White House drops infrastructure price tag to $1.7 trillion in talks with GOP

The White House put forward a $1.7-trillion infrastructure counteroffer Friday to Senate Republicans, dropping from President Biden’s sweeping $2.3-trillion proposal “in the spirit of finding common ground.”

White House Press Secretary Jen Psaki disclosed the new offer as talks were still underway between key Cabinet secretaries and GOP senators at a crucial stage toward a deal. Skepticism had been rising on all sides amid complaints about the lack of significant movement off the opening bids. Republicans had offered a $568-billion plan.

“This proposal exhibits a willingness to come down in size,” she said at the press briefing.

The White House and Republican senators have been in talks ever since Biden met with a core group of Republican negotiators last week to discuss the possibility of working together on an infrastructure plan. The White House dispatched the Transportation and Commerce secretaries and top aides to Capitol Hill to meet with the Republicans earlier this week, and they had a follow-up video call Friday.

The slog of those negotiations is certain to amplify worries from Democrats that time is running out to strike a compromise. The president’s team had set a soft Memorial Day deadline to determine whether a deal was within reach.

Psaki said the new proposal drops the president’s proposed expenditures on broadband and bridges to meet the Republicans’ lower level. She said the administration’s proposal also involved “shifting investments in research and development, supply chains, manufacturing and small business,” on par with the Endless Frontiers Act, which is a bipartisan bill pending in the Senate.

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But she signaled the president still expects to rely on raising corporate tax rates to pay for it, which has been a nonstarter for Republicans.

More details would be coming after Friday’s session, she said.

Securing a vast infrastructure plan is Biden’s top priority as he seeks to make good on his campaign pledge to “build back better” in the aftermath of the coronavirus crisis and the economic churn from a shifting economy. With narrow Democratic majorities in the House and Senate, the president is reaching out to Republicans for support on a potentially bipartisan approach rather than relying simply on his own party to muscle the proposal to passage. But Republicans are refusing Biden’s idea of a corporate tax increase to pay for the package.

Senate Republican leader Mitch McConnell of Kentucky said Thursday on Fox News that higher taxes on corporations or the wealthiest Americans are nonstarters. Republicans are unwilling to undo the 2017 tax cuts, the party’s signature domestic accomplishment under President Trump, which reduced the corporate rate from 35% to 21%. Biden proposes lifting the corporate tax to 28%.

“If they’re willing to settle for a targeted infrastructure bill without revisiting the 2017 tax bill, we’ll work with them,” McConnell told Fox’s Larry Kudlow, a former Trump advisor. But McConnell said a package of $2 trillion or more “is not going to have any Republican support.”

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In earlier talks, the last offer from GOP lawmakers left some dismay in the administration that there wasn’t more movement from their initial $568-billion proposal.

Republicans did increase their offer and have worked in good faith with the White House, according to a Republican who spoke on condition of anonymity to discuss the private talks.

The lead Republican negotiator, Sen. Shelley Moore Capito of West Virginia, was encouraged by the talks and expected the White House to be back in touch by week’s end, her office said.

But there was “not a significantly changed offer” from the Republicans during their meeting with the administration this week, according to a person who spoke on condition of anonymity to discuss the private negotiations.

The White House’s hopes for a bipartisan deal on infrastructure have cooled but it has not abandoned the effort, according to an administration official, who was not authorized to publicly discuss the private conversations and spoke on condition of anonymity.

Biden has reveled in the face-to-face negotiations, aides said, and has expressed hope to bring Republicans along. West Wing officials have been heartened by public comments made by some of the GOP negotiating team, including Capito, the official said.

But the outward talks of progress have not translated into the two sides getting much closer to a deal. Beyond the significant gap in the visions for the size of the package, there has been little discussion of how to reach an agreement on how to pay for it.

One GOP senator in the talks suggested tapping unspent funds from the massive COVID-19 aid package to help pay for the infrastructure investment. Other funds could be derived from uncollected tax revenues or public-private partnerships.

One strategy that had gained momentum would be for Biden to negotiate a more limited, traditional infrastructure bill of roads, highways, bridges and broadband as a bipartisan effort. Then, Democrats could try to muscle through the remainder of Biden’s priorities on climate investments and the so-called human infrastructure of child care, education and hospitals on their own.

But administration aides believe that if such an “infrastructure-only” bipartisan deal is far smaller than Biden’s original proposal, the White House risks a rebellion from Democrats who could claim that the president made a bad deal and missed the moment to pass a sweeping, transformational package.