The Senate passed a two-month extension of highway funding by voice vote on Saturday, staving off an abrupt halt in infrastructure projects and pushing back a likely protracted debate over how to finance road construction in the long-term.
The vote sends the stopgap highway bill to President Obama, who’s expected to sign it before the May 31 deadline.
But there was also bipartisan agreement that Saturday’s action was nothing more than a punt that barely avoided a shutdown of highway projects during the busy summer months, and that the two parties need to find a way to fund the sort of long-term highway bill that has eluded Congress for years.
“Senate Democrats want to get on a with a long-term solution, because we understand that you cannot have big league economic growth with little league infrastructure,” Sen. Ron Wyden (Ore.), the top Democrat on the Finance Committee, told reporters on Friday.
The Senate vote on highways was also one of the last acts in a hectic week, in which the chamber struggled to find compromises on both President Obama’s trade agenda and surveillance programs.
The House and the Senate agreed to back a two-month extension of highway policy after top Republicans like House Ways and Means Chairman Paul Ryan and Senate Finance Chairman Orrin Hatch (R-Utah) fell short in their efforts to find the $11 billion or so needed to push the highway deadline back until the end of 2015.
Hatch blamed the failure to reach a deal squarely on Democrats.
“Unfortunately [Democratic] cooperation didn’t last,” he said. “In fact it never really began.
By passing the simple two-month deal, lawmakers didn’t have to come up with any new cash for the Highway Trust Fund. The Transportation Department has said that, as long as highway policy was extended, the trust fund had enough money to last until the middle of this summer.
But while infrastructure might have been the least contentious of the three issues this week, leaders in both parties acknowledge that finding the roughly $15 billion a year necessary for as much as a six-year highway bill will be far from easy, and that there are plenty of divisions among lawmakers about how to achieve that goal.
Sen. Pat Roberts (R-Kan.) said Friday that he would love to “give some people some legitimate expectations, predictability.”
“But I’m just not sure that we can get that done,” Roberts said.
Republicans are expected to push for yet another highway patch before the July deadline, seeking to fund highway programs through the end of the year in what would make roughly two dozen short-term extensions over the last 12 years.
But even that narrow agreement could be difficult to achieve, with Democrats vowing that the new two-month patch should be the absolute last short-term extension.
Plus, Senate supporters of the Export-Import Bank insist Majority Leader Mitch McConnell (R-Ky.) has assured them the bank’s reauthorization can be attached to a highway extension this summer. The fate of the export bank has split Republicans, and attaching a reauthorization to the highway bill could especially complicate matters in the House.
“If it ends up being in the mix of a transportation funding bill – yeah, it makes it more complicated. For sure,” Sen. John Thune (S.D.), the No. 3 Republican in the Senate, said about the Ex-Im Bank.
Not surprisingly, the forecast for a longer-term is even cloudier. The Senate Environment and Public Works Committee is expected to mark up a six-year highway policy bill in late June.
But to pay for it, Republicans say there’s no chance that an increase of the gas tax – the major cog in the Highway Trust Fund – can make it through Congress. The gas tax covers only about $34 billion of the $50 billion the federal government spends each year on roads.
And while some GOP leaders have floated the idea of pairing tax reform and a highway bill, Republican tax writers in both chambers are far from sure that sort of plan is feasible.
“We’re not even near doing tax reform at this point,” Hatch told reporters this week.
Republicans and Democrats have found some overlap on how to deal with the roughly $2 trillion worth of profits that multinational corporations have parked offshore, with both wanting to find a way to lower the taxes on those earnings so companies will bring the money back to the U.S.
The White House released a plan this year that would tax all that offshore income at a 14 percent rate, and use the revenue to replenish the highway fund.
President Obama and congressional Republicans have also discussed how to revamp the tax system for businesses. But it’s an open question whether there’s enough revenue from the offshore profits to both fund highway projects and slash the corporate tax rate, as both Obama and Senate Republicans want to do.
The president’s plan for roads, Senate Majority Whip John Cornyn (R-Texas) said this week, “is a non-starter for us.”
That’s on top of the other obstacles facing tax reform, including the small business lobby’s push to block any tax reform deal that doesn’t cut tax rates for individuals. Some lawmakers have also pushed for a simple corporate tax holiday to help fund roads, but tax writers say they won’t go for that.
“There’s been a lot of loose talk about repatriation,” said Rep. Charles Boustany (La.), a senior Republican on the House Ways and Means Committee.
Before those broader talks heat up, lawmakers will try to find another highway extension to get the trust fund through December. But recent discussions over a seven-month extension hit the skids after Republicans sought to use savings from mandatory spending to help cover the costs, something Democrats wouldn’t support.
Democrats also say that Republicans need to make highways a larger priority, and are warning against any further short-term extensions.
“I’m serving notice here,” Sen. Dick Durbin (D-Ill.) said Friday. “This 60-day extension will go through, I understand that. But from this point forward it’s not going to be automatic anymore. …It’s time for the Republican speaker and the Republican majority leader to lead.”