Deadline slips for highway deal

Key lawmakers insist that a later deadline for highway funding won’t sap any of their urgency as they seek to link an infrastructure deal with international tax reform.

The Transportation Department said this week that highway funding could last well into 2016, potentially giving Congress an extra half of a year to strike the long-term infrastructure deal that has long eluded Washington.

{mosads}But House Republicans, the driving force behind the efforts to use revenues from offshore corporate profits to pay for highway projects, say they don’t want the extra time.

Congress might frequently need a deadline to pass important legislation, those Republicans acknowledge. But lawmakers also have no interest in pushing a highway deadline deep into a presidential election year, and House Republicans say waiting that long would also allow the Highway Trust Fund to dip to dangerously low levels.

“The announcement on the Highway Trust Fund is, we think, misleading,” said Rep. Kevin Brady (Texas), a senior Republican on the tax-writing House Ways and Means Committee.

Brady also stressed this week that, if Congress doesn’t act, the spending on highway projects could start to slow as soon as December, an outcome he called “irresponsible.”

“That’s a red flag we ought to play real close attention to, because then you’re having impacts in states. So we think the time to act is now,” he said.

But even as they maintain that they want to strike a major deal in the next few months, House Republicans still face a number of obstacles in reaching an agreement with a skeptical Senate before the end of 2015.

Lawmakers currently have an Oct. 29 deadline for extending highway programs, and had been under the impression that the Highway Trust Fund could easily be replenished through mid-December.

If the House is unable to make progress on both its international tax plan and highway policy in the coming months, the chamber could be forced to accept a Senate highway bill passed this summer that House leaders have repeatedly said is riddled with deficiencies. The Senate bill authorizes six years worth of highway policy, but only includes funding for three years.

Already, the House Transportation Committee has had to put off its plans to consider a six-year highway bill, and have not announced a timeline for when it will take up a measure — raising the chances that the House will be unable to pass its own long-term bill and then hash out a compromise with the Senate by the October deadline.

Top House tax writers are also struggling to piece together a complicated package revamping how multinational corporations are taxed, including giving new incentives to companies for innovation and tapping current offshore corporate profits to pay for road improvements.

That’s all happening as lawmakers face a packed September, with more votes on President Obama’s Iran deal forthcoming, an upcoming visit from Pope Francis and a potential brawl over government funding ahead of a Sept. 30 deadline. The battle over government funding, in particular, could spill into October, when lawmakers face their highway deadline.

“The goal has always been: complete this by the end of the year. If we can get that accomplished before this first extension expires, good,” said Rep. Dave Reichert (R-Wash.), the chairman of a Ways and Means subcommittee that oversees taxes.

House Ways and Means Chairman Paul Ryan (R-Wis.), Senate Finance Chairman Orrin Hatch (R-Utah) and Sen. Charles Schumer (N.Y.), perhaps the key Democratic negotiator over a combined highway-tax deal, all huddled this week, in a sign that all sides want to wrap up some sort of agreement sooner rather than later.

Hatch and Senate Majority Leader Mitch McConnell (R-Ky.) have said they’re deeply skeptical about the idea of using tax reform to pay for highway projects, with McConnell in particular questioning whether it’s worth the time to negotiate.

But Hatch insisted this week that he would try to keep an open mind about what his House colleagues are proposing, even if he’s not optimistic they’ll craft a plan to his liking. “I’d like to have them accept the Senate position,” Hatch said

“I’d rather get it done,” Hatch added. “If the House could agree, we’d have six years. We’d certainly have three.”

One of the central planks in a potential international tax reform deal is a so-called innovation box, which would give companies a lower rate on income stemming from copyrights, patents and other intellectual property.

Key Democrats such as Schumer and Rep. Richard Neal (Mass.) back that sort of proposal, with Neal joining Rep. Charles Boustany (R-La.) in releasing a draft proposal shortly before the August recess.

Boustany reportedly said this week that the current plan would cost around $280 billion over a decade, which would amount to just some of the costs that would likely need to be offset in any overhaul of international tax rules.

Ryan and his allies are also seeking to shield future offshore earnings from U.S. taxation, in addition to taxing current profits for highways. Such a plan would also require strengthening rules to ensure that multinational corporations don’t game the system or funnel profits to tax havens.

Boustany also told reporters he was just starting to sift through the feedback about his original innovation box draft. “It’s not finalized yet,” he said. “It’s just a draft.”

But both Boustany and Brady acknowledged that Ways and Means faces a tight deadline in trying to pull a package together by the end of next month. And unlike Reichert, Brady insisted that the committee very much wanted to get a longer-term solution in place by Halloween.

“I think unfortunately the highway bill remains very much unresolved,” said Rep. Sandy Levin (Mich.), the top Democrat at Ways and Means. “Very much unresolved.”