Joe Biden met Republican criticisms of his economic proposals head-on Friday

Joe Biden met Republican criticisms of his economic proposals head-on Friday

Washington (CNN) – President Joe Biden met Republican criticisms of his economic proposals head-on Friday, citing disappointing jobs data as a call to action for more government spending and brushing aside concerns that generous expanded unemployment benefits have kept Americans from returning to work.

It was an example of the President, who's already shown he's getting down to work on substantive issues, using current headlines to amplify his efforts to sell that work. In the face of far-worse-than-expected economic data, which critics were eager to pin on his administration, Biden stayed relentlessly on message -- turning the poor numbers into a messaging tool. Headlines about the GOP, meanwhile, continued to be dominated by former President Donald Trump's looming influence, which congressional Republicans did little to quell as they moved closer to ousting a Trump critic from leadership.

While Biden has hit the road to make his case to voters, he's not exactly ignoring Republicans down Pennsylvania Avenue. Facing resistance to the size and scope of his plans from Republicans (and even some Democrats), he'll soon meet with congressional leadership from both parties at the White House, followed by GOP senators whom he hopes will work with him to find an infrastructure compromise.

Biden tries to sell his agenda while Republicans go after their own

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"Look, (when) we came to office -- we knew we were facing a once in a century pandemic and a once in a generation economic crisis. We knew this wouldn't be a sprint. It'd be a marathon," Biden said Friday after the jobs report was released. "We never thought after the first 60 days that everything would be fine. Today there's more evidence that our economy is moving in the right direction. But it's clear we have a long way to go."

As Biden has embarked on his tour to make the case for roughly $4 trillion in new spending through the American Families Plan and the American Jobs Plan, his opponents have often centered their pushback -- not just on the cost of those plans -- but also the notion that the economy is already recovering and that additional aid in the form of Biden agenda items like boosting the salaries of home health care workers is unnecessary when the recovery is moving at a rapid clip.

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Biden refuted that argument Friday as he made the case that his plans would help blue collar workers who have been left behind in the economic gains of the last decade: "Let's not let up. We're still digging our way out of a very deep hole we were put in. No one should underestimate how tough this battle is," he said.

Friday's jobs report, showing the US economy added 266,000 jobs in April instead of the 1 million economists were expecting, handed Biden a new tool in his arsenal as he tries to circumvent Republican opposition by directly persuading Americans to back the next phase of his plans.

In response, he defended his $1.9 trillion American Rescue Plan -- which parceled out checks of up to $1,400 to eligible recipients as well as a $300 federal boost to weekly jobless payments and aid to small businesses -- arguing that economic influx would take more time to show results fueling the economy.

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White House officials were clearly surprised by the new job numbers Friday, especially given the expectations.
Treasury Secretary Janet Yellen told reporters that her best guess would have been higher, but that she's watched data long enough to know it's "extremely volatile."

"There are often surprises and temporary factors, and one should never take one month's data as an underlying trend," she said. Yellen predicted that the US economy would reach full employment next year, but added, the "road back is going to be somewhat bumpy."

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Biden will confront GOP arguments against his plans next week when he meets a cadre of Republican senators led by Sen. Shelley Moore Capito of West Virginia. Many Republicans have outright rejected Biden's call to raise the corporate income tax rate to 28%, although he suggested this week he was open to a rate of between 25% and 28%, to pay for his proposals.

In addition to Capito, Biden will meet with Wyoming Sen. John Barrasso, Missouri Sen. Roy Blunt, Idaho Sen. Mike Crapo, Pennsylvania Sen. Pat Toomey and Mississippi Sen. Roger Wicker. A White House official said the President "appreciates their engagement," adding that the "ongoing dialogue" on the jobs plan is "high priority."

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During a gaggle Friday, members of the President's "jobs Cabinet" -- a group that is trying to persuade lawmakers to support the plans -- said they were hopeful about the opportunity for compromise. Energy Secretary Jennifer Granholm said there is "optimism that there will be a (bipartisan) agreement in large chunks," while Commerce Secretary Gina Raimondo emphasized that Biden has "been clear since the beginning that he's open to compromise."

Distracting divisions in the GOP

While attempting to stay unified in their economic message, House Republicans appeared to be moving ahead with replacing Rep. Liz Cheney, the No. 3 House Republican, as conference chair to punish her for rejecting Trump's "big lie" that the election was stolen from the former President. The shakeup inside the conference has subsumed all other news in Washington this week, making it difficult for the GOP to stay focused on their opposition to Biden's plans.

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Rep. Elise Stefanik is poised to replace Cheney in a vote as soon as next week after marshalling the votes needed by demonstrating her loyalty to Trump, despite concerns about her conservative credentials and her harsh comments about his rhetoric and policies four years ago when she claimed that she would be an independent voice.

In an interview with Breitbart News radio on Saturday, Stefanik alluded to Cheney, without mentioning her by name, arguing that the Wyoming Republican doesn't represent the party and shouldn't hold the role anymore.

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"The role of the conference chair is very different than a rank-and-file member. Rank-and-file members vote how they want. They vote their districts. When you are the conference chair and communicating and in charge of the message of the party in the House, you have to represent a majority of the members and the majority of the voters across this country" Stefanik said.

"Regardless of what the establishment says, regardless of the editorial boards, it's an elected position and when you no longer have the confidence of your colleagues, it's time for a new direction," she added.

Other Republicans who, like Cheney, voted to impeach Trump have been feeling heat from their constituents at home. On Friday, the Ohio Republican Party Central Committee voted to censure and call for the resignation of Ohio Rep. Anthony Gonzalez for his vote on impeachment.

