Senate infrastructure bill cuts IRS funding, increasing pressure for new revenue

Lawmakers have scrapped plans to help fund an estimated $ 1 trillion infrastructure package by bolstering tax collection enforcement at the Internal Revenue Service, key negotiator says, adding further difficulties funding for the bipartite measure before an impending deadline for the agreement.

Republican opposition is one of the main reasons that funding for a larger IRS application is no longer part of the infrastructure proposal, Sen. Rob Portman (R., Ohio) said on Sunday on CNN. He cited the recoil of some lawmakers who warn of overbreadth of intrusive government. This has cast new uncertainty on the plan days ahead of a planned midweek vote by Democratic Senate leaders.

But Mr Portman said the sudden lack of funding was not necessarily a blow to the entire program, adding that there were other potential sources of income for the infrastructure plan, such as a rule of thumb. Medicare reimbursement.

“We have a number of pay-fors,” Mr. Portman said. “And it’s important that it gets paid.”

Republicans and Democrats have spent weeks trying to negotiate an infrastructure deal, but wondered how to cover the costs while minimizing the impact on the federal deficit, which has reached record levels in recent years, due to significant tax cuts and a pandemic. related expenses.

Lawmakers this week face the first test of whether there will be enough support to move the infrastructure deal forward, as well as a $ 3.5 trillion budget resolution backed only by Democrats to push forward d other parts of President Biden’s agenda, such as the expansion of clean energy and health care. The two nested pieces of legislation together make up the bulk of the White House’s economic plan.

Senate Majority Leader Chuck Schumer (D., NY) said last week he would take the first step of the process on Monday, calling a vote on Wednesday to begin debate on the bipartisan bill on infrastructure. Democratic support for infrastructure legislation, however, depends on the party merging on the same day around the $ 3.5 trillion budget resolution.

The $ 1 trillion bipartisan infrastructure package and the $ 3.5 trillion Democratic Health and Poverty Plan will face hurdles as they cross Congress in tandem. Gerald F. Seib of the WSJ explains. Photographic illustration: Laura Kammermann

Both bills are based on fragile coalitions of legislators deciding to compromise. Republicans and Democrats were still working out key details over the weekend on how they would pay the roughly $ 1,000 billion infrastructure bill and said they weren’t sure. to meet the mid-week deadline.

Sen. Bill Cassidy (R., La.) Told Fox News on Sunday that meeting Wednesday’s deadline was possible, but only if negotiators agreed on payments for the plan.

“We need leadership from the Senate, Schumer and the White House to work with us. Right now, I can — I can honestly tell you that they haven’t, ”Mr. Cassidy said. “We are competing with their $ 3.5 trillion plan. They want everything to be reasonable on their side, not to help us. “

Mr Portman, the GOP’s main negotiator on the infrastructure deal, said negotiations were ongoing and should not have a deadline on Wednesday.

“Getting it right is more important than meeting an arbitrary deadline,” he said.

The group of 11 Republicans and 11 Democratic caucus members reached an agreement on a general framework with the White House last month, but some said they would not vote to start debate on the bill unless ‘a more detailed agreement has not been reached. Late last week, disagreements over adding money to the IRS budget to bolster its collection of unpaid taxes stumbled lawmakers in hopes of finalizing how the cost of the bill would be compensated.

“We want to be able to collect the taxes owed, but we don’t want to harass individuals either – and in between there’s a fine line that we don’t want to cross,” said Sen. Mike Rounds (R ., SD), member of the bipartite group.

Senator Bernie Sanders has called for up to $ 6 trillion for spending in the infrastructure package, including anti-poverty legislation.

Photo:

Kevin Dietsch / Getty Images

Lawmakers had said last week they were looking to see if they could replace the IRS’s enforcement provision with another way to foot the bill, but are limited by Republicans’ refusal to raise taxes and Democrats’ reluctance to increase user fees at lower and middle levels. – income from the Americans.

The infrastructure bill will need 60 votes to advance in the Senate at 50-50, where Liberal Democrats have said their support depends on the separate poverty and climate package ensuring unanimous support within their party. Democrats plan to move the $ 3.5 trillion package forward through a budget-related process that allows it to bypass the 60-vote requirement and move to a simple majority, provided they avoid any defection in their own ranks.

The chairman of the Senate Budget Committee, Bernie Sanders (I., Vermont) had initially asked for a package of $ 6 trillion and some centrists, whose meaning. Joe Manchin (D., W.Va.) had hoped for a bill not to exceed $ 2,000 billion. As part of a framework reached by Democrats on the Budget Committee last week, including Mr Sanders, the $ 3.5 trillion package would combine expanded access to affordable early childhood care, childcare benefits, and childcare benefits. broader health insurance and programs to combat poverty and climate change.

Mr Manchin and other centrist Democrats said last week they needed to review the deal in more detail before committing to backing it. Sen. Jon Tester (D., Mont.) Said late last week that he would at least support moving the process of crafting the budget resolution forward. Mr Schumer said Senate Democrats have until Wednesday to decide whether they can unite around this.

“We have to solve some very important problems in this country and I think there is a real possibility that this 3.5 trillion dollars can solve some of these problems which are not addressed in this bipartite infrastructure package,” said Mr. Tester to reporters. “So I want to have a debate on this. “

House Speaker Nancy Pelosi (D., Calif.) Said she would not discuss the bipartisan infrastructure bill until the larger budget package was passed by the Senate, which will cause negative reactions from both sides.

“We urge our colleagues to support an alternative approach and recognize that supporting an infrastructure bill that allows new spending also allows Democrats to spend $ 3.5 trillion on taxes and spending,” a group of nine conservative Republicans in the Senate.

Meanwhile, some centrist House Democrats are urging Ms Pelosi to introduce the bipartisan infrastructure bill as soon as it passes the Senate.

“We strongly urge – and we pledge to work with you to bring about – a vote in the House on this legislation before the August recess and without any unnecessary or contrived delay to the arrival of the Senate,” said a group of 10 House Democrats in a letter released Thursday.