Pelosi open to scrapping key components in spending package

Speaker Nancy Pelosi (D-Calif.) said Thursday that she’s ready to scrap two key components of the House’s $3.5 trillion social benefits package — a long-term extension of the child tax credit and a hike in corporate tax rates — in order to get the legislation to President Biden’s desk.

The child tax credit has emerged as a key selling point of the massive social spending bill, which stands at the center of Biden’s economic agenda, and powerful Democrats are pushing to permanently extend an expansion of that credit, which they first adopted in March.

Pelosi said she also supports that long-term extension but will accept the shorter one-year window that Biden proposed earlier in the week, saying the president is driving the train.

“That’s what the president has agreed to,” Pelosi said during a press briefing in the Capitol.

“Let me just say I want a permanent child tax credit. I’ve wanted it for years,” she quickly added. “This is the president’s big issue. It is called the Biden child tax credit. So if it’s acceptable to him, in light of the bill, it’s acceptable to me.”

The corporate tax hike has surfaced as another point of internal tension as Democratic leaders race to win unanimous support for the package in both chambers, where razor-thin majorities mean they can afford virtually no defections.

The House’s $3.5 trillion package had increased that rate to 26.5 percent — up from the current rate of 21 percent, which was adopted by Republicans in 2017. But Sen. Kyrsten Sinema (D-Ariz.) has reportedly come out in opposition to any corporate or individual rate hike, leading Biden to seek alternative sources of revenue to offset the cost of his new spending plans.

Pelosi on Thursday amplified earlier promises that the entire package will be deficit neutral, saying the specific funding is currently being crunched by the heads of the Senate Finance and House Ways and Means committees. But echoing Biden, she suggested Democrats will look beyond the corporate tax hike for that new revenue.

“We had in our House bill, which I was very proud of, an increase in the corporate rate, and an increase in the capital gains. It was a very well-received proposal because it wasn’t punitive, it was fair,” she said. “But we’ll see what survives, what prevails.”

“My preference,” she added, “is to follow the cooperation that the Senate and the House come to.”

Asked specifically about Sinema’s opposition to the tax hikes, Pelosi sounded a note of resignation.

“Her position is well-known,” the Speaker said.

Across the Capitol, Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, has been meeting with the House committee chairs in search of new revenue streams. Wyden on Thursday said he’s still pressing to include tax hikes on corporations and wealthy Americans, characterizing them as popular reforms that promote simple “fairness.”

“I am very much for our corporate proposals,” he told reporters.

Still, Wyden declined to draw any red lines, saying he’s “not in the business of speculating about speculation.”

The internal policy divisions have persisted even as Biden and Democratic leaders are scrambling to win an agreement before the end of the week. That timeline was promoted by Senate Majority Leader Charles Schumer (D-N.Y.) — and seconded by Sen. Joe Manchin (D-W.Va.), a centrist who’s crucial to the negotiations. And Pelosi said that, despite the remaining hurdles, they’re on track to meet that deadline.

“We’ve always been on track for doing that,” she said. “The House has been on schedule. We have a goal, we have a timetable, we have milestones, and we’ve met them all. And this is one of them.”