Senators negotiating the bipartisan infrastructure package are trying to defang potential GOP criticism about the funding mechanisms for their $1.2 trillion deal and whether they can fully cover the cost of the legislation.
The group of almost two dozen senators is racing to finalize legislative text for the Congressional Budget Office (CBO) in a matter of days as they face pressure from Senate Majority Leader Charles Schumer (D-N.Y.), who has scheduled a procedural vote for Wednesday.
With top Republicans signaling the CBO analysis will be a key factor in whether they support the package, negotiators are laying the groundwork to argue that the congressional scorekeeper lowballed some of their proposals. They are also looking for potential revenue alternatives amid conservative concern about some of their ideas.
“CBO is like this magic box somewhere that divines these numbers and we’re all kind of holding our breath until we see something that sends the right puff of smoke up,” said Sen. Lisa Murkowski (R-Alaska), a member of the bipartisan group.
“Are we all going to pass out if the score doesn’t come out exactly the way we want? No,” she added. “It may be something that we need to revisit, but it doesn’t mean that we’re done.”
Sen. Rob Portman (R-Ohio), who has led the talks with Sen. Kyrsten Sinema (D-Ariz.), said the bipartisan bill “is going to be adding to the efficiency and therefore the productivity of our economy … [but] CBO may not give us full credit.”
The preemptive pushback from GOP members of the group comes ahead of likely criticism from other Republicans if the CBO’s official analysis says the bill falls short of paying for all of its components.
How to pay for the bill has been a sticking point for the bipartisan group, whose members have promised that their bill will be fully paid for. Though the bill is estimated by negotiators to cost $1.2 trillion over eight years, it includes roughly $579 billion in new spending.
Senate GOP leaders have warned that any deficit spending could be problematic for their caucus.
“All I’ve said is, I would like for it to be paid for. We’ve added quite enough to the national debt,” Senate Minority Leader Mitch McConnell (R-Ky.) told reporters in Kentucky earlier this month.
Sen. John Thune (R-S.D.), McConnell’s No. 2, noted that the argument from the GOP negotiators — that the CBO’s analysis might not accurately reflect some of their revenue streams — has some merit.
“I think there is an argument to be made on some of the pay-fors that they are credible even if they perhaps don’t score,” Thune said.
Thune added that senators were discussing using a CBO score or an analysis from the White House Office of Management and Budget, but “I think our members are going to insist on using CBO scores.”
“If those numbers come in less than what was estimated, that means we’re going to have a lot less of it that’s paid for and a lot more being debt-financed, which is a problem for a lot of our members,” he added.
The bipartisan group announced late last month during a White House meeting with President Biden that they had reached a deal on a framework for a $1.2 trillion bill. Since then, they’ve been working behind the scenes trying to turn the framework into legislation.
One idea discussed as a way to pay for the bill is giving the IRS an additional $40 billion, which the group says could generate up to $100 billion in revenue through ramped up enforcement.
That notion has drawn skepticism from conservatives, who have long viewed the agency as politically motivated, even though the group has been discussing potential “guardrails” to try to assuage those concerns. But negotiators have acknowledged that the idea might also not pass muster with the CBO.
“The tax gap is a good example. … CBO says all these taxes were supposed to be collected, so we’re not going to give you credit, which is I think wrong. So the CBO may not be as fulsome as it should be,” Portman said.
The IRS funding could be pulled from the deal. Negotiators are working to find an alternative revenue source and are expected to work with the White House through the weekend to try to look for a backup.
But they also acknowledge that with existing red lines on what can be used as a revenue source, it’s now difficult to find a replacement that passes the smell test.
Sen. Mark Warner (D-Va.), a member of the bipartisan group, noted there weren’t a lot of credible alternatives if “one side takes off taxes and the other side takes off user fees.”
“What is one of the old time favorites?” he quipped. “Pension smoothing?”