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Bipartisan Group of Senators Reaches Agreement on Infrastructure Proposal — 2nd Update

By Andrew Duehren and Kristina Peterson 

WASHINGTON -- Members of a bipartisan group of senators said they had reached an agreement on an infrastructure proposal that would be fully paid for without tax increases, pitching the plan to other lawmakers and the White House as they try to craft compromise legislation on the issue.

While the group of 10 senators didn't reveal details of the plan in its statement, people familiar with the agreement said it called for $579 billion above expected future federal spending on infrastructure. The overall proposal would spend $974 billion over five years and $1.2 trillion if it continued over eight years, according to some of the people.

The initial agreement comes days after President Biden called off a separate set of negotiations with Senate Republicans over an infrastructure plan, instead pivoting his focus to the talks among the group of five Republicans and five Democrats.

To move forward in Congress, the plan would need the buy-in from a broader group of Republicans and Democrats, as well as the White House. In recent days, some Democrats have indicated they are skeptical that the bipartisan talks will result in a large enough package.

"We are discussing our approach with our respective colleagues, and the White House, and remain optimistic that this can lay the groundwork to garner broad support from both parties and meet America's infrastructure needs," said the group, which includes Sens. Kyrsten Sinema (D., Ariz.), Rob Portman (R., Ohio) and Joe Manchin (D., W.Va.).

A White House spokesman said Mr. Biden appreciated the group's plan.

"Questions need to be addressed, particularly around the details of both policy and pay fors, among other matters. Senior White House staff and the Jobs Cabinet will work with the Senate group in the days ahead to get answers to those questions, as we also consult with other Members in both the House and the Senate on the path forward," the spokesman said in a statement.

Republicans said the infrastructure investments wouldn't be paid for by tax increases, but lawmakers have been tight-lipped about how they would fund the package, expected to be the most contentious part of the negotiations. Sen. Mitt Romney (R., Utah), another member of the group, said earlier Thursday that the group was looking at indexing the gas tax to inflation. The federal gasoline tax hasn't been increased since 1993.

The White House told the negotiators that raising revenue through indexing the gas tax for inflation, or through an electric vehicle mileage tax, would violate Mr. Biden's red line of not raising taxes on those earning less than $400,000 a year and couldn't be part of any package, according to people familiar with the discussions.

The new proposal is also expected to be paid for in part by repurposing funds from previous Covid-aid packages, said Sen. Shelley Moore Capito (R., W.Va.), who led the last round of negotiations with Mr. Biden and has spoken with members of the bipartisan group.

Mr. Biden last week indicated he would be open to using about $75 billion of Covid aid passed during the Trump administration, but administration officials said he wouldn't siphon any funds from the $1.9 trillion Covid-19 relief package passed earlier this year.

Mr. Biden ended talks with Mrs. Capito after she last offered about $307 billion in new spending.

During the talks with Mrs. Capito, Mr. Biden sought at least $1 trillion in spending above the baseline, projected levels of federal spending if current infrastructure programs continued. The original White House plan came in at $2.3 trillion, showering money on roads and bridges along with workforce development and home care, among other programs. Many Democrats are eager to approve much of that proposal.

The support of five Republicans for $579 billion in spending above the baseline brings the two parties closer together on the scope of the package. But in a Senate evenly divided between Republicans and Democrats, at least 10 Republicans would need to join every Democrat to pass the bill through regular order, and it is unclear if the bipartisan agreement will attract that much support from both Republicans and Democrats.

"Obviously to get Republican support for it you'd have to have a lot more of our members involved in the conversation, and to get enough Democrats," said Sen. John Thune (R., S.D), the No. 2 Republican. "It is a tricky balance."

Mr. Biden's original plan also called for raising taxes on corporations, including raising the corporate rate to 28% from 21% and tightening the net on U.S. companies' foreign earnings, to cover the cost of the infrastructure plan over 15 years. Republicans have rejected raising corporate taxes, instead favoring raising money from user fees.

While Mr. Biden floated other tax ideas in negotiations with Republicans, including a minimum corporate tax rate, to raise revenue for the plan, he has adamantly opposed raising user fees such as the gas tax.

Some Democrats are supportive of raising the gas tax, though. Sen Tom Carper (D., Del.), the chairman of the Senate Environment and Public Works Committee, tweeted on Thursday that Congress should index the gas tax to inflation.

"Things worth having are worth paying for," he wrote in a tweet. "As I've said for the last two Congresses, at a minimum we should index the gas tax to inflation to help fund investments in climate-resilient infrastructure."

Democrats have the power to approve an infrastructure package without meeting the typical 60-vote threshold in the Senate if they use a budgetary tool called reconciliation. Senate Majority Leader Chuck Schumer (D., N.Y.) said this week that the party was preparing to move forward with reconciliation as it also explores the bipartisan talks. Mr. Schumer said lawmakers could ultimately approve two packages -- one that is bipartisan and one that relies only on Democratic votes.

Democrats are also seeking to advance Mr. Biden's separate $1.8 trillion plan focused on child care and antipoverty efforts.

Write to Andrew Duehren at andrew.duehren@wsj.com and Kristina Peterson at kristina.peterson@wsj.com

 

(END) Dow Jones Newswires

June 10, 2021 20:36 ET (00:36 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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