will ensure that tech giants pay more tax where they operate.
  • It also pledges to introduce a global minimum corporate tax rate of 15 percent.
  • See more stories on Insider’s business page.

Finance ministers for some of the world’s wealthiest nations have reached a “historic agreement” to tackle tax abuses by internet giants and to introduce a global minimum corporate tax rate of 15 percent.

“I am delighted to announce that today after years of discussion G7 finance ministers have reached a historic agreement to reform the global tax system,” Rishi Sunak, the UK’s Chancellor of the Exchequer, said after a Group of Seven (G7) meeting in London.

“To make it fit for the global digital age, but crucially to make sure that it is fair so that the right companies pay the right tax in the right places and that’s a huge prize for British taxpayers,” Sunak added.

Read more: The director of wealth management at a $12 billion firm shares 3 stocks set to thrive when corporate taxes rise – and says all of them have at least 15% upside from current levels

The deal – agreed on by Canada, France, Germany, Italy, Japan, the UK, and the US – will ensure that multinationals pay more tax where they operate, the Financial Times said. This is to avoid companies setting up local branches in countries with low corporate tax rates and then declaring their profits there, the BBC reported.

The “first pillar” of the agreement would apply to global companies with at least a 10 percent profit margin, the BBC said. A 20 percent tax on any profit above that margin would be reallocated and taxed in the countries where they make sales, Sunak said on Twitter.

It is likely to affect tech giants, including Amazon, Facebook, and Google, Metro reported.

The “second pillar” is a commitment to introducing a global minimum corporate tax rate of 15 percent. This will disincentivize major companies from declaring profits in tax havens, the Financial Times said. It will also stop countries from trying to undercut each other.

The latter is seen as a big win for the Biden administration. President Joe Biden’s infrastructure plans include a hike in the country’s corporate tax rate, Insider’s Juliana Kaplan reported. If rates are more uniform around the world, as this commitment pledges, it could encourage multinational companies to remain in the US, even with higher taxes, Kaplan said.

Secretary of the Treasury Janey Yellen said on Twitter that the global minimum tax will “end the race-to-the-bottom in corporate taxation” and would “level the playing field” for business.

The “Silicon Six”– Microsoft, Amazon, Facebook, the Google owner Alphabet, Netflix, and Apple – have long been accused of avoiding paying tens of billions less tax over the past decade on trillions of dollars of revenue than the figures cited in annual financial reports would seem to entail, according to the Guardian.

Nick Clegg, Facebook Vice President for Global Affairs, told Insider via email: “Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G7. Today’s agreement is a significant first step towards certainty for businesses and strengthening public confidence in the global tax system. We want the international tax reform process to succeed and recognize this could mean Facebook paying more tax, and in different places.”

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Biden has reportedly offered to ditch his rollback of Trump-era tax cuts in a major infrastructure concession to GOP

Joe Biden Shelley Moore Capito in Oval Office White House
President Joe Biden meets with Sen. Shelley Moore Capito at the White House.

  • Biden has reportedly made a major concession to drop a corporate tax hike in infrastructure talks with Republicans.
  • Instead, he’d put in place a 15% minimum corporate tax.
  • Republicans have barely budged in the negotiations so far. They’re schedule to speak again Friday.
  • See more stories on Insider’s business page.

President Joe Biden has reportedly floated creating a minimum tax for corporations rather than pursuing his proposed corporate tax rate increase, according to The Washington Post.

The move comes as the president continues a fourth week of negotiations with the GOP, who have ruled out any alterations to the 2017 Republican tax cuts. Biden had proposed raising the corporate rate from to 28% from its current level of 21% enacted under President Donald Trump’s tax law.

Instead, Biden put forward a 15% minimum corporate tax as a possible solution, a source familiar with the discussions told the Post. That tax would take aim at corporations paying little to no taxes. Biden has previously cited a report from the left-leaning Institute on Taxation and Economic Policy indicating 55 major American companies paid nothing in federal income taxes in the past year.

The White House did not immediately respond to a request for comment.

The move represents a sharp break from Biden’s previous fiery rhetoric on the need for increased corporate taxes; Still, some centrist Democrats like Sen. Joe Manchin of West Virginia are pushing for a rate closer to 25%, rather than 28%. Biden wants to offset his proposed infrastructure spending with tax hikes on corporations and the country’s highest-earners.

Republicans last week led by Sen. Shelley Moore Capito of West Virginia pitched an infrastructure plan with only a modest amount of new spending above what Congress has already approved. Both parties are at loggerheads over the size and scale of the package, along with how to pay for it. Republicans are seeking to finance their spending with coronavirus relief money, which Democrats are rejecting.

It also comes amidst a push by the US to enact a global minimum corporate tax rate, which would seek to standardize taxes for multinational companies and prevent them from fleeing to countries with lower levies. The latest figure reported for that rate is also 15%, not the expected 21%.

