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Biden Ends Bipartisan Talks In Favor of a Different Bipartisan Group

Goodbye Bipartisan Group, Hello Different Bipartisan Group
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Capito Throws in the Towel

The WSJ reports President Biden Ends Infrastructure Talks With Senate GOP Group

White House press secretary Jen Psaki said that Mr. Biden informed Sen. Shelley Moore Capito (R., W.Va.), the lead Republican negotiator, that the latest offer from the Republican group didn’t meet his threshold for spending on infrastructure, clean energy and job creation. She also said the White House felt its efforts in talks to close the spending gap with the GOP stance hadn’t been fully reciprocated.

Mrs. Capito said Mr. Biden called her Tuesday to end the negotiations. She blamed Mr. Biden for insisting on raising taxes to pay for his plan, a central tension in the talks.

“After negotiating in good faith and making significant progress to move closer to what the president wanted, I am disappointed by his decision,” she said.

The two sides also disagreed on repurposing money from the $1.9 trillion coronavirus relief package the president signed in March, with Republicans seeking to reuse hundreds of billions of dollars of those funds, and the White House instead pointing to possibly tapping a smaller amount of money from previous aid.

The White House will now turn to a bipartisan group of lawmakers as another possible path toward reaching a compromise. A small group of Republicans and Democrats, including Sens. Rob Portman (R., Ohio), Mitt Romney (R., Utah), and Joe Manchin (D., W.Va.), have been discussing a plan that would spend up to $900 billion over five years, according to people familiar with the talks.

Different Bipartisan Group, Same Problems

Shifting the discussion from one group may close some of the spending gap. 

Capito went as high as $928 billion but only $257 billion was new spending. She agreed to up that a further $50 billion.

Biden lowered his demand to $1 trillion, a dramatic decrease from his initial proposal of $2.3 trillion.

However, Biden insists on $1 trillion in new spending.

Three Problems Remain

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  1. The amount of spending. Biden insists on "new" spending. Republicans want to repurpose allocated but unspent Covid stimulus.
  2. Republicans want user fees and Democrats want new taxes.
  3. Republicans might agree to some tax hikes but will not agree to the corporate tax hikes that Biden wants.

Shifting the bipartisan group might narrow problem number one but the sides are very far apart ($307 billion vs $1 trillion).

There are no signs of thawing on user fees or corporate tax hikes. 

G-7 Nations Agree to Biden's 15% Minimum Corporate Tax Proposal

On June 6, I commented G-7 Nations Agree to Biden's 15% Minimum Corporate Tax Proposal.

On June 3, I noted Biden Cuts $700 Billion From Infrastructure Demands But "Where From" Is a Mystery

We still do not know what if anything Biden cut from his demands. I suspect part of the drop is a sleight-of-hand maneuver that partially includes a change from total spending to new spending. 

Regardless, shifting from one group to another will not solve anything unless Biden or Republicans bend in major ways.