Democrats push carbon tax to help fund $ 3.5 billion spending package

Democratic lawmakers are drawing up plans for a tax on imports from carbon-polluting countries to help pay for a $ 3.5-tonne package in new government spending for everything from universal childcare to an expansion of public health services.

While details of the tariffs are scarce, news of the Democrats’ proposals came on the same day as the EU. published u so plans imposes an import tax based on its carbon footprint.

European diplomats have hoped that Washington will work with Brussels to tackle climate change through trade mechanisms such as a carbon border tax. But any U.S. effort to impose taxes on carbon entering the country would mark a policy change for the Joe Biden administration.

John Kerry, a spokesman for the Biden climate, warned this year that a carbon tax border adjustment should be a “last resort” and that he was “concerned” about Brussels ’plans for a such a mechanism.

Senate Democrats agreed late Tuesday to move forward with the $ 3.5 billion spending package, paving the way for Democrats to push many of the president’s most ambitious order items without the support of the Republicans. Biden’s wish list includes investments in custody and education, an expansion of government health benefits for the elderly and measures to combat climate change.

On Wednesday, Biden joined Senate Democrats for lunch on Capitol Hill, where Chuck Schumer, the Senate Majority Leader, briefed all 50 Democratic lawmakers in the upper house on what had been agreed – and how it would be fully paid so that it does not add to the budget deficit.

A former Democratic aide said the revenue would be collected through a tax reform – including changes to the corporate tax rate and taxes for high-income individuals – but the taxes would not. they will not be increased for families earning less than $ 400,000 a year, small businesses or family farms.

Legislation has yet to be drafted, but a former Democratic aide said the budget resolution would also propose “polluting import taxes,” along with other significant investments to help meet Biden’s goal of a reduction. of 50 percent of carbon emissions by 2030.

It is unclear whether Democrats will seek to emulate EU plans, which include expanding a scheme that makes companies pay the cost of pollution and imposes a carbon border regulation mechanism that would force them to importers to pay more for coal imported from countries with weaker climate policies.

The $ 3.5 billion proposal by Democrats is in addition to the Bipartisan infrastructure agreement of $ 1 ton agreed last month between Democratic and Republican lawmakers.

Biden asked Congress to pursue a “two-track” strategy, passing the infrastructure agreement with the support of both parties and the draft larger budget with a Senate procedure called reconciliation. This allows Democrats to circumvent filibuster rules – which require the support of at least 60 lawmakers in the 100-member chamber – and go it alone. The Senate is split 50-50 between Democrats and Republicans, with Kamala Harris, the vice president, able to cast a defeat vote.

The budget agreement must always be signed by all 50 Democratic senators. Joe Manchin, the West Virginia Conservative Democrat who has been a thorn in the side of the Biden administration, told reporters Wednesday that he wanted to see “more details.”

Manchin did not immediately comment on any impositions on polluting companies, but reiterated his opposition to eliminating America’s dependence on fossil fuels. The West Virginia economy is heavily dependent on coal extraction.

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