Members of a bipartisan Senate group negotiating a fallback infrastructure plan say they will avoid tax increases and user fees, but include climate-related spending, in a bid to get past obstacles that have tripped up progress on a $1 trillion-plus package thus far.
Louisiana Republican Sen. Bill Cassidy said Wednesday that the group of senators he’s negotiating with has a chance to show President Joe Biden there are Democrats willing to eschew partisan proposals in order to get a deal.
The senators have not yet finalized their proposal, including how exactly to pay for it, but they’ve appeared to make some concessions that Biden and a group of Senate Republicans, led by Environment and Public Works ranking member Shelley Moore Capito of West Virginia were largely unwilling to in their negotiations that ended Tuesday.
The so-called G-20 group of senators has kept tax increases off the table to appease the Republican members and is including some climate-related infrastructure spending that Democrats have demanded, multiple senators involved in the talks said Wednesday.
“I think the advantage of the bipartisan group is that frankly that softens the White House line, potentially. And … it may allow Republicans to be a little bit more giving, if you will,” Cassidy said during a virtual BakerHostetler event.
Cassidy has emerged as one of the key senators involved in the bipartisan negotiations, along with Kyrsten Sinema, D-Ariz., Rob Portman, R-Ohio, and Joe Manchin III, D-W.Va. Biden spoke Tuesday with Cassidy, Sinema and Manchin after he ended his negotiations with Capito.
The main difference between the two negotiating groups is that the bipartisan one includes congressional Democrats, whereas Biden was the sole representative for his party in negotiations with Capito’s group.
“This may have more of a chance to demonstrate to the president [provisions] Democrats would accept that he may not have been aware that they would accept,” Cassidy said.
Their 58-member group has released a separate $1.25 trillion infrastructure spending framework, including $761.8 billion in new spending over eight years, that could mirror some of what the bicameral group ultimately proposes. The Problem Solvers plan does not include offsets, however, as those continue to be negotiated in the bicameral talks.
Cassidy said he’s neither optimistic nor pessimistic about the chances of the bicameral group’s efforts succeeding, but there are things the negotiators have agreed to, such as funding for resiliency infrastructure to help protect areas prone to floods and natural disasters, that “broadens the appeal of the package.”
“Now ultimately I don’t know if the appeal of the package is as important as the appeal of the pay-fors,” he said. “And so if we run into trouble — and I’m sure we will — it will be on finding agreement on how we pay for this.”
Capito has said that disagreement over offsets was among the reasons her negotiations with Biden broke down. Despite Republicans making clear they were opposed to tax increases, she said Biden included four proposals that would raise tax revenues in the offer he floated to her during a one-on-one meeting at the White House last week.
Biden pitched his 15 percent minimum “book income” tax on profits that large corporations report on their financial statements that the president suggested would not reverse Republicans’ 2017 tax law since it wouldn’t directly increase the 21 percent corporate rate. Biden also brought up his proposal to eliminate “stepped up basis,” which allows assets like stocks and land to be passed on at a person’s death without triggering capital gains taxes, for inheritances above $1 million per person.
“Small businesses and farmers and individuals would be very harmed” by that proposal, Capito said Tuesday on Fox News. “He also brought up fossil fuel incentives, getting rid of that. I mean you can imagine, being from West Virginia, I was a bit dumbfounded.”
Biden also brought up his proposals to step up tax enforcement and financial institutions’ information reporting to the IRS, which Treasury estimates would help recover at least $700 billion of the tax gap of revenues owed but not paid.
“No. 1, does that exist?” Capito said. “And what does that encompass if you’re going around collecting taxes in that amount? The regime that he laid out is very onerous in terms of trying to get to those numbers.”
No tax, user fee increases
The bipartisan group has stayed away from Biden’s tax increase proposals in order to get Republican buy-in.
“If you need 60 votes, you have to have obviously at least 10 Republicans, and maybe a couple more if you lose some Democrats,” Cassidy said. “So even if you get three or four Republicans that would be willing to retreat somewhat on [the 2017 tax law], you know it’s probably safe to say you wouldn’t get 10 or 12.”
Sen. Mitt Romney, a member of the bipartisan group, said none of the pay-fors in its proposal would increase taxes or user fees — the latter being more of a concession to Democrats who argue that would be a tax hike on lower-income individuals and families, which is Biden’s only “red line” in negotiations.
The Utah Republican did not say what offsets are included in the plan, but he said it’s “entirely paid for.” Asked if the proposal would index the federal gasoline tax to inflation, Romney did not deny that could be included.
“That’s not a tax increase if you would have it apply going forward, but I’m not going to describe any of the line items or pay-fors specifically,” he said.
Sen. Jon Tester, D-Mont., another member of the G-20 group, told reporters Wednesday that his understanding is tax increases will not be part of the bipartisan proposal and that “if it’s paid for” he thinks the White House can support a package that didn’t raise taxes.
“I think there’s ways to do that; hopefully it won’t be smoke and mirrors,” Tester told a few media outlets. “Bottom line, this is probably the hardest part from my perspective, is how you get it paid for.”
White House Press Secretary Jen Psaki told reporters Wednesday that Biden's tax increase proposals “should be on the table” in bipartisan talks, but she signaled that the White House is ready to pursue a more partisan path to getting those enacted. She said the Senate is moving ahead with the budget reconciliation process, which allows Democrats to get around the normal 60-vote threshold for legislation, and the White House sees that as “an opportunity to move, through that vehicle, a bunch of his bold economic ideas, as well as corporate tax reform.”
Republicans have also made concessions in the negotiations, agreeing to some climate-related spending to help bring Democrats along. Romney said the group has funding for nuclear and hydrogen power, direct air capture and carbon dioxide pipelines.
“So all those things are related to climate change, but the Democrats’ agenda on climate change is probably something they’re going to pursue, by and large, outside of an infrastructure bill,” he said.
Romney said there are about eight or nine Republicans who’ve been involved enough in the talks to feel comfortable with the direction the bipartisan package is headed, but they’re still running it by other GOP senators to see if there’s sufficient support to make the compromise attractive to the White House and Democratic leadership.
“If there’s not, it won’t have any particular purpose going forward,” he said.