Senate Republicans have included $20 billion for infrastructure financing in their latest counteroffer to the White House as a signal of bipartisan support for inclusion of public finance tax provisions.
President Biden said Thursday he will meet with infrastructure negotiators next week while also telling reporters the White House needs to further study the proposal.
“I haven’t had the chance to go over the details,” said Biden, who indicated he talked briefly on the phone to Republican Sen. Shelley Moore Capito, who is leading the group.
Capito’s group proposed Thursday to finance infrastructure by redirecting unused federal money from earlier COVID-19 emergency spending bills.
One example Capito gave is the 23 states that have said they’re terminating federal enhanced unemployment benefits. “Certainly those dollars are not going to be spent,” she said. “We know that because our states have said it’s time for people to get back to work.”
However, White House spokeswoman Jen Psaki said the administration is “worried that major cuts in COVID relief funds could imperil pending aid to small businesses, restaurants and rural hospitals using this money to get back on their feet after the crush of the pandemic.”
Senate Republicans said their approach would leave intact the 2017 Tax Cuts and Jobs Act rather than raising the corporate tax rate to 28% as Biden has proposed.
“What makes them think we want to undo the tax reform that gave us the best economy of my lifetime?” asked Sen. Pat Toomey, R-Pa.
But some Senate Republicans have expressed public support for one change to the 2017 tax legislation — reinstating the tax-exempt refunding for municipal bonds that was terminated under the law.
In addition to tax-exempt advance refunding, some Republicans have gone on record as supporting reinstatement of direct-pay Build America Bonds and an increased limit on tax-exempt bank-qualified debt to $30 million from its current $10 million mark.
Senate Republicans’ latest offer to spend $928 billion over eight years, up from their original $568 billion proposal released last month, does not include manufacturing infrastructure because that’s being considered separately by the Senate in the form of the U.S. Innovation and Competition Act. That includes the Endless Frontiers Act and other measures to keep a competitive edge over China in technology and science.
The White House proposal to spend $1.7 trillion also has other provisions Republicans leave out, such as $400 billion for the caring economy and $100 billion for vouchers to purchase electric cars.
Republicans also left out of their plan VA hospitals, schools, and housing that they don’t think should be treated as physical infrastructure, according to Capito. Taken in that context, Capito said, “I think the gap is much less.”
In addition to the $20 billion for infrastructure financing, the Senate Republicans’ latest offer has $506 billion for roads, bridges and major infrastructure projects, including $4 billion for electric vehicle and alternative fuel charging stations and $14 billion for resilience.
There’s also $98 billion for public transit; $72 billion for water systems; $65 billion for broadband; $56 billion for airports; and $46 billion for passenger and freight rail systems. Other pieces include $22 billion for ports and waterways; $22 billion for Western water storage; and $21 billion for safety.
U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley described the proposal as “a good faith offer and a significant step in the right direction.”
“Discussions between the Biden administration and Congress must continue on a bipartisan basis,” Bradley said in a Thursday press statement.
The U.S. Chamber spokesman pointed to the Senate’s recent 89-2 vote approving a $35 billion water bill and unanimous committee passage of a surface transportation reauthorization bill as “models for addressing our nation’s infrastructure needs.”
“Fundamental, durable policy is not achieved when one political party pushes through legislation on their own,” said Bradley. “We urge continued bipartisan discussions so our nation’s infrastructure receives the modernization it desperately needs.”