Rep. Josh Gottheimer (DN.J.) is gauging support among House centrists for a counterproposal to the emerging Senate reconciliation package, with one big clause: No new taxes.
Why it matters: Any attempt to change a deal Senate Majority Leader Chuck Schumer can strike with Sen. Joe Manchin (DW.Va.) could derail the entire package. That could deprive President Biden — and vulnerable lawmakers — of an election victory at a moment of real weakness.
- Gottheimer’s discussions focused on a small group that included Reps. Carolyn Bourdeau (D-Ga.), Ed Case (D-Hawaii), Tom Swasey (DN.Y.), Susie Lee (D-Nev.) Dean Phillips (D- Minn.) and Mickey Sherrill (DN.J.).
The big picture: Manchin has been adamant that he wants higher corporate taxes to reduce the deficit and help fight inflation.
- For months, his transcript has been a 2:1 ratio of fresh revenue to new spending, with about $500 billion going to deficit reduction.
- But early discussions in the House led by Gottheimer did not include new taxes on corporations or wealthy individuals. Trump’s tax cuts for corporations and individuals will remain in place.
- Gottheimer’s formula would leave $177 billion for deficit reduction — a step toward Manchin but far short of his roughly $500 billion goal.
Be smart: Like an aircraft carrier on the high seas, the runway for President Biden, Schumer and House Speaker Nancy Pelosi to land a reconciliation package is short and slippery.
- After declaring Biden’s original $2.2 trillion climate and social spending package dead last December, Manchin renewed talks with Schumer on a much smaller deal this spring, and the two sides are still in talks.
- But Manchin remains concerned about inflation. Fresh data — as the White House prepares for a potential 8.8 percent annual CPI — could change its calculation.
- Some centrists in the House of Representatives are equally concerned that the economy is on the brink of recession and worried about raising taxes in the event of a slowdown.
Sen. Kirsten Sinema (D-Ariz.), who vetoed plans to increase the overall top corporate tax rate last year, will have to see the details of any deal Schumer and Manchin reach.
- She did support various revenue options that added up to $1.8 trillion in new taxes to address tax avoidance by corporations and wealthy individuals.
There have long been questions about how Democratic leaders and the White House could advance the House’s “No SALT, No Deal” caucus.
- With Democrats currently sitting by a 220-210 margin in the House, Gottheimer would need five votes to extract concessions from Senate or House leaders.
By the numbers: Gottheimer’s counterproposal calls for $520 billion in new spending on the climate-energy exchange and health insurance, and a total of $627 billion in new money from increased IRS enforcement and drug pricing reform.
- About $400 billion will come from IRS regulations, relying on the White House’s rosy estimate of how much revenue they can collect by cracking down on tax cheats.
- He’s counting on another $297 billion from prescription drug reform.
- While he wants to lift the $10,000 limit on the state and local tax (SALT) deduction on federal taxes, his version — which includes income limits — is deficit-neutral.
Flashback: Gottheimer led a group of nine centrist lawmakers last summer to pressure Pelosi to first pass a bipartisan infrastructure bill and then address greater social spending and Biden’s climate package.
- Although the move irked House leaders, the caucus ultimately prevailed and Biden signed into law about $1 trillion in infrastructure spending.
The bottom line: Gottheimer’s move is an indication that some House members are taking the Schumer-Manchin talks seriously.
- But just because they’re getting ready to respond to a potential deal doesn’t guarantee an agreement.
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