Bipartisan Infrastructure Plan Gains Support, Boosting Odds

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Jun 17 2021, 1:20 AMJun 17 2021, 7:25 PMJune 17 2021, 1:20 AMJune 17 2021, 7:25 PM

(Bloomberg) -- Prospects for a bipartisan deal on the biggest infrastructure package in decades improved on Wednesday as 21 senators, including 11 Republicans, signed onto a bipartisan framework for a $579 billion package.

Such legislation would still need support from nearly all 50 Democrats in the chamber unless more Republicans sign on, and it includes a funding mechanism -- indexing the national gasoline tax to inflation -- that the White House has opposed.

There are a “lot of preconditions” from Republicans and Democrats both, so getting an overall deal “will be a challenge,” Democratic Senator Mark Warner of Virginia, a member of the negotiating group, said after a meeting with White House officials to discuss the latest outline of a compromise.

The plan is still being written and would be weeks if not months away from being enacted even if agreed on.

Even so, Wednesday’s developments showcased a turnaround from the start of last week, when President Joe Biden ended direct talks with a Republican group of senators without agreement.

Senators backing the proposal released a statement throwing their support behind “this bipartisan framework that provides an historic investment in our nation’s core infrastructure needs without raising taxes.”

Key Number

Having at least 10 Republicans would get the bill past the 60-vote threshold for regular-order legislation with full Democratic backing.

The group includes Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who are considered crucial Democratic votes. Republican Senators Todd Young of Indiana and Lindsey Graham of South Carolina were among the Republican backers.

The plan was put together by a smaller bipartisan group led by Sinema and Republican Rob Portman of Ohio.

Democratic members of the group met with White House economic adviser Brian Deese, legislative affairs director Louisa Terrell and counselor Steve Ricchetti.

Biden told reporters traveling with him in Geneva that his chief of staff, Ron Klain, thinks “there may be some room” for a deal. At the same time, he said “I honestly haven’t seen it. I don’t know what the details are.”

“The White House team was grateful for the briefing from the Democratic senators involved in the infrastructure negotiations, and found it productive and encouraging. They look forward to briefing the President tomorrow after his return to the White House, and continuing to consult with Senators and Representatives on the path forward,” White House spokesman Andrew Bates said in a statement.

GOP Senator Mitt Romney of Utah told reporters earlier that the group doesn’t intend to release text of its proposal until more support is secured.

Senator Jeanne Shaheen, a New Hampshire Democrat, said that some details, like whether to index the federal gasoline tax to inflation, are “fluid” in the wake of an objection to the idea from the White House, which called it a tax increase on the poor and middle class.

Not Ready

Young added his support to the plan. He said that the White House is planning to offer a proposal to replace the $30 billion in revenue from indexing the gas tax and that a proposal for fees for electric vehicles may also be removed from the plan due to Democratic objections.

Other Republicans, like Deb Fischer of Nebraska and Roger Wicker of Mississippi, said they are encouraged by the plan but won’t sign on until it is finalized.

Bill Cassidy, a Louisiana Republican, who was part of the group that drew up the proposal, said that any alternative funding source is subject to discussion with the White House and others outside the group.

The group is proposing $1.2 trillion over eight years for physical infrastructure, including already expected maintenance spending. Instead of the corporate tax increases Biden has put forward, the proposed compromise would bolster tax enforcement, encourage private investment and re-purpose unspent coronavirus relief and unemployment benefit funds.

An outline of the plan, first reported by Politico and obtained by Bloomberg News, proposes increases in customs user fees and direct payment of municipal bonds as financing sources for new spending.

The plan would devote $110 billion to roads and bridges; $66 billion to passenger and freight rail; and $15 billion to electric vehicles and buses.

The proposal would likely unleash a wave of debt sales in the municipal market by reviving a tool used after the 2008 recession, known as Build America Bonds. Issuers sold more than $180 billion of the securities before the program lapsed at the end of 2010, according to data compiled by Bloomberg.

By providing a federal subsidy to help cover interest costs on debt, direct-pay bonds can reduce borrowing costs for municipalities. Proposals to revive them have received bipartisan support this year.

Build America Bonds were a taxable alternative to traditional tax-exempt bonds, which both took the pressure off the municipal-debt market and allowed underwriters to market them to overseas investors and others who don’t typically buy state and local government debt.

‘Quite Interested’

“What you saw today is Republicans and Democrats are quite interested in moving forward,” said Senator Rob Portman of Ohio, the lead Republican negotiator.

The Senate group’s efforts come as Senate Majority Leader Chuck Schumer continues with what he calls his “two tracks” strategy. Schumer began initial steps to craft a Democrat-only bill incorporating other elements of Biden’s economic agenda, including a vast expansion of spending for climate change and child care.

Warner said after the meeting with White House officials that it was clear to him there will have to be a follow-on reconciliation package -- but said he disagrees with some of Biden’s longer-term proposals, pointing to the need for intra-party negotiations on such a bill.

For now, Democratic moderates such as Manchin are not on board with sidestepping the GOP with a budget reconciliation bill. Manchin told reporters Wednesday he won’t now commit to do a reconciliation bill later in exchange for securing Democratic votes for the draft bipartisan plan.

Republican senators endorsing the framework are:

Richard Burr of North Carolina
Bill Cassidy of Louisiana
Susan Collins of Maine
Lindsay Graham of South Carolina
Jerry Moran of Kansas
Lisa Murkowski of Alaska
Rob Portman of Ohio
Mitt Romney of Utah
Mike Rounds of South Dakota
Thom Tillis of North Carolina
Todd Young of Indiana

The Democrats are:

Chris Coons of Delaware
Maggie Hassan of New Hampshire
John Hickenlooper of Colorado
Mark Kelly of Arizona
Joe Manchin of West Virginia
Jeanne Shaheen of New Hampshire
Kyrsten Sinema of Arizona
Jon Tester of Montana
Mark Warner of Virginia.

Angus King, a Maine Independent, has also signed on.