MAY 3, 2021
Kuttner on TAP
Strategic Compromise—or Sellout?
Washington is full of talk that the Biden administration and its Senate allies are discussing paring back the $2.3 trillion infrastructure plan in order to attract some Republican support. Sen. Chris Coons of Delaware, a longtime ally of Biden, has been conferring with Republicans, as has White House chief of staff Ron Klain and senior aide Steve Ricchetti.

The president plans to confer personally this week with Sen. Shelley Moore Capito, who is promoting a compromise on behalf of Republicans. Biden will bring congressional leaders of both parties to the White House to discuss options May 12.

What gives? Are Democrats once again bargaining against themselves?

Actually, no. This in fact is shrewd politics. For one thing, Democrats are short of the needed 50 Senate votes in their own caucus. Joe Manchin has made it clear that he won’t support either the full $2.3 trillion, or the taxes needed to pay for it.

For another thing, if Biden can get some Republican senators to support part of the package now, it usefully splits the GOP Senate caucus and weakens Mitch McConnell. Biden can always come back for the rest in the FY 2022 budget reconciliation in September, as his own popularity and public support for infrastructure spending both increase.

We need the same sort of compromise on the fraught issue of whether to restore full deductibility of state and local taxes, abbreviated as SALT. In 2017, Trump poured SALT in Democrats’ wounds, as it were, by limiting the total deduction against federal income taxes to $10,000.

While the Trump tax legislation cut taxes for most affluent taxpayers, this limitation was a well-targeted "F-You" to voters in blue states like New York, California, Connecticut, New Jersey, and Massachusetts, where housing costs and property taxes are sky-high even for the upper middle class.

Many House and Senate members from these states want the full SALT deduction restored. Biden has properly balked because this is mostly a tax cut for rich people. There’s an easy fix—raise it to something like $25,000. That would help the professional class, which got whacked, but leave mansion owners paying higher taxes, and keep key blue-state Democrats on board.

Unless you have a much larger majority than Biden does, politics is the art of the possible, and not all compromises are sellouts.

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