Update (1215ET): Having explained to the American public how “17 Nobel Prize winning economists” believe this new spending bill will not be inflationary and will not raise the deficit (seriously), it appears President Biden is rapidly realizing just how serious an inflection point he is approaching.
Bloomberg reports that, in a private meeting Thursday at the Capitol, Biden warned House Democrats that his presidency and their own political fortunes depend on them passing his multi-trillion-dollar economic agenda.
“I don’t think it’s hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week,” Biden told the lawmakers, according to two people in the room and a third person familiar with the remark.
Given his record approval rating plunge since inauguration, perhaps that bird has already flown the coop, and backing a flailing president into the MidTerms may not be poitically palatable to each of their individual political careers.
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Update (1145ET): Arriving roughly a half-hour late, President Biden spoke from the White House on Thursday to fill out the details of the Dems’ $1.75 trillion social spending and climate change plan, the president seemed to have a message to any Democrat who might vote against it: the bill represents an effective “compromise,” that won’t increase the deficit, according to “17 Nobel Prize winning economists.”.
While many Dem agenda items were left out, Biden said “that’s compromise…that’s consensus and that’s what I ran on,” he said of the bill, saying that, combined with the infrastructure bill, the package would amount to a “historic investment” that would “truly transform our nation.”
“No one got everything they wanted, including me. But that’s what compromise is,” Biden said, touting spending deal that includes climate and Medicaid coverage provisions but excludes paid leave and drug-price negotiations. “That’s consensus, and that’s what I ran on.”
He then went on to “lay out a few points”. “We face an inflection point as a nation” since the dominance America enjoyed during the 20th Century is already fading as we head deeper into the 21st.
“For most of the 20th Century, we led the world by a significant margin because we invested in our people. We didn’t just build an interstate highway system, we built a highway in the sky…we invested in the space race, and we won.
As for American leadership in public education, “we invested in education for all our children back in the late 18th century…that was a major part of why we were able to lead the world in the 20th century…but somewhere along the way…we stopped investing in our people.”
However, somewhere along the line, America “lost our edge as a nation.”
“We used to lead the world in educational achievement, now according to the OECD, the US ranks 35th…We can’t be competitive in the 21st century economy if we continue this side.”
Americans need to “build America from the bottom up not the top down.”
As for the theme of economic inequality, Biden said he “can’t think of a single time when the middle class has done well and wealthy haven’t done well…but I can think of times when the wealthy did well and the middle class didn’t.”
Ultimately, the social spending bill is “about expanding opportunity not letting the opportunity be denied.” “It’s about leading the world and not let the world pass us by
Many of the benefits of the bill are targeted at what Biden called the “sandwich generation who feel financially squeezed by raising a child and caring for an aging parent.”
Seniors on medicare they need some help…they don’t want to put them in nursing homes not because of the cost but because its a matter of dignity. you’re just looking for an answer so your parents can keep living independently with dignity…we’re going to expand services for seniors so families can get help from well-trained professionals.”
In a reference to how COVID has impacted the labor market, Biden said “30 years ago we ranked 7th in terms of women working…we’ve gone from 7th to 33rd. There are over 2MM women not working today because they can’t afford child care.”
Biden added that “we’re going to allow parents earning less than $300,000 a year well pay no more than 7% of their salary on childcare,” Biden said.
Moving on, Biden added the plan would “cut child poverty in half in a year.”
After this, he shifted to the climate side of the agenda, and infrastructure. The bill according to Biden will make climate friendly investments in infrastructure like renewable energy, public transportation (including trains, as Biden noted in a self-deprecating joke) while also investing in clean water for the next generation.
Circling back to the subject of how to pay for the bill, Biden insists that “in order to make these investments…the wealthy must pay their fair share.”
“If we make these investments, there will be no stopping Americans and the American people…that’s what these plans do, they’re about betting on America.”
He concluded without taking questions, saying only “see you in Rome” as he presumably left the podium to depart for the G-20 conference in Rome that starts later Thursday.
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President Biden will attempt to explain to the nation just how awesome his administration’s new tax-the-rich-and-spend-spend-spend plan is (despite it being less than half the size that his progressive pals are still demanding)…
Remarks due to start at 1115ET:
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Update (1010ET): President Biden’s brief trip to Capitol Hill to try and sell his new social spending and climate change framework to progressives is over. According to BBG, he has left the Dem caucus meeting with his top negotiators and Nancy Pelosi, whom he was seen chatting with as they departed. Biden will address the American people in a little over an hour.
Biden is pushing for a vote on the infrastructure bill Thursday (which seems more like a fantasy than an achievable goal) although that goal was parroted to the press by at least a few House progressives. Speaker Pelosi has confirmed that she wants to have the vote on the infrastructure bill on Thursday – as in today.
Meanwhile at least one progressive – Rep. Ilhan Omar – says she won’t support a spending bill until she sees the full text.
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Update (0900ET): As President Biden prepares to meet with Congressional Democrats ahead of a 1130ET presser from the White House to officially unveil the plan, more details of the Dems’ new $1.75 trillion spending-and-climate plan are leaking out. Biden has reportedly struck an agreement with moderates like Manchin and Sinema on the deal (which encompasses an expansion of the social safety net, and elements of the ‘Green New Deal’).
