Negotiators struggle to finish infrastructure deal with clock ticking
A bipartisan group of Senate negotiators and senior White House officials is struggling to finish work on an infrastructure package that is now set to get its first vote as soon as Wednesday.
The senators have narrowed the number of outstanding disagreements in the talks to roughly a dozen, but the biggest problem of them all, how exactly to pay for $579 billion in new spending, remains unresolved.
That number represents spending over current budget baselines. The total deal is estimated at $1.2 trillion over eight years or $973 billion over five years.
Republicans warn there’s no chance they’ll get it all wrapped up by Wednesday, when Senate Majority Leader Charles Schumer (D-N.Y.) plans to force a vote on a motion to proceed to the bipartisan infrastructure legislation.
Without the support of at least 10 GOP senators, a vote to begin the infrastructure debate Wednesday will fail, putting the bipartisan legislation in limbo and raising serious questions about whether it can ever get across the finish line.
The latest impasse is over a Republican proposal to repeal a Trump-era rule on Medicare rebates that was intended to lower patients’ out-of-pocket spending on prescription drugs by allowing pharmacy benefit managers to pass along savings to consumers instead of insurance companies. But critics of the Trump rule say it instead cost patients more money by raising their premiums, a cost passed on to the federal government through higher premium subsidies.
The GOP proposal would raise a huge amount of revenue, enough to cover a significant amount of the shortfall in offsets that the bipartisan negotiators need to solve. The Congressional Budget Office (CBO) has estimated it would generate about $180 billion in savings.
But the White House is resisting the idea of using the Medicare rebate rule as a revenue source because Democrats are planning to use it to help cover the cost of the $3.5 trillion reconciliation package that would include elements of President Biden’s American Jobs Plan and American Family Plan that don’t have Republican support.
Democrats would be able to enact those elements of Biden’s agenda with simple-majority votes under the budget reconciliation process.
Another hang-up in the negotiations is over how much money to devote to public transit, an important Democratic priority that has limited GOP support.
Republicans are balking at what they say would be an unprecedented increase in transit funding at a time when an estimated $40 billion in COVID-19 relief funding for public transit systems remains unspent.
Sen. Rob Portman (Ohio), the lead Republican negotiator, said Monday that the White House would prefer to save the Medicare rebate offset for their $3.5 trillion reconciliation package.
“It’s a pay-for that everybody acknowledges, Democrats and Republicans, and I believe it will be used in some context because it’s viewed as good policy,” Portman told reporters.
But he acknowledged that Democrats “would like to use it for reconciliation.”
“We’re working on other pay-fors,” he added.
The ban on prescription drug rebates put in place by the Trump administration wound up increasing health insurance premiums.
The CBO has informed lawmakers that if they reverse the ban on rebates, the government will save money because it subsidizes premiums.
Negotiators were forced to drop a proposal to provide an additional to $40 billion to beef up IRS enforcement of tax compliance. That move had been estimated to net $80 billion to $100 billion in new revenue.
Portman confirmed on Sunday that the IRS provision would be dropped, putting a big hole in the original strategy for paying for the legislation.
“One reason it’s not part of the proposal is that we did have pushback. Another reason is that we found out that the Democrats were going to put a proposal into the reconciliation package which was not just similar to the one we had, but with a lot more IRS enforcement, so that created quite a problem,” he said on CNN’s “State of the Union.”
Portman confirmed on Monday that the IRS enforcement provision is still out of the bipartisan framework.
He said that the number of remaining disagreements had been narrowed from about 24 issues to about a dozen.
“We had over two dozen differences we had to work out and negotiate and we got through probably half,” Portman said. “So we worked all today and we’re going to have another Zoom call tonight. The White House is involved.”
He noted that his 35th wedding anniversary was Tuesday and joked that he would be celebrating it by participating on conference calls late into the evening.
A fight over transit funding is another major stumbling block.
The issue has traditionally been the jurisdiction of the Senate Banking Committee, but the bipartisan group is seeking to put their own stamp on the process, undermining the jurisdiction of the Banking Committee and, some Republicans say, breaking with past precedent on how much federal funding should go to transit.
Democrats are seeking, and Republicans in the bipartisan group have agreed to, a $48.5 billion boost for transit funding on top of current budget baselines.
Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said the traditional 80-20 breakdown of funding allocation between highways and mass transit would be preserved. Republicans, however, say that Brown is just counting contract authority and not total funding.
Portman has warned that the legislation won’t be wrapped up by Wednesday or Thursday when Schumer is trying to force action.
Senate GOP Whip John Thune (S.D.) said that Republicans will block a motion to begin debate before the bipartisan group has finished its negotiations with the White House.
“It’s not going to get 60, let’s put it that way,” he said, citing the 60 votes needed to advance the motion to proceed. “The group is still meeting and they’re still making progress.”
Senate Minority Leader Mitch McConnell (R-Ky.) told reporters: “I think we need to see the bill before we decide whether or not to vote for it.”
Portman and other negotiators, however, say the talks will continue, even if a procedural motion to take up the bill fails. The big question then would be whether Schumer decides to give the White House and the bipartisan group more time to talk or whether he would move on to schedule a vote on the Senate budget resolution.
Schumer on Monday announced that if the Senate votes in midweek to begin debate on a bipartisan infrastructure bill, he would make any deal reached by the White House and Portman and other Senate negotiators the first amendment to receive a vote.
He also said he would offer infrastructure bills passed with strong bipartisan support out of the Environment and Public Works and the Commerce committees as amendments to the shell bill.
“The motion to proceed on Wednesday is simply about getting the legislative process started here on the Senate floor. It is not a deadline to determine every final detail of the bill,” he said.
Updated at 7:33 a.m.