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Infrastructure deal in precarious state as endgame nears

The Washington Post logo The Washington Post 7/19/2021 Seung Min Kim

President Biden on Monday took a subtle yet unmistakable dig at Republicans who have backed away from a major funding component in a bipartisan infrastructure package that is now starting to fray, saying pointedly that “we shook hands on it” even as he continued to promote the agreement.

Biden’s comment, with its accusatory undertones, reflected the agreement’s precarious state at the outset of what could be a pivotal week. Senate Majority Leader Charles E. Schumer (D-N.Y.) plans to force a vote within days to advance the roughly $1 trillion plan despite the Republican hesitations, a high-stakes gamble that is intended to force agreement but that GOP senators on Monday warned they would reject.

Biden also will seek to turn up the pressure by traveling to Ohio on Wednesday to pitch the plan and hold a town hall session with voters.

The last-minute struggle to nail down details of the blueprint for revitalizing roads, bridges, water pipes and broadband systems is threatening a bipartisan victory that stands not just at the core of Biden’s economic agenda, but also is intended as Exhibit A in the president’s case that bipartisanship is still possible in a divided Washington.

The current flare-up revolves around more than $100 billion in revenue that a bipartisan group of senators hoped to raise by beefing up Internal Revenue Service enforcement so it could better collect unpaid taxes. Conservatives rebelled against empowering an agency they deeply distrust, however, even after Republicans including Sen. Rob Portman of Ohio, a top GOP negotiator, sought to address the concerns by proposing safeguards on the IRS’s authority.

But those suggested restrictions made the IRS provision virtually unworkable, according to aides familiar with the discussions, forcing negotiators to nix it as a source of revenue and leaving senators scrambling to find tens of billions of new dollars to pay for the infrastructure deal.

Biden, who has repeatedly insisted that Democrats and Republicans can still come together to do big things, voiced some frustration Monday in a speech that largely focused on inflation threats. “We should be united on one thing — passage of the bipartisan infrastructure framework, which we shook hands on. We shook hands on it,” Biden said.

Republicans were annoyed by Schumer’s insistence on holding preliminary Senate votes Wednesday to proceed to a debate on the agreement, which has not been finalized. The majority leader finalized his floor strategy on Monday night, teeing up a Wednesday vote that would allow the Senate to proceed to the bipartisan package.

The Wednesday vote, Schumer said, was “simply about getting the legislative process started here on the Senate floor,” and he indicated that he was prepared to put the bipartisan infrastructure legislation on the floor as early as Thursday should the group finalize it by then.

“It is not a deadline to determine every final detail of the bill,” Schumer said of the Wednesday vote. “All a yes vote on the motion to proceed simply means that the Senate is ready to begin debating and amending a bipartisan infrastructure bill. No more, no less.”

But since Schumer disclosed his strategy, Republicans have indicated that a critical mass of their members would effectively block the infrastructure package if a deal had not been finalized.

“It’s not going to get 60, let’s put it that way,” said Sen. John Thune (R-S.D.) on Monday, referring to the number of votes needed to advance nearly any legislation on the Senate floor.

It will probably become clear within days whether the back-and-forth is the usual last-minute haggling before a complex deal comes together in Congress or something more ominous — the early signs of the collapse of an agreement that Biden hoped would be a decisive bipartisan achievement.

Republicans’ opposition to the IRS provision hardened after Senate Democrats suggested that they would use the expanded tax-collection powers to bring in more revenue for a separate, $3.5 trillion package that includes a wide array of Democratic priorities.

Video: 'We have a deal': Biden announces infrastructure agreement (Associated Press)

Issues large and small were still unresolved Monday, aides said. While the challenge of funding the package remained the biggest hurdle, there were also issues on the spending side of the deal, including transit, broadband and a proposed infrastructure bank, aides said.

At least publicly, neither Biden nor other administration officials have shown concerns that the bipartisan agreement they have touted could be collapsing. The president will continue to promote the agreement in the coming days and the issue will probably be a major focus of a CNN town hall scheduled for Wednesday in Cincinnati — Portman’s hometown.

[Biden hits the road for infrastructure deal]

“If we make a prudent, multiyear investment in better roads, bridges, transit systems, and high-speed Internet, and a modern, resilient electric grid, here’s what will happen: It breaks up the bottlenecks in our economy,” Biden said. “Goods get to consumers more rapidly and less expensively. Small businesses create and innovate much more seamlessly.”

The disagreements and uncertainty over what is in the package were compounded by tactical skirmishes in the Senate as Schumer planned to force a standoff by scheduling a procedural vote on Wednesday.

The move is meant to put pressure on the bipartisan negotiators to firm up an agreement while ensuring that a separate, Democrats-only spending package can move along in tandem. Republicans have balked at Schumer’s strategy and most GOP senators, even those directly negotiating the bipartisan agreement, have said they would vote against advancing that package absent a final deal.

The White House has said it is deferring to Schumer on legislative strategy, although the majority leader’s decision to move forward has irritated Republicans, who have asked for more time to finalize the agreement.

“We’ve had one week in session since agreeing to a general framework,” Portman said. “We’ve got to get this right.”

Some Democrats, however, are wary of letting talks drag on over a bipartisan deal they thought they had reached when Biden met with lawmakers and then emerged from the White House, flanked by senators of both parties, to announce the agreement.

One alternative source of revenue discussed by Republican and Democratic senators, along with the White House, is rolling back changes to Medicare prescription drug rules that were announced during the Trump administration.

Back then, Health and Human Services pushed a “rebate rule” that would end a widespread practice in which drugmakers give rebates to insurance middlemen in government programs such as Medicare to include those drugs in their coverage. The idea was to channel the money to consumers instead.

In 2019, the Congressional Budget Office said that going ahead with the Trump rule would cost $177 billion over a decade, although officials involved in the ongoing infrastructure negotiations said it was difficult to pinpoint a precise figure. Portman said on Monday that revised figures from the CBO indicated that undoing the Medicare rule could yield as much as $186 billion, which would be a significant source of revenue to help pay for the infrastructure package.

But the Medicare drug savings is causing its own problems, because — like the IRS provisions — Democrats had planned to use that revenue to pay for their ­party-line, $3.5 trillion spending plan and do not want to use it to fund the bipartisan package, according to GOP and Democratic aides.

During negotiations in recent days, White House aides were “not very” open to using the savings from rolling back the Medicare rebate rule, although they have indicated some flexibility, according to one official familiar with the talks.

“I’ve always felt that the White House is going to be reluctant to use any pay-for that they might seize and use later,” Thune said.

The administration has not weighed in publicly on alternative sources of revenue, as top White House officials continued to negotiate with senators during the weekend via Zoom. The senators drafting the proposal were scheduled to meet again virtually on Monday night.

“While there was agreement, of course, on the support for the IRS step that would have just ensured that some of the wealthiest Americans paid what they owed in taxes, some have backed away from that,” White House press secretary Jen Psaki said Monday. “We’re . . . very open to alternatives from this end, but we’ll let those conversations happen privately and be supportive of them from our end.”

Marianna Sotomayor and Yasmeen Abutaleb contributed to this report.

Joe Biden wearing a suit and tie: President Biden talks about the infrastructure plan at the White House on Monday. © Demetrius Freeman/The Washington Post President Biden talks about the infrastructure plan at the White House on Monday.

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