The White House also reportedly wants to increase tax enforcement on corporations and high-earners.

“It’s just not fair. It’s not fair to the rest of the American taxpayers,” Biden previously said in a speech defending the corporate tax rate increase. “We’re going to try to put an end to this. Not fleece them – 28%. If you’re a mom, a dad, a cop, firefighter, police officer, etc., you’re paying close to that in your income tax.”

Capito and Biden are scheduled to speak again on Friday.

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Elizabeth Warren says the GOP infrastructure plan is not a ‘serious’ counteroffer and leaves out women

senator elizabeth warren
Sen. Elizabeth Warren.

  • GOP Senators introduced a $928 billion counteroffer to Biden’s $2.25 trillion infrastructure plan.
  • Massachusetts Sen. Elizabeth Warren said their plan is not a “serious” offer and leaves out women.
  • She, along with other Democrats, also criticized the GOP idea to repurpose stimulus aid to fund infrastructure.
  • See more stories on Insider’s business page.

A group of Republican senators unveiled their $928 billion counterproposal to President Joe Biden’s infrastructure plan, increasing the price tag from their first $568 billion counteroffer.

Massachusetts Sen. Elizabeth Warren was not impressed with this new plan.

“I don’t really think this is a serious counteroffer,” Warren told MSNBC following the release of the plan.

The past few weeks in the White House have been filled with Oval Office meetings attempting to get Republicans on board with Biden’s $4 trillion infrastructure plan. After a GOP group – led by Sen. Shelley Moore Capito of West Virginia – met with Biden to discuss their original $568 billion proposal, the White House countered that with a $1.7 trillion proposal, down from its initial price tag of $2.25 trillion on the American Jobs Plan.

And on Thursday, the Republicans brought a $928 billion offer to the table, largely focused on funding for physical infrastructure, and only a $257 billion increase in new government spending beyond what Congress has already authorized.

Warren criticized the plan for lacking a clear funding method and only suggesting repurposing already allocated stimulus funds.

“First of all, they don’t have pay-fors for this, it’s not real,” Warren said. “They have this illusory notion of how we’re going to take money that’s already been committed to other places and other spending.”

She added that women are also left behind in this package because while Biden’s American Families Plan proposed significant investments in childcare, the GOP offer does not allocate any funding toward care-economy measures.

“Millions of women are out of the workforce right now and one out of four says the reason [for that]: I can’t get childcare,” Warren said. “This is our chance to expand our idea of what infrastructure means. Give women who want to work a real chance in the workplace,” she added.

Other Democratic lawmakers joined Warren in criticizing not only the GOP plan, but the idea of using stimulus aid to pay for it instead of the corporate tax hikes Biden had originally proposed.

“They’re talking about using the child tax credit to pay for this,” Colorado Sen. Michael Bennet told reporters. “This is a significant tax cut for working people. Ninety percent of America’s kids – more than that – are going to benefit. It’s going to cut childhood poverty almost in half so I really don’t understand their desire to raise taxes on working people.”

And Insider reported that 14 state treasurers are urging Congress to refrain from repurposing stimulus money to fund infrastructure, given that the aid is much needed to sustain economic recovery for state and local governments.

“This is called a jobs bill. It’s infrastructure and jobs,” Warren said. “So long as we’re investing in roads and bridges and lots of concrete, about 90% of those jobs are going to be for men. But when we’re talking about childcare, those jobs are nearly all going to women and those jobs today pay far too little. We have a chance to turn those into good paying, professional jobs.”

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Biden’s budget will reportedly cost $6 trillion while running a $1.3 trillion deficit over a decade

Joe Biden
President Joe Biden.

  • Biden’s budget will propose $6 trillion for fiscal year 2022, according to a New York Times report.
  • It will also run a $1.3 trillion deficit over a decade, which will be offset by corporate tax hikes.
  • This will mainly fund Biden’s infrastructure plan while leaving out campaign promises, like canceling student debt.
  • See more stories on Insider’s business page.

President Joe Biden’s first budget request will officially be unveiled on Friday, and the New York Times found that it will propose $6 trillion to help fund his major infrastructure spending plans.

On Thursday, the Times reported that the $6 trillion budget proposal for fiscal year 2022 will be accompanied by deficits of $1.3 trillion over the next decade, and it will also call for total spending to increase to $8.2 billion by 2031, according to obtained documents.

This would take the US to its highest federal spending levels since World War II, and it comes as Biden is lobbying for his $4 trillion infrastructure plan, which not only includes rebuilding physical infrastructure, but climate change initiatives and efforts to boost the middle class, as well. This budget proposal will help him do that.

