Without Gas in the Tank, Senate Stays Course on Highways
Senate Republicans are confident they’ll take up a highway extension this week — though the bill’s duration and pay-for are still up in the air.
Senators from both parties are mulling suggestions that range from a kick-the-can plan to fund the highway account through the 2016 elections to a more ambitious proposal that would include a short-term patch linked to a major tax overhaul designed to fund a full six-year extension.
Regardless of the unknowns, Republicans were confident the highway bill would hit the floor this week.
“I’m more optimistic than I’ve been in a long time,” Majority Whip John Cornyn, R-Texas, said of the schedule after a private meeting with relevant committee chairs and leadership. “This is something everybody wants to do on a bipartisan basis, is pass as long-term a highway bill as we can.”
Neither Cornyn nor others would elaborate on the options Republican leaders were discussing. But Democrats have been pushing for a plan proposed by President Barack Obama to use tax revenue from repatriated funds to pay for the six-year bill.
“We have a position,” said Sen. Ron Wyden, D-Ore., ranking member on the Senate Finance Committee. “Our position: We want a long-term bill and the pay-for is the president’s proposal.”
It’s unlikely Congress would be able to complete a tax overhaul by the time the current authorization expires at the end of the month and it’s unclear what is the shortest duration Democrats would be willing to accept.
Sen. Charles E. Schumer, one of the top Senate Democrats, said his party needs to see the Republican plan before committing to support or opposition. He did say, however, that the vast majority of Senate Democrats do not support an increase in the gas tax as a funding mechanism.
“We don’t like a patch, we don’t like a short-term extension, but we’re not going to prejudge anything in a vacuum,” the New York Democrat told reporters last week. “Let’s see what they have. What does a patch mean? Is it 12 months, 16 months, three months, nine months? How do they pay for it? Does it have an increase in funding? These are all questions they should have.”
Transportation Secretary Anthony Foxx pushed for a long-term bill last week, but he echoed Schumer’s sentiments and stopped short of a veto threat.
“We need to end this extension-palooza that we have in transportation for so long,” Foxx said on July 9. “I think there are many ways that could happen. … So we’re gonna have to see, as [Schumer] said, what comes about.”
The idea of using changes to the international tax code to fund the highway extension, of which there are multiple proposals, creates a divide within the Republican Caucus.
Sen. Rob Portman, R-Ohio, co-introduced — along with Schumer — principles for an international tax overhaul. But Portman, one of the most vulnerable incumbents in 2016, said he’s not opposed to “finding pay-fors outside of the tax process.” Still, he said he needs to see the pay-fors, to “make sure that they are good policy.”
Sen. Tim Scott, R-S.C., said he supported an international tax overhaul, but using it to fund a highway bill would be a “hard pill to digest.”
“When you … use the funds from tax reform for highways, then you don’t use the money to lower the taxes, which will then create a permanent revenue stream as opposed to a six-year window,” Scott said.
Finance Chairman Orrin G. Hatch, R-Utah, expressed similar concerns and said he didn’t like moving to a territorial taxing system — taxing domestic and not foreign income, a component of at least one of the suggested proposals.
Hatch’s counterpart in the House, Rep. Paul D. Ryan, R-Wis., supports a one-time repatriation if it’s within the context of broader international tax overhaul. But he does not support “deemed repatriation,” which Obama’s plan calls for. Any plan for Ryan, and likely most other Republicans, would have to be a net tax decrease.
“Chairman Ryan supports a short-term patch to get to the end of the year so we have time to develop a long-term solution,” Ryan spokesman Doug Andres said in a statement.
Another idea floated last week was using tax extenders as a pay-for. With the opposition to a short-term patch and the complexities of funding the six-year plan, an in-between patch — anywhere from 12 months to a few years — is possible.
That would help legislators get through the election cycle. But it would hurt the highway program in the long-term, according to the two top senators on the Environment and Public Works Committee.
Chairman James M. Inhofe, R-Okla., said larger projects of national concern would “fall by the wayside,” even with a multi-year bill.
“You really need a six-year bill,” Sen. Barbara Boxer, D-Calif., the committee’s ranking member, said. “Because if you’re building major projects and you’re fixing major bridges that are falling down, you need the assurance that we’re there.”
Also hanging in the balance is the fate of the Export-Import Bank, which is expected to hitch a ride on the highway bill . The bank’s reauthorization, which expired last month, will likely lure Democrats, but drive away some Republicans who see the bank as little more than corporate welfare.
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