Republicans rule out tax rises but keep hopes of infrastructure deal alive

Congressional leaders from both political parties have agreed to press on in search of a compromise on Joe Biden’s infrastructure spending package, even as Republicans ruled out reversing Donald Trump’s tax cuts as part of any deal.

Speaking after a closely watched meeting at the White House on Wednesday, the first of its kind since Biden entered office in January, top Republicans and Democrats said there was scope for further discussion on the next stages of the president’s economic agenda.

The president’s current proposal includes a $2.3tn infrastructure spending plan that would inject government funding into roads, bridges, transport hubs, water facilities, broadband and manufacturing capacity across the country.

“I think there’s an opportunity that we could work together on infrastructure,” said Kevin McCarthy, the Republican leader in the House of Representatives.

“We’re going to try hard to get [a bipartisan deal],” said Chuck Schumer, the Senate majority leader and a Democrat. “We’ll see what areas of agreement and commonality there are, that’s the first step.”

Biden, who has decades of experience on Capitol Hill, is making a strong push to get some Republican support for the infrastructure package, after failing to muster any for the $1.9tn stimulus bill in March.

After meeting with congressional leaders on Wednesday, he is due to host a group of Republican senators at the White House on Thursday to see if there is any scope for compromise.

One of the biggest obstacles to a deal is that Biden wants to pay for the plan by raising corporate taxes, including increasing the corporate income tax from 21 per cent to 28 per cent.

The president signalled he may be willing to lower his target rate to 25 per cent, but Republicans are wary of any tax rises — a position described by Mitch McConnell, the Republican leader in the upper chamber, as a “red line” after the White House meeting.

“From my perspective, this discussion about the way forward on infrastructure will not include revisiting the 2017 tax bill,” he said, referring to the tax cut legislation passed by Trump four years ago.

McConnell said he would allow Republican committee chairs to work on a package with their counterparts, rather than “top-down” negotiations.

At the start of the meeting, Biden said the purpose of the gathering was to see “if there’s any way we can reach a compromise that gets the people’s work done and is within the bounds of everyone agreeing”.

He joked that forging a deal would come naturally to him: “Easy. Just snap my fingers. It’ll happen.”

Many Democrats have warned the White House not to waste too much time trying to lure Republicans into a deal, and instead focus on finding a compromise within their own party that could be passed without Republican support.

The White House has cast its infrastructure plan as pivotal to ensuring that the US economy can overcome some of its structural deficiencies as the country emerges from the pandemic, but Republicans have labelled the plan as excessive in size and insufficiently targeted in its scope.

Tensions in the talks have been fuelled by surprising economic data for April, which showed a slowdown in hiring combined with a surge in consumer prices.