Pelosi signals she is willing to scale back spending plan

House Speaker Nancy Pelosi (D-CA) signaled on Thursday that she is willing to scale back major parts of the $3.5 trillion spending plan that some in her party have said is too large.

Pelosi said she would agree with Biden to forego a permanent child tax credit package that has been giving parents up to $300 per month for each child, most in direct monthly payments to parents’ accounts and would also give up the corporate tax hike that was planned as a way to help pay for the spending. 

Instead, Democrats will take just a one-year extension of the child credit, which increased from $1,000 per child to up to $3,600, depending on parent’s income. The credit is now also fully refundable, which means even parents with no taxable income can get the full amount.

Advocates of the child tax credit have said that it has cut child food insecurity by half and has one of the largest impacts of any government program on kids. Pelosi said she wants the program to be permanent but is following the president’s lead by going for a temporary extension.

“The president’s big issue”

“This is the president’s big issue,” she said. “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 cost of a permanent child tax credit would be $1.6 trillion over 10 years, according to the Tax Foundation.

The tax on corporations was set to increase from 21% to 26.5% in the spending bill. Along with an increase in capital gains taxes from 20% to 25%, the increases were projected to raise $2 trillion toward the cost of the spending.

But Sen. Kirsten Sinema (D-AZ) has said she won’t vote for any bill that increases taxes on anyone, and Biden and Pelosi hope that getting rid of the corporate tax increase will be enough to appease her.

Sinema and Manchin holding the line

Pelosi and Biden have had a hard time getting their agenda passed in Congress mainly because of Sinema and Sen. Joe Manchin (D-WV), who has opposed the huge price tag on spending.

In a Senate that is evenly divided between Democrats and Republicans, with only Vice President Kamala Harris giving Democrats the majority when a tie-breaking vote is needed, even just these two senators’ opposition can kill a bill.

Manchin has said he would vote yes on a scaled-down bill of $1.5 trillion, less than half of the original price tag.

Manchin said on Thursday that a Friday deadline for a deal on the bill will not be met, stating that there is still a lot of work to be done before an agreement is reached.

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