US Republicans ready a new infrastructure counteroffer for Biden

Senate Republicans revived negotiations over United States President Joe Biden’s sweeping investment plan, preparing a $1 trillion infrastructure proposal that would be funded with COVID-19 relief money as a counteroffer to the White House.

Biden, a Democrat, had said he wanted to see progress on legislation by May 31, the US Memorial Day holiday.

Republicans said on Tuesday they would disclose details of the new offer by Thursday, with some sounding upbeat after both sides had panned other offers.

“I think that we’ve got good momentum, but we’ll see what their reaction is,” said Capito, the top Republican on the Senate Environment and Public Works Committee.

However, there are others who remain pessimistic about the negotiations.

The number-three Senate Republican, John Barrasso, told reporters: “We are now very far apart. We were pretty close when we met with President Biden in the White House” two weeks ago.

At the White House, Press Secretary Jen Psaki declined to address the new plan but said: “We expect this week to be a week of progress.”

Sharp disagreements

There is sharp disagreement between Republicans and Democrats about a basic definition of infrastructure – Republicans want to keep it strictly to things like roads, bridges and broadband, while Biden and Democrats want a bill to include items such as funding for childcare centres and green energy investments.

Biden had dropped his $2.3 trillion opening bid to $1.7 trillion, and Republicans had nudged their initial $568bn offer up by about $50bn late last week, but talks teetered as both sides complained the movement was insufficient.

Also complicating the negotiations is a significant conflict over how to pay for it.

The Republicans have uniformly rejected Biden’s plan to pay for the investments by raising the corporate tax rate, from 21 percent to 28 percent. Instead, the GOP senators want to shift approximately $700bn of unspent COVID-19 relief funds to infrastructure, which may be a nonstarter for Democrats. Republicans also want to rely on gas taxes, tolls and other fees charged to drivers to pay for the highways and other infrastructure.

The Republicans said their new proposal would be aligned with what they discussed with Biden in their first Oval Office meeting almost two weeks ago.

If talks stall, Biden and his fellow Democrats in Congress could decide to move forward at the end of the month without Republicans. Biden in March signed sweeping COVID-19 relief legislation passed in Congress without Republican support.

As talks hit a deadlock late last week, it is unclear if this latest GOP offer will be enough to put negotiations back on track.

Senate Republican leader Mitch McConnell, who tapped Capito to lead the GOP effort, gave a nod to the latest offer, saying the idea of repurposing the COVID-19 funds was “good advice” from Larry Summers, a Harvard professor and Clinton-era treasury secretary. Summers suggested as much in a recent op-ed as some economists warn of rising inflation with the government spending.

Publicly and privately, the Republicans say that while Biden appears willing to negotiate with the senators, his staff often changes course. They point to a similar dynamic during coronavirus aid talks when Biden seemed to agree with a group of GOP senators, only to have staff behind him shaking their heads no.

The Republicans are eager to publicly disclose Biden’s comments to them as they make the case for their new offer before the Memorial Day deadline.

Among Democrats, it is not lost on them that McConnell has said repeatedly that “100 percent of my focus” is on stopping Biden’s agenda.

Adding to the mix, a bipartisan group that includes Republican Senator from Utah Mitt Romney is quietly working on other proposals as a “backup”, he said.

“This is going to feel like a tightrope walk all the way until it gets to Biden’s desk,” said Jim Kessler, executive vice president of Third Way, a centrist think-tank.

The administration is signalling that it is important not just whether Biden can push his infrastructure and other proposals into law, but also how he does it. By this reasoning, voters — and some moderate Democratic lawmakers — are more likely to be on board if Biden at least tries for bipartisanship.

The West Wing believes its bargaining position is strong. Aides point to Biden’s high poll numbers and the popularity of his proposals, all while believing that they have the option of muscling the infrastructure plan to the passage under special budget reconciliation rules that require only a party-line vote.

But there is a growing sense of urgency within the White House and among Democrats. After a burst of legislative accomplishments, including the COVID-19 relief bill, the pace has slowed dramatically. And the future may hinge on a few select senators.

Psaki insisted no decisions had been made on whether the administration will go it alone as it awaits a counteroffer from Republicans. “We’re not quite there yet,” she said.