White House Signals Senate GOP Infrastructure Bill Is A Starting Point

On April 22, a group of U.S. Senate Republicans unveiled a $568 billion counteroffer to President Joe Biden’s $2.25 trillion infrastructure plan. In addition to being a fraction of the cost, the GOP alternative narrowly focuses on projects that fall under the traditional or conventional definition of infrastructure.

Specifically, the Republican plan includes:

• $299 billion for roads and bridges;
• $65 billion for broadband;
• $61 billion for public transit;
• $44 billion for airports;
• $35 billion for drinking water and wastewater systems;
• $20 billion for railways;
• $17 billion for ports and inland waterways;
• $14 billion for water storage; and
• $13 billion for safety measures.

The spending would be paid for with user fees like the gas tax or a vehicle miles traveled (VMT) program, as well as unspent COVID-19 relief funds. The National Association of Manufacturers (NAM) has offered a similar outline for paying for infrastructure investments.

Specifically, NAM has suggested:

• User fees, including an increase in the fuel tax that is indexed to inflation, or a VMT tax that allows people to pay for infrastructure based on the degree to which they use it.
• Private sector and industry investment through public infrastructure bonds and municipal infrastructure bonds.
• A national infrastructure bank backed by federal dollars that would share some of the risk of infrastructure investment, but provide much-needed capital for the development of projects with public benefit. As private industry draws loans from the bank, it can take on the risk, with revenue going back to the infrastructure bank’s coffers for future development opportunities.

While some Senate Democrats rejected the Republican proposal outright, the White House signaled President Biden is open to using the GOP plan as a starting point. White House Press Secretary Jen Psaki told reporters the $568 GOP billion is “the beginning of a discussion.” Psaki also said, “The next steps will be conversations at the staff level, conversations between senior members of our administration, members of Congress, appropriate committee staff through the course of next week …”

Last Friday, Sen. Joe Manchin (D-W.Va.), who will provide an important voice in those discussions and a pivotal vote on infrastructure legislation, also argued lawmakers should focus on the “conventional” infrastructure definition when they write a bill. Specifically, Sen. Manchin said, “What we think the greatest need we have now, that can be done in a bipartisan way, is … water, sewer, roads, bridges, internet — things that we know need to be repaired, be fixed.”

While that statement aligns Sen. Manchin more closely with his Republican colleagues, one matter on which the senator does not agree with the GOP is the gas tax. Sen. Manchin has said he does not want to raise this levy in order to pay for an infrastructure bill. (He is also opposed to raising the corporate tax rate to 28 percent, as President Biden has suggested.)

House lawmakers might have something to say about the topic of the gas tax, however. On April 23, the bipartisan House Problem Solvers Caucus released a report that called for increasing and indexing the gas and diesel tax to a number of factors, including highway construction costs, inflation, and fuel economy standards. The caucus also suggested a possible VMT tax. Read more here.

Next up: President Biden is expected to propose raising the top marginal personal income tax rate to 39.6 percent and the capital gains tax rate for high-income individuals from 20 percent to 39.6 percent to pay for his American Families Plan. That plan, the second part of the White House’s infrastructure outline, is expected to be released this week and to include provisions on child care and paid leave, along with other issues related to tackling income inequality.

Find out more about the American Families Plan, and the potential tax increases, here.