GOP and Democrats combat over taxes, inexperienced agenda
United States President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck in the South Court Auditorium of the Eisenhower Executive Office Building on March 10, 2021 in Washington, DC.
Alex Wong | Getty Images
President Joe Biden wants his infrastructure overhaul plan to be backed by both parties, but behind the scenes lawmakers are starting to draw lines of battle over what should be in the legislation – and how to pay for it.
In recent meetings with Biden and his top aides, lawmakers from both parties suggested breaking the bill in different ways, according to some participants.
Democrats suggested separating the projects from the pay-fors: one measure would include the building proposals, which both sides of the aisle would appear to support. The other would include a number of provisions to cover costs – including increasing taxes on gas, businesses and electric vehicles – which have already sparked criticism of the GOP and are likely to be passed down only in partisan politics.
Conversely, Republicans have proposed supporting a carbon emissions tax – a more predictable financial penalty for fossil fuel businesses, as opposed to regulations that stop drilling and change with each administration. Or they could support a trust fund with diversified sources of income from several smaller tax changes or cost reductions.
However, they made it clear that they will not be joining a bill that one legislature said is “hijacked” by government clean energy interests.
“If the Democrats are to do a climate bill that they know will be far more contentious than helping to come together and rebuild our roads and bridges, they must use the reconciliation process,” said Rep. Rodney Davis, R-Ill ., CNBC said after meeting at the White House.
Reconciliation is the congressional process that allows policies that affect spending or revenue to pass the Senate by a simple majority. It was used for landmark and possibly legacy-defining proposals when support from both parties was elusive – like with the Bush and Trump tax cuts, Obamacare and most recently Biden’s pandemic relief plan.
Rep. Peter DeFazio, D-Ore., Chair of the House Transportation and Infrastructure Committee, said the rules for the process would likely drop large chunks of a bill as their impact on the federal budget is viewed as unclear or negligible.
MP Peter DeFazio, D-Ore.
Sarah Silbiger | CQ appeal group | Getty Images
“But the money could be raised through reconciliation – and the money will be a big problem,” said DeFazio. But as for the projects themselves, “The President clearly wants to try two parties and I am ready to try.”
Biden isn’t the only one who wants the bill to be bipartisan.
Senator Joe Manchin, a centrist Democrat from the conservative stronghold of West Virginia who is overshadowing the priorities of a 50:50 split in the Chamber, said he also wanted Republican support for the bill.
“I won’t get a bill that cuts [the GOP] completely out before we try, “Manchin told Axios in an interview.
Manchin’s West Virginia colleague, Senator Shelley Moore Capito, holds the top Republican position on the committee that will draft the Senate Infrastructure Bill. It recently raised concerns about corporate tax increases, criticized a vehicle-mileage tax as an alternative to a gas tax, and introduced the option for Democrats not to offset the cost of the proposal against additional revenue.
MP Shelley Moore Capito, RW.Va.
Bill Clark | CQ appeal | Getty Images
While Biden solicited revenue ideas from lawmakers, White House advisors said they wanted to capitalize on persistently low interest rates regardless of where the national debt and deficit are.
“The president has made it clear that being fiscally responsible is a priority of his,” said Bharat Ramamurti, deputy director of the White House National Economic Council. “He also made it clear that one of the best things we can do right now is deficit financing these investments, as it will get the economy moving faster. And in the long run, growth will help reduce debt and the deficit Good.”
The White House has maintained a disciplined message about the state of the discussion: it is too early to go into details.
“We have not proposed a package at the moment and when we get to that point we will surely have this discussion,” Psaki said during a recent daily briefing. “The president has talked about various revenue increases in the past, whether it will reverse certain tax cuts, but we are not at this point in internal political discussions.”
The White House has yet to appoint its key policy advisers and has delegated efforts to longtime Biden adviser Steve Ricchetti and Transportation Secretary Pete Buttigieg, according to people familiar with the matter. Polly Trottenberg, a former New York traffic officer, is expected to play an oversized role, but this has not yet been confirmed.
Installing a full list of policy officials to address and implement potential policies would take months, but lawmakers suggest enough infrastructure work has already been done to draft laws before the summer. The US Chamber of Commerce set a deadline for adoption of July 4th in a letter signed by 300 companies in February.
The end of summer could be more likely.
“In late July, before the August recess, I think that is possible,” said Rep. John Garamendi, D-Calif. “I already said the month of September is more likely.”
By the end of September, Congress must pass a re-approval law on highway finance that could set a deadline for a city that rarely operates without a city.
The Biden administration, meanwhile, does not want the opportunity to reform the American infrastructure in order to break away from it. “Infrastructure Week” became a punchline during the Trump administration as a bill proved elusive despite the former president saying infrastructure was one of his top priorities.
Asked in an MSNBC interview when Biden’s Infrastructure Week would take place, Buttigieg said, “I think it could be an Infrastructure Year.”
– CNBC’s Stephanie Dhue contributed to the coverage.