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President Biden plans to test Republicans’ appetite to pay for any part of his proposed $4.1 trillion in infrastructure and social spending before deciding whether to pursue one big tax-and-spend package or two smaller ones, Axios has learned.
Driving the news: Biden is wary of boxing himself in, since it would dictate whether he seeks a bipartisan or all-Democratic approach. He told reporters on Wednesday, "I'm willing to compromise. But I'm not willing to not pay for what we're talking about. I'm not willing to deficit-spend."
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The president's proposal to raise an additional $700 billion from wealthy Americans through increased tax enforcement could be the easiest way to attract Republican support for a pared-down package, according to Democrats close to the White House.
Biden will host his first bipartisan meeting with the "Big Four" congressional leaders next Wednesday, May 12, including House Minority Leader Kevin McCarthy (R-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.).
He'll also meet separately with Sen. Shelley Moore Capito (R-W.Va.), who's emerged as a key negotiator for the Republicans' $568 billion counterproposal on infrastructure.
Why it matters: If Republicans agree to pay for it, Biden is more likely to settle for a smaller, bipartisan bill focused on traditional infrastructure such as roads, bridges and broadband.
The final infrastructure bill could creep up to $1 trillion during negotiations but would be well short of the president's initial $2.3 trillion proposal. Republican support would be key, since it would need 60 votes to pass in the Senate.
Biden would then return to Congress for the remainder of his spending proposals.
He'd aim to pass them later in the year via budget reconciliation, a process requiring only a simple 51-vote Democratic majority for approval.
Between the lines: The one-two approach could require Biden to sacrifice many of the progressive priorities in his Build Back Better agenda.
A second package, focused on "human infrastructure" such as paid family leave and costing in excess of $3 trillion, could collapse under the bill's overall price tag and complexity.
Democrats expect centrists like Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) to press for a reduction in the size and scope of the second package.
The big picture: Biden initially proposed paying for his first $2.3 trillion infrastructure package by increasing corporate taxes.
For his second $1.8 trillion plan, he focused on personal taxes, including raising the top marginal income rate to 39.6%, treating capital gains as regular income and capturing another $700 billion in tax enforcement by investing another $80 billion in the IRS.
Despite pairing them that way, he's open to ideas about which taxes should be applied to which spending.
Go deeper: Biden's proposed $4.1 trillion in overall spending could actually be much higher, after the Congressional Budget Office and Joint Committee on Taxation provide their official price tags.
Biden's initial $1.8 trillion American Families plan would actually cost $700 billion more than the White House has claimed, according to a new analysis by the University of Pennsylvania Wharton Budget Model.
The bottom line: By decoupling the revenue-raisers from his spending provisions, Biden has expanded his options to pay for parts of his program.
Yet by increasing the likelihood of supporting one smaller bill, he’s potentially jeopardizing his bigger political agenda.
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