The Times added that under Biden’s budget proposal, the federal deficit would hit $1.8 trillion in 2022, and it would recede slightly after that before growing to nearly $1.6 trillion by 2031. But his plans to fund infrastructure by corporate tax hikes and wealthy people would help shrink those deficits, despite Republicans firmly opposing those hikes.

Last week, Insider reported that issues that Biden campaigned on – like student debt forgiveness – will not be included in Friday’s budget proposal, based on information sources told The Washington Post, and health care promises, like lowering prescription drug costs, won’t be making the cut, either.

“The President’s budget will focus on advancing the historic legislative agenda he’s already put forward for this year,” Rob Friedlander, spokesman for the White House budget office, told the Post. “The budget won’t propose other new initiatives but will put together the full picture of how these proposals would advance economic growth and shared prosperity while also putting our country on a sound fiscal course.”

Biden also pledged to reform the unemployment insurance system when unveiling his American Families Plan, but that will reportedly not be in the budget, either. It will mainly focus on already proposed infrastructure investments, like education and climate change, and will likely not go too far beyond that for the time being.

However, this budget proposal requires congressional approval, so its fate rests at the hands of lawmakers. But given the course the infrastructure bill has taken so far, there will likely be disagreements on what will end up in the budget. For example, Democrats have been urging Biden to ditch negotiations with the GOP on infrastructure and pass a big spending bill while Republicans continue to counter Biden’s plan with a lower scope and size.

But Biden is still committed to bipartisanship, and whether his budget proposal gets bipartisan support remains to be seen.

White House Press Secretary Jen Psaki said last week that the negotiations were an art of a “different kind of a deal – a deal for the working people.”

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The GOP prepares to come up $500 billion on infrastructure after Biden comes down by $600 billion

Roger Wicker Mississippi
Sen. Roger Wicker.

  • GOP Sen. Roger Wicker said Republicans will bring Biden a $1 trillion infrastructure counter-offer.
  • This follows the White House’s offer to cut its $2.25 trillion plan down to $1.7 trillion.
  • Some Republicans still think $1 trillion is too high, while the parties are far apart on funding new spending.
  • See more stories on Insider’s business page.

In his latest attempt to get Republicans on board with his infrastructure plan, President Joe Biden offered them a $1.7 trillion plan last week, down from his initial $2.25 trillion proposal. GOP lawmakers plan on countering that with a $1 trillion plan on Thursday.

A group of GOP senators, led by Shelley Moore Capito of West Virginia, met with Biden two weeks ago to discuss their initial $568 billion counter-proposal to Biden’s infrastructure plan. They missed last Tuesday’s deadline to bring the president a new offer, but Sen. Roger Wicker of Mississippi told reporters on Tuesday that a new offer close to $1 trillion will be brought to the table on Thursday.

“We’re going to hit a figure very close to what the president said he would accept, and it will end up being the most substantial infrastructure bill ever enacted by the federal government,” Wicker told reporters.

Capito’s office said in a statement to Insider last week that Friday’s White House offer was “well above the range of what can pass Congress with bipartisan support” and that Republicans and the White House still differed on what’s considered infrastructure, how much should be spent on it, and where that money should come from.

While Biden has proposed funding the plan through corporate tax hikes, Republicans have strongly opposed doing so, instead suggesting “user-fees,” a set of charges levied on the users of a federal service or good, like raising the federal gas tax.

And last week, Insider reported that Capito floated the idea of taking unused federal unemployment money to fund infrastructure, which comes as 23 GOP-led states have so far announced they are ending unemployment benefits early following the weak April jobs report.

Wicker told reporters on Tuesday that repurposing stimulus funds, and not spending any new money, will be something the GOP will push for. Republicans are also pushing take Biden’s proposed tax hikes on the richest Americans and multinational firms off the table in any deal.

“I do think there’s a path forward here if the president is willing to take it,” Sen. Joni Ernst of Iowa, the fourth-ranking Senate Republican, told Insider. “As long as we’re not talking about tax hikes, I think that’s really important because Republicans are not going to support any tax hikes.”

Biden has proposed lifting the corporate tax rate to 28% from the 21% level put in place in the 2017 Republican tax law. He’s also seeking to impose higher taxes on investors and raise the marginal income tax rate.

Not all Republicans support the $1 trillion figure, likely complicating a bipartisan plan. Sen. Mitt Romney of Utah told reporters that it’s “unlikely” he’d support a number that high, which could pose another barrier to reaching a bipartisan agreement.

As these negotiations continue, Democratic lawmakers are increasingly urging Biden to forego these discussions and move ahead with passing the comprehensive package he proposed, with corporate tax hikes, to get urgent aid to Americans.

“We appreciate the White House’s interest in reaching across the aisle to seek Republican support for overwhelmingly popular infrastructure priorities …” House Democrats wrote in a letter. “While bipartisan support is welcome, the pursuit of Republican votes cannot come at the expense of limiting the scope of popular investments.”

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