McConnell goes big on roads bill

Majority Leader Mitch McConnell is steering the Senate toward a multi-year highway bill that could take the funding issue off the table through the 2016 elections.

The bill could be released as early as Tuesday, though the Kentucky Republican is keeping the details close to his chest as conservative groups watch for anything that resembles a tax hike.

{mosads}McConnell has ruled out raising the gas tax and opposes paying for the bill by devising a new tax regime for overseas profits, limiting his options.

But the GOP leader is taking a hands-on approach in negotiations with Sen. Barbara Boxer (D-Calif.), and on Monday expressed confidence that a deal was imminent.

“Sen. Boxer and I have been in negotiations all weekend, and I spoke with her yesterday, and we’re hoping to be able to announce tomorrow a major bipartisan multi-year highway bill,” McConnell said in Shepherdsville, Ky.

McConnell is pursuing a multi-year bill shorter than the six-year extension favored by Senate Democrats and House Ways and Means Committee Chairman Paul Ryan (R-Wis.). Doing so could head off an intraparty fight over how to use revenues from tax reform.

“McConnell has been driving the train on this. He’s really the prime mover,” said a Republican aide familiar with the talks.

McConnell shared a list of possible offsets for the highway bill with the Senate Republican Conference at a meