Biden to unveil $1.75tn spending framework in hope of deal

US president Joe Biden is set to announce a $1.75tn framework agreement with fellow Democrats on his economic agenda in an effort to stoke momentum after weeks of fraught negotiations, senior administration officials have said.

Biden is expected to unveil details of the proposed deal during a meeting with House Democrats on Thursday morning, before speaking about it from the White House. The US president had hoped to reach a compromise on the legislation before he heads to Italy for the G20 summit later on Thursday.

Senior administration officials said they were “confident” that the proposed deal would garner the support of all Democrats on Capitol Hill, including senators Kyrsten Sinema and Joe Manchin, two moderate Democratic senators who have been resisting many elements of Biden’s agenda.

The framework to be presented by Biden on Thursday sharply pares back the president’s ambitions to reshape the US economy with government investment. Biden had originally hoped for the package to be worth up to $3.5tn in spending over a decade, but its size has fallen below $2tn.

Still, senior administration officials have touted the importance of the measures that have been retained, including free universal pre-kindergarten education, the extension of a tax credit for children, large investments in climate action and the expansion of government healthcare for seniors to include hearing benefits.

The officials also said the plan would be fully paid for through higher taxes on the wealthiest Americans and large corporations. The White House and senior Democrats have been scrambling to find ways to increase taxes in recent days, including a new levy on billionaires that was subsequently dropped.

Biden is now proposing a new 5 per cent surtax on incomes over $10m and an additional 3 per cent surtax on incomes above $25m, according to senior administration officials.

The proposed deal would also include a new 1 per cent levy on share buybacks by the largest corporations, as well as a minimum tax to prevent large businesses from taking advantage of multiple tax breaks to lower their tax bills.

If the framework is well-received by Democrats in the House — particularly progressives who have argued against scaling it back — it could pave the way for the passage of a $1.2tn bipartisan infrastructure deal that was agreed earlier this year.