President Joe Biden will meet with the main Republican negotiator on infrastructure spending on Friday as they try to craft a deal that can satisfy their sharply divided camps.
Biden is set to speak with Senator Shelley Moore Capito just days after offering to scrap his proposed corporate tax hike in order to salvage hopes of a bipartisan deal.
The situation remained fluid — and tricky — headed into Friday's talks. Biden risks creating division among Democrats, some who believe he may be giving up too much to Republicans.
Biden floated the idea of dropping his plan to raise corporate tax rates as high as 28% during an Oval Office meeting with Capito on Wednesday, sources said. Biden instead proposed setting a minimum 15% tax rate aimed at ensuring all companies pay taxes.
Still, the White House's latest offer of a roughly $1 trillion infrastructure bill is still four times as much as Republicans have been willing to spend.
Republican leaders have endorsed roughly $257 billion in new spending, while calling major tax hikes to finance the construction of roads, bridges, water pipes, and other projects a non-starter.
Both sides are playing a game of legislative chess.
Biden could strike a deal with Republicans on a limited infrastructure package now and push later for another bill that would likely only secure the backing of his fellow Democrats, sources said.
The president also has not given up on seeking as much as $1.7 trillion, according to one of the sources.
He wants to get a bipartisan deal but has the option of seeking a party-line "reconciliation" vote on proposals that he knows Republicans will not support. Reconciliation circumvents Senate rules that require 60 votes to pass most legislation.
Republican senators are weighing whether to seek limitations on the reconciliation tactic as part of any agreement on an infrastructure package, according to a different person familiar with the conversations.
Talks could still fall apart, and Biden could face resistance from supporters if they believe he has given up too much.
"Any restrictions on a reconciliation bill would blow out support from the left wing of the Democratic Party," the source said.
The one-on-one sessions between Biden and Capito are testing liberal Democrats' patience by delaying legislative action in the period before Congress goes into recess for summer vacation.
Biden's new proposals could mean dropping not just the tax increase but ambitious plans for childcare and education. His initial plan called for $2.25 trillion in spending and new revenue.
Democrat Rep. Pramila Jayapal, who heads the liberal Congressional Progressive Caucus, said her colleagues were concerned that passing the small package would kill "momentum for doing something more."
Transportation Secretary Pete Buttigieg has said the White House sees Monday — when Congress returns from a one-week break — as a critical date to see progress in talks.
But White House press secretary Jen Psaki stopped short on Thursday of declaring any deadline, saying the White House is going to "keep our options open."
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