Biden’s economic agenda faces familiar hurdle with fight over financing

By Jim Tankersley And Emily Cochrane

President Joe Biden’s ambitions for a large-scale investment in the nation’s aging public works system along with other parts of his economic agenda hinge on what has always been the most difficult problem for lawmakers: agreeing on how to pay for the spending.

That question has sent a group of centrist senators scrounging to find creative ways to cover nearly $600 billion in new spending that they want to include as part of a potential compromise plan to invest in roads, broadband internet, electric utilities and other federal infrastructure projects.

The White House and Republicans have ruled out entire categories of potential ways to raise revenues. The impasse has become the subject of increasingly urgent talks between a large group of Senate Democrats, Republicans, White House officials and, at times, the president himself.

Among the ideas that senators have discussed in recent days are repurposing unspent coronavirus relief funds, increasing enforcement by the IRS and establishing user fees for drivers, including indexing the gas tax to inflation.

Biden dispatched aides to Capitol Hill on Tuesday for discussions that his press secretary, Jen Psaki, said yielded progress but no agreement. Top White House officials are set to meet Wednesday evening with Sen. Chuck Schumer of New York, the majority leader, and House Speaker Nancy Pelosi of California. Those discussions will center on infrastructure negotiations as well as a separate effort to move a large chunk of the president’s $4 trillion economic agenda through the Senate without any Republican votes using a procedural mechanism known as reconciliation.

Among those expected to attend the meeting are Brian Deese, director of the National Economic Council; Steve Ricchetti, a top adviser to Biden; Louisa Terrell, director of the White House Office of Legislative Affairs; Shalanda Young, acting director of the Office of Management and Budget; and Susan Rice, who leads the White House Domestic Policy Council, according to an official familiar with the plans.

Democratic leaders in Congress are preparing to move a sweeping, multitrillion-dollar bill through the reconciliation process to avoid the need for Republican votes and approve spending on physical infrastructure, education, emissions reduction, child care, paid leave, anti-poverty efforts and more. But centrist Democrats in the Senate — along with Biden — have said repeatedly that they want to strike a deal with Republicans on what would be a pared-down version of the president’s plan to rebuild roads, bridges and other infrastructure projects.

The bipartisan group has not reached public agreement on how to finance the spending.

Moderates in both parties insist that any deal be paid for with new revenues. Biden has offered $4 trillion in potential revenue sources, all concentrated on increasing the tax burden on businesses and high earners. Republicans have countered with hundreds of billions of their own, including increased taxes for drivers and repurposing previously borrowed money from the $1.9 trillion COVID relief bill that Biden signed into law this year.

The senators who spearheaded the original framework spent much of Tuesday huddling with Deese, Ricchetti and Terrell to iron out the details of an outline to provide for $1.2 trillion over eight years, of which $579 billion is new funding, and how to finance it.

“These things are always complicated and tough,” said Sen. Rob Portman, R-Ohio, as he left the Capitol on Tuesday. “We’re getting there. We’re moving in the right direction.”

Neither side appeared to have enough common ground to formally announce how they would fund the plan. Shuttling across the Capitol for hourslong meetings scheduled around votes, the five Democrats and five Republicans declined to offer specifics beyond their prevailing optimism and plans to continue discussions.

“Pay-fors,” Sen. Bill Cassidy of Louisiana, one of the Republicans negotiating the agreement, said when asked what the remaining stumbling blocks were. “Anytime you’re coming up with $579 billion, you’ve got to figure out how to do it.”

Biden has pledged to not raise taxes on the middle class, including at the gasoline pump. Senate Republicans refuse to increase tax rates for businesses and high earners. Both sides have dug in, to the surprise of some business leaders and other lobbyists in Washington.

White House officials have shifted in recent weeks to pressing Republicans to support one of Biden’s proposals that would not amount to an increase in tax rates: a plan to spend tens of billions of dollars on increased enforcement by the IRS. The administration says such a plan would collect hundreds of billions of dollars from high earners and corporations that owe, but do not pay, their fair share of taxes. Republicans say they are concerned about the scope of the provision, but they have continued to discuss it in private meetings.

“I would say we’ve put a lot of different options on pay-fors on the table,” Psaki told reporters Tuesday. “And our view is: There’s a fundamental question right now. Are Republicans, members of Congress, do they believe that rich people should have to pay the taxes they owe, or should we increase the cost of travelers who are just trying to make it to work? That’s the basic question here. So we’ll see if they can make progress on that exact point.”

Lawmakers expressed optimism that a deal could be reached this week, but they acknowledged the division over raising revenues.

“It’s always the hard part of an infrastructure package,” said Sen. Shelley Moore Capito, R-W.Va., who unsuccessfully tried to negotiate an even narrower package with Biden.

“There’s a pretty good dividing line sometimes between Republicans and Democrats — certainly is on taxes,” she added. “But the president’s taken any kind of user fee off the table — which is traditionally where you pay for these things — so that just makes it extra hard.”

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