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The central committee also censured the nine other House Republicans who voted to impeach Trump from other states, an illustration of the punishing mood of the former President's base and how far out of bounds they are willing to go to show their loyalty to him.

'Doesn't add a single penny': Fact-checking Biden's deficit claims

In the past, Republicans have typically fought the Democrats over concerns spending proposals would expand the deficit and the continually growing national debt. Having weathered those critiques during the Obama years, President Joe Biden's proposals to revitalize the US economy seem designed to circumvent that line of attack, as he claims they won't increase the deficit.

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According to Biden, his latest proposal -- the $1.8 trillion American Families Plan -- "doesn't add a single penny to our deficit," he said in Portsmouth, Virginia on Monday.

Biden hopes to achieve this and offset the costs of both the American Families Plan and the roughly $2 trillion American Jobs Plan with a series of changes to the tax plan. Biden's proposed tax provisions include a capital gains tax increase for households making over $1 million, increasing the corporate tax rate from 21% to 28%, raising the top marginal income tax rate to 39.6% for households with $400,000 or more in income and requiring estates to pay taxes on unrealized gains of more than $1 million.

These tax proposals should raise around $3 trillion in 10 years, based on estimates from the nonpartisan Committee for a Responsible Federal Budget, a group focused on policy analysis and fiscal responsibility. And the White House claims that the revenue generated, in large part through the proposed tax increases, will cover the cost of both plans in 15 years. As such, Biden stated during his joint address to Congress on April 28 that "we can do it without increasing deficits."

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Facts First: According to experts and current studies of the proposals, the plans -- if unchanged -- will likely increase deficits in the short term but will be deficit-neutral in the long run. However, there are a lot of factors that could affect Biden's deficit-neutral goal, including how Congress might change the plans and the tax provisions, whether the proposed tax increases remain in place if Democrats lose control in DC and how much the tax changes will actually collect if implemented.

Marc Goldwein, Senior Policy Director for the CRFB told CNN "it's great" the administration aims to have the plans pay for itself but he would prefer a different timeframe. Historically, the target window for a budget to become deficit neutral is 10 years but with these plans, it's 15.

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"We're concerned," Goldwein said. "That's an awful long time period. And a lot can happen between now and then."
According to Goldwein, a longer time frame "just reduces the likelihood that they're going to meet the goal."
When asked about Biden's deficit promise, City University of New York associate professor of economics J.W. Mason told CNN that the zero-deficit rhetoric could come back to hurt Biden's proposals.

"When they put down that marker, 'we're gonna pay for this 100%,' and then they find that it's hard to get those taxes through," Mason said, "you end up with a smaller program than the country needs and that's the danger."

The mechanisms to pay for the plans' provisions have faced pushback from Republicans and some moderate Democrats and Biden is already showing a willingness to negotiate. The President suggested on Thursday he's open to increasing the corporate income tax rate from 21% to somewhere between 25% and 28%. A smaller increase would mean less tax revenue, which could further delay the timeframe for deficit neutrality.

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If Biden's initial proposed tax increases are approved and remain in place long enough, here's what experts have to say about the impact the American Jobs Plan and American Families Plan are likely to have on the deficit.

American Jobs Plan

Senior Policy Analyst at the right-leaning Tax Foundation Garrett Watson told CNN the American Jobs Plan would run a deficit in the short-term but that, because the spending is largely short-term and the proposed tax increase on corporations is permanent, the costs could potentially be offset by the tax increases in the White House's 15-year window.

"(I)t becomes a question of the policy and politics of increasing the deficit over that 10-year window," Watson noted, "versus looking at it in the longer run."

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The American Jobs Plan will temporarily increase deficits in the short-term but reduce deficits over the long-term, according to the CRFB.

CRFB estimates that the American Jobs Plan will increase the deficit by $900 billion to $1 trillion over 10 years, before deficit reductions would kick in, making it deficit neutral once it's fully paid for in 15 years. After that, the CRFB estimates the plan would reduce deficits by around $200 billion annually.

Analysis from the Penn Wharton Budget Model, a nonpartisan research-based initiative at the University of Pennsylvania's Wharton School, reflects a similar trend in the US debt overtime. Based on estimates from the Penn Model, the American Jobs Plan's spending provisions would increase deficits while the tax provisions would decrease deficits. The Penn Model estimates the combined impact would result in the US debt increasing within 10 years, when the amount spent remains greater than the amount of new revenues raised, but then decreasing after 20 years if the tax increases persist.

American Families Plan

According to the CRFB, the American Families Plan will increase the deficit over a decade. Additionally, based on estimates from the Penn Model estimates, the American Families Plan will increase government debt within 20 years, even if the tax increases continue to raise revenue at the expected rate.

Watson told CNN that funding for the American Families Plan is different than the American Jobs Plan because it relies heavily on projections of what the IRS might be able to collect in additional taxes if they receive an increased budget of $80 billion.

"(I)f it ends up falling short, for any reason really, you do end up in a situation where you got to find alternative funding for the permanent spending," Watson said. "I think that's the big wildcard there from a longer-term deficit perspective."

Biden's plan also calls for a temporary expansion of the Child Tax Credit. Some Democrats would like to make these increases permanent, the cost of which isn't included in Biden's plan.

Another potential issue in covering the cost of the American Families Plan is on the changes to the capital gains tax. If individuals think Biden's tax could be reversed in the future, they might choose to wait on realizing those gains.

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