Senate Majority Leader Mitch McConnell (R-Ky.) and House Ways and Means Chairman Paul Ryan (R-Wis.) are at odds over how to extend highway funding past a looming July 31 deadline.
The two men can agree on this: A full six-year extension of highway projects won’t come together in the next few weeks — making some sort of short-term extension necessary — and Congress won’t raise the gas tax.
But with three weeks until the deadline, Ryan and other House Republicans are interested in finding the $8 billion needed to patch the trust fund until the end of 2015. An extension of just a few months, they contend, would allow a bipartisan group of lawmakers to pursue a deal to revamp the U.S.’s international tax system. Their proposal involves using revenue from offshore corporate profits for infrastructure funding.
“That’s what our first preference is, and we’re in discussions with our colleagues on how to do that,” Ryan said Thursday at an event sponsored by Politico, suggesting there were few other options when it comes to crafting a long-term deal.
“If we can’t get an agreement on that, then we have to go to a Plan B,” he said. “And that means we have to come up with the resources to cover this trust fund shortfall.”
But McConnell and his allies, facing a difficult 2016 map for the Senate, are focused on finding enough highway funding to get the trust fund past next year’s election.
GOP senators also said this week they were concerned that President Obama and congressional Democrats would view even a slimmer tax reform deal as a chance to simply grab more revenue to offset higher spending and that they don’t see any reason to overhaul the tax code in a piecemeal fashion.
“We’ve got to pay for the highway bill, but I don’t think we have to raise taxes to do it,” Senate Majority Whip John Cornyn (R-Texas) told reporters on Thursday.
Both McConnell and Cornyn have said they’d prefer to do tax reform in one fell swoop, and McConnell has long downplayed the chances that Republicans can work with the administration on tax reform.
“People are of two minds: They really, really want a highway bill. But they really have concerns about doing this,” Cornyn said, referring to the tax reform and highway plan sought by Ryan, Sen. Charles Schumer (D-N.Y.), Sen. Rob Portman (R-Ohio) and others.
Those differences are just some of the obstacles that lawmakers face in extending highway funding, the one big deadline that Congress faces before the August recess.
Supporters of the Export-Import Bank, which saw its charter expire at the end of June, want to revive it via an amendment in the highway bill — something opposed by the staunch conservatives who fought for the bank’s death.
Meanwhile, the anti-tax activist Grover Norquist raised questions Thursday about whether the sort of international framework being discussed would be considered a tax increase.
McConnell has said that he wants to bring a highway bill to the floor next week, after the Senate finishes an education bill. The Kentucky Republican hasn’t discussed publicly how he would pay for highways, though Senate Finance Chairman Orrin Hatch (R-Utah) has said that he has given GOP leadership a list of offsets.
But even some Senate Republicans acknowledge that it will be a heavy lift to find a patch to get them through November 2016, especially with Democrats opposed to using spending cuts to offset funding. Lawmakers were unable to cobble together the $11 billion they were seeking in May for a seven-month highway patch.
Sen. Dan Coats (R-Ind.) said Thursday that “we’re willing to look at something shorter” if the Senate can’t extend highways past the presidential election. “But I think all of us are hoping we can find the silver bullet or holy grail that will get us the kind of pay-for that is acceptable,” he said.
The plan that Ryan, Schumer and Portman are floating would tax the profits that U.S. multinational corporations have offshore, at far lower than the 35 percent corporate rate, to pay for road projects.
Under the framework, the U.S. would also make permanent changes to its international tax structure, including shielding future offshore corporate profits from the Treasury. Ryan said Thursday that sort of approach would relieve “this international pressure and problem we have of our tax base leaving us, companies leaving America.”
But there are serious questions about whether Congress, which has stalled on tax reform issues for close to five years, would be able to work out the details of that plan.
Portman and Schumer glossed over many of the particulars in their framework. And Norquist said Thursday that any deal that included revenue for roads would need to be offset by tax cuts elsewhere.
GOP aides maintained that whatever plan they come up with won’t be a tax increase, while some Democrats have said that the revenues for highways would need to be on top of other revenue-neutral tax changes.
Still, Schumer said Thursday that the agreement they’re seeking is “a very doable proposition.”
“Is it there yet? No,” he added. “But right now, it’s the only alternative out there.”
Schumer also pointedly said that Democrats wouldn’t agree to another short-term extension of highway projects if Republicans like McConnell don’t agree to at least consider the idea of pairing tax reform and highways.
“You’d need to see some broad support, that people would have confidence that over the next three or four months you could actually get the international tax reform deal done,” Schumer said.
Despite those potential roadblocks, other key players in the highway funding debate say that any talk of divisions between the House and Senate Republicans is overblown.
Rep. Pat Tiberi (R-Ohio), a senior Ways and Means member who agrees with Ryan’s approach to highways and tax reform, said lawmakers have plenty of time to work out an extension.
“I would never want to criticize a body for trying to get somewhere, and they’re trying to get somewhere,” Tiberi said about the Senate. “That’s O.K.”

Tags Highway bill Highway Trust Fund MAP-21 Reauthorization Mitch McConnell Paul Ryan
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