U.S. infrastructure deal teeters after Republicans reject IRS funding

[July 21, 2021]  By Jarrett Renshaw and David Morgan

WASHINGTON (Reuters) -The White House and U.S. congressional negotiators are scrambling to salvage a $1.2 trillion bipartisan infrastructure deal after Republicans balked at funding to enforce existing tax laws - a key way to pay for the plan - leaving both sides searching for a way forward.

Senators and Biden administration officials still hope to hammer out the deal, including a plan to finance it, for a Senate vote on Wednesday, but both parties were growing increasingly skeptical Tuesday.

"(It’s) hard to think there will be a bill by the time we vote tomorrow," Republican Senator Bill Cassidy, one of the bipartisan infrastructure negotiators, told Reuters. "There's still more issues," he said, including how the Congressional Budget Office scores the bill's impact on U.S. federal finances.

White House press secretary Jen Psaki said on Tuesday that the president supports Senate Majority Leader Chuck Schumer's plan to take a procedural vote to move to a debate on the bill on Wednesday, despite the lack of text and agreement on how to pay for it.

"There are no secrets in this legislation" Psaki told reporters.

The next step, Democrats say, could be jettisoning the bipartisan agreement entirely, which needs 10 Republican votes to pass the Senate, and putting all of Biden's spending priorities into a "budget reconciliation bill" that can pass along party lines.

"Patience is wearing thin for Democrats and I am fully expecting the party’s leadership to pivot towards the go-alone approach shortly. Then, the blame game will begin," said one Democratic aide involved in the negotiations.

But Senate Minority Leader Mitch McConnell said a failed procedural vote would not cause further delay.

"The majority leader will not be slowed down by having this motion to proceed to the bill defeated. All that does is give him the opportunity to move to reconsider, and at whatever point the bipartisan deal comes together, we can reconsider the vote," McConnell, the Senate's top Republican, told a press conference.

"In other words, no time is lost." he said. "We're not going to the bill until we know what the bill is."

IRS FUNDING SCUFFLE

Last month, Biden and a bipartisan group of senators agreed on a $1.2 trillion infrastructure package with roughly $600 billion in new spending financed in part by increased enforcement of tax laws.

The sun rises on the U.S. Capitol dome before Joe Biden's presidential inauguration in Washington, U.S., January 20, 2021. REUTERS/Jonathan Ernst/File Photo

Both sides agreed to add $40 billion to the Internal Revenue Service budget, a move that Biden said would focus on enforcing tax laws for large corporations and people who earn more than $400,000.

The funding would yield about $100 billion in tax revenue, negotiators said, or a sixth of the package's new spending cost.

Republicans, under pressure from anti-tax groups who claimed it would empower auditors to harass business owners and political opposition, rejected that plan over the weekend.

Ohio Senator Rob Portman said Sunday that Republicans believed Biden had agreed the full extent of IRS enforcement funding would be in the bipartisan bill; instead Democrats are planning to add billions more to IRS enforcement to the later reconciliation bill.

The IRS budget fell to about $11.95 billion in 2020 from an inflation-adjusted $14.6 billion in 2010, largely as a result of Republican-driven budget cuts that Democrats want to reverse.

On Monday Biden took a dig at Republicans who have backed away from the deal, saying “we shook hands on it."
 

Asked if it will be time to forge ahead with reconciliation if Wednesday’s Senate vote fails, Representative Alexandria Ocasio-Cortez, a leading Democratic progressive, told reporters: "Yes … they've been killing time for months and at this point, I believe that it’s starting to get to a point where this bipartisan effort is seeming to serve less on investing in our infrastructure and serving more the end of just delaying action on infrastructure."

(Reporting by Jarrett Renshaw and David Morgan; Writing by Heather Timmons; Editing by Andrea Ricci)

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