Here’s CNBC with more specific details from the plan, some of which were previously known, and some of which are novel:
After months of negotiations, “the package contains a wide-ranging set of programs that, if enacted, will profoundly impact the lives of families with children, low-income Americans and the renewable energy economy,” per CNBC and Bloomberg.
The details include:
Universal preschool for all 3- and 4-year olds, which is funded for at least 6 years.
Subsidized child care that caps what parents pay at 7% of their income, which is funded for 6 years.
A 15% minimum tax on corporate profits for firms with earnings over $1 billion reported to shareholders, and a 1% surtax on stock buybacks
An additional 5% tax on incomes above $10 million, as well as an additional 3% on incomes above $25 million
$555 billion in clean energy and climate provisions
A one-year extension of the current expanded Child Tax Credit, which impacts approximately 35 million households nationwide.
Expanded tax credits for 10 years for utility and residential clean energy, including electric vehicles.
Extend the current, pandemic-related Affordable Care Act subsidies for 4 years.
Allow Medicare to cover the cost of hearing.
The framework also raises the possibility of immigration reform being included in the reconciliation package, but the scope isn’t clear. It forecasts a cost of $100 billion, in addition to the $1.75 trillion topline.
The framework is also notable for what the framework excludes, per CNBC:
A longstanding proposal to create a federal paid family and medical leave system was dropped from the bill on Wednesday afternoon after Sen. Joe Manchin, a key Democratic swing vote, said he did not believe the program belonged in the bill.
The primary purpose of Biden’s trip to the Hill Thursday morning is to convince progressives to back the plan, though Biden says “everybody” is already on board with the new plan. Per CNBC, the bigest challenge for Dems will be convincing the progressives to accept it, since the plan falls far short of “the Squad” and their allies’ grand vision for a $3.5 trillion reworking of the social safety net. Biden will deliver an address to the nation later this am after the meetings on the Hill.
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After abandoning a plan to strictly monitor Americans’ bank accounts in an effort to crack down on tax cheats following an outburst of popular opposition, Democrats finally came together yesterday and agreed on a corporate minimum tax that might offset at least some of the spending from President Biden’s “Build Back Better” initiative.
But given the fractiousness inherent to the Democratic Party, which has seen the House and Senate tax-writing committees and their leaders and members constantly bickering over what new taxes would and would not be acceptable – while Republicans stoke public resistance by warning that the Dems are trying to push through the biggest tax increase in decades – it looks like (after Sen. Kyrsten Sinema agreed to a minimum corporate tax rate) the Democratic caucus has finally ceded something that we at Zero Hedge have suspected all along.
According to Bloomberg, the two main takeaways from Wednesday evening’s tax agreement are this:
1) the bulk of President Trump’s tax cuts will be left in place although
2) corporations will face a new slightly higher minimum tax.
But let’s put the tax side of the program aside for a moment, because WaPo and WSJ have just reported that President Biden is preparing to share a $1.75 trillion framework for his spending bill before he leaves for an extended trip abroad.
That would mean the size of the Dems’ social spending program has shrunk below $2 trillion to $1.75 trillion according to a report released minutes ago by WSJ . That’s down from the initial target of $3.5 trillion. Lawmakers are also waiting to pass a $1.2 trillion “bipartisan” infrastructure bill that passed the Senate back in August, but has been held up by progressive Democrats in the House, who are demanding that the social spending plan get a vote first, so to guarantee that it doesn’t fall by the wayside. Biden has indicated his supports this strategy.
After Treasury Sec Janet Yellen and other Dems hinted at the possibility of taxing unrealized capital gains – an idea that elicited horrified responses from Dems and GOPers alike – BBG says it looks like formerly “core” proposals to increase the top marginal income tax rate and the rate on capital gains tax have been abandoned while “more creative” measures like a minimum tax on the profits on corporate financial statements and a surtax on millionaires are still a possibility.
The new framework is expected to include funding for expanded health coverage, housing, universal prekindergarten and child care, and climate programs, among other provisions. WSJ says. Dems also abandoned a key push to mandate paid family leave on Wednesday.
Here’s a rundown from BBG:
After weeks of secretive discussions, Sen. Sinema has given the Biden admin a list of specific tax policies she will support in order to raise revenue for the social spending plan, per BBG’s sources on the Hill.
She would back the billionaires’ tax put forth by Senate Finance Committee Chairman Ron Wyden or a 3% income surcharge for earners above $5 million, as well as a 15% corporate minimum tax, the people said on condition of anonymity to discuss sensitive negotiations.
As Dems continue to debate what an acceptable tax and spend plan might look like, it appears Dems have also abandoned a plan to increase inheritance taxes, while a potential surtax on billionaires’ wealth has also started to gain their momentum.
But before President Biden leaves for a lengthy trip to Europe for the G-20 climate talks in Rome and the climate summit in Glasgow that will be the first major global climate summit since the Paris Accords in 2015, he’s expected to visit the Hill. Per WSJ, Biden’s also expected to make an address from the White House Thursday at 1130ET to explain to ‘average joe’ what the latest version of the Dems’ spending framework looks like.