Speaker Nancy Pelosi and Senate Majority Leader Charles E. Schumer late Wednesday blessed a tentative bipartisan agreement on $559 billion in new infrastructure spending that a group of senators and White House aides negotiated, but warned it has to move along with a larger partisan package to get Democrats’ support.
“One can’t be done without the other,” Schumer said at the end of a two-hour meeting with Pelosi and White House aides Wednesday. “All of us agreed to that. We can’t get the bipartisan bill done unless we're sure we're getting the budget reconciliation bill done, and we can't get the budget reconciliation bill done unless we're sure of the bipartisan [bill].”
Schumer welcomed the bipartisan agreement, saying “we support the concepts we have heard about.” He, Pelosi and the White House aides agreed there was enough progress to continue with their two-bill approach.
“We're all on the same page,” he said. “Both tracks — the bipartisan track and the budget reconciliation track — are proceeding apace.”
The reconciliation bill could include trillions in additional spending on other aspects of Biden's two economic plans and things Democratic lawmakers want, like universal pre-K, two years of free college, national paid leave and various climate and health care initiatives.
Schumer said both chambers will vote in July on a budget resolution containing reconciliation instructions doling out spending and revenue targets for committees to assemble the larger partisan package. He initially expressed hope that both the bipartisan and partisan bills could also move in July but then admitted writing the reconciliation bill “takes a while.”
Pelosi also warned that the House would not vote on the bipartisan bill until her members can see the reconciliation bill.
Their comments came just hours after White House aides and a bipartisan group of Senate negotiators reached their tentative agreement — a breakthrough that prompted an invitation for the group to meet with President Joe Biden Thursday.
Pelosi said despite the tentative agreement, the House still plans to vote the week of June 28 on a five-year, $547 billion highway bill, as well as wastewater and drinking water bills. She said those bills could later be “merged with the things in the bipartisan bill that are not part of both,” but Schumer chimed in to say the Senate versions of the reauthorizations may be the ones added.
“We're very excited about the prospect of a bipartisan agreement, and then it takes us to whatever else we want to do,” she said.
Hours earlier, the bipartisan Senate negotiators left their meeting with White House aides Louisa Terrell, Steve Ricchetti and Brian Deese on Capitol Hill providing few details about the framework they will present to Biden Thursday. Office of Management and Budget acting Director Shalanda Young and White House Domestic Policy Advisor Susan Rice joined Deese for the meeting with Schumer and Pelosi.
“All we’re going to say is we’ve agreed on a framework on the entire package. We’re going to go to the White House,” said Sen. Mitt Romney, R-Utah.
The White House confirmed the scheduled Thursday meeting in a statement, with Press Secretary Jen Psaki saying the group ”made progress towards an outline of a potential agreement.”
The tentative agreement marks progress in what has been a monthslong process of congressional wrangling over Biden’s $2 trillion-plus infrastructure package, his key domestic priority. Republicans have balked at Biden’s topline, definition of infrastructure and proposed tax increase offsets.
An earlier effort at a compromise led by Sen. Shelley Moore Capito, R-W.Va., fell apart after weeks of meetings between the White House, Capito and four other Republicans.
The new group, led by Sens. Rob Portman, R-Ohio and Kyrsten Sinema, D-Ariz., which had been negotiating for months behind the scenes, then became the focus of a potential bipartisan deal. A total of 21 senators, 10 Democrats and 11 Republicans, signed off on that group’s initial proposal, which had a list of potential offsets that were not fully agreed to, before negotiations with the White House began in earnest.
The final package is close to the original $579 billion in new spending, but the group counted $20 billion in previously appropriated funding to support broadband infrastructure in hard-to-reach areas that lowered the topline on new spending. In all, the plan, including baseline funding that supports existing programs like highway maintenance, would total roughly $1.18 trillion over eight years and $954 billion over five.
Sen. Joe Manchin III, D-W.Va., said the group would pay for it using an unspecified variety of pay-fors — which may include spending redirected from other programs — but the plan does not include indexing the gas tax to rise with inflation, one of the senators’ initial ideas that the White House rejected.
“It’s just a matter of we’re going to wrap it up tomorrow,” he said, adding “everyone in that room agreed on the framework.”
Portman said the negotiators agreed to a “good, balanced group of pay-fors,” details of which they still needed to work through with staff, he added.
“I would say that we're very, very close and we're going to now do the outreach that is important to grow the vote from the middle out," Portman said.
Sen. Mark Warner, D-Va., said the group’s whittling down of their prior list of potential pay-fors to ones in which both parties and the White House could agree reflected substantial progress. The broader caucuses will still need to be briefed on and sold on the plan.
“I would call this a much sturdier framework,” Warner said. “Obviously we wouldn't be going to the White House if we didn't think [it] has broad-based support."
The senators declined to say what pay-fors they settled on but one they’d been narrowing in on in recent days is providing more enforcement funding for the IRS to collect taxes owed but not paid. In targeting the so-called “tax gap,” negotiators ran into disagreements on how much additional revenue a boost in funding for IRS audits could raise.
The Treasury Department has estimated that Biden’s proposal to spend an additional $80 billion over 10 years on tax enforcement would raise $316 billion over the same period. But Republicans have suggested that’s likely an overshoot and said the Congressional Budget Office will score it lower.
In July 2020, CBO estimated that increasing IRS enforcement funding by $20 billion over 10 years would raise $61 billion and that doubling the amount to $40 billion over 10 years would raise $103 billion.
Current and former IRS officials testifying on the matter before the tax-writing committees in recent months have said the agency needs a sustainable funding increase but that it would take time for the IRS to put the extra money to use.
For example, Barry Johnson, the IRS’s acting chief of research and analytics, told the Senate Finance Committee in May that on average IRS auditors do not operate at full capacity in terms of their ability to bring in revenue until their third year of employment. New auditors actually cost the agency revenue in their first year because the IRS has to take another officer offline to train them, he said.
“I have some concerns about what would be done if a huge amount of more money was put into the IRS, how would it be utilized,” Finance ranking member Michael D. Crapo, R-Idaho, said in a June 22 interview.
Crapo is not part of the bipartisan group but he said he has discussed the tax-enforcement piece with senators involved. He said he is open to increasing the IRS enforcement budget at an “appropriately tailored” level but with discretionary funding, not mandatory funding as the administration has proposed for most of its increase.