Biden, Capito Seek Progress in Infrastructure Talks -- 6th Update

By Andrew Restuccia and Eliza Collins

WASHINGTON -- President Biden met Wednesday afternoon with the Senate Republican leading GOP efforts to craft infrastructure legislation, as the two sides continue to seek common ground ahead of a Biden administration deadline next week to show progress in the negotiations.

The meeting, which lasted about an hour, concluded with no public comment from Mr. Biden or Sen. Shelley Moore Capito (R., W.Va.). A White House official said they plan to speak again this week, in the face of growing doubts that a deal is likely amid sharp disagreements in the size of any package and what taxes or fees should be used to pay for it.

The talks came after Senate Republicans unveiled a plan last week to spend $928 billion over eight years to update roads, bridges, rail and transit systems. That offer is an increase from the GOP's original five-year $568 billion proposal, but it still left the two sides far apart. The White House's latest offer was for $1.7 trillion in spending.

Ahead of the meeting, White House press secretary Jen Psaki said Wednesday's meeting would be a broad discussion instead of a formal "exchange of paper." During the meeting, Mr. Biden and Mrs. Capito agreed to talk Friday, according to the White House official, who didn't say whether they would reconnect in person or by phone. The official described Wednesday's meeting as a "constructive and frank conversation" about using infrastructure spending to drive economic growth.

Kelley Moore, a spokeswoman for Mrs. Capito, said the senator and the president discussed the latest GOP offer "and how they can come together to reach a bipartisan agreement." She said Mrs. Capito reiterated her desire to come to a compromise that could pass on a bipartisan basis and was encouraged that negotiations have continued.

Transportation Secretary Pete Buttigieg said Sunday on CNN that infrastructure talks need to show a clear direction toward an agreement by the time Congress returns from its recess on June 7. Democrats have the power to use their narrow control of the House and Senate to approve legislation without Republican support if they stay united, though the White House and some Democrats have pushed for a bipartisan approach to infrastructure.

Mrs. Capito on Fox News on Sunday expressed optimism that a deal could get done, pointing out that the two sides had inched toward each other. She acknowledged that despite their efforts, it was possible they wouldn't come to an agreement by the deadline.

Senate Minority Leader Mitch McConnell (R., Ky.), speaking in his home state Wednesday, said he talked to Mrs. Capito in the morning and was hopeful "that we can actually reach a bipartisan agreement on infrastructure."

There is other movement on infrastructure as well. The Senate Environment and Public Works Committee unanimously advanced a $304 billion reauthorization bill last week, legislation that lawmakers see as a possible component of a broader infrastructure deal. The House Transportation and Infrastructure Committee will mark up their surface reauthorization bill next week, which has overlap but covers a broader group of transportation and infrastructure costs.

Another group of lawmakers, including Sens. Mitt Romney (R., Utah) and Joe Manchin (D., W.Va.), have been holding their own discussions on infrastructure, preparing a plan to release if the talks between Republicans and the White House fall apart.

After weeks of negotiations, the Biden administration and GOP lawmakers remain at odds over the overall size and scope of the measure, as well as how to pay for it.

While Republicans have proposed more spending, only about $257 billion of their proposal last week is above baseline levels, projected federal spending if current programs continued, according to the Republicans. The White House has said the entirety of its $1.7 trillion plan is above current baseline levels, though Congress will need to set new baseline spending by the end of this fiscal year.

Last month, the White House released the $1.7 trillion infrastructure proposal, down from roughly $2.3 trillion in its initial plan. The White House lowered its proposed spending on highways and broadband and shifted some programs into other legislation. But White House aides also called on the GOP to back funding for caring for elderly and disabled Americans, a $400 billion effort in its original proposal. Republicans have said the measure shouldn't be included in the infrastructure package.

Mr. Biden has proposed paying for his infrastructure package through increased taxes on corporations, including raising the corporate rate to 28% from 21%. Republicans say they won't support any tax increases and instead would seek to pay for their offer by redirecting federal Covid-19 aid.

"We have put over the course of the last year and a half, trillions of dollars into Covid relief and much of that is unspent. We say reprogram that," Mrs. Capito said Sunday. She also said that some of the bill could be financed with user fees for electric vehicles. The White House has said it would oppose any increase in user fees.

Sen. Chris Murphy (D., Conn.) told reporters Friday that with interest rates so low, it was "kind of insane" to account for every dollar up front.

"I do think there is sympathy for deficit financing a substantial portion of this. I think it's good economics," he said.

If the White House and Republicans are unable to come up with a compromise, Democrats will likely seek to use reconciliation, a special process tied to the budget, to pass a much larger package that includes infrastructure and other social programs.

Under the reconciliation process, lawmakers pass a budget resolution that then provides committees with instructions to craft legislation meeting the budget's target. That process allows lawmakers to pass bills in the Senate with just a simple majority, rather than the 60 votes most bills require.

The Senate is split evenly between Democrats and Republicans. Top Democrats have said they are open to using reconciliation, though the entire party would need to be on board. Vice President Kamala Harris could act as the tiebreaking vote.

Democrats already used reconciliation to pass a $1.9 trillion coronavirus relief package earlier this year using the budget tied to fiscal year 2021, which ends Sept. 30. Although the Senate parliamentarian, the nonpartisan official who gives guidance about what is permitted, has indicated that lawmakers could technically use the same budget resolution to pass additional legislation, her subsequent guidance has indicated that could run into procedural challenges, according to a copy of the ruling viewed by The Wall Street Journal.

Democrats have indicated they will likely try to pass a fiscal year 2022 budget resolution that could be used for passing additional legislation under reconciliation. Mr. Biden released a $6 trillion budget request to Congress Friday.

Andrew Duehren and Kristina Peterson contributed to this article.

Write to Andrew Restuccia at [e-mail] and Eliza Collins at [e-mail].

(END) Dow Jones Newswires

06-02-21 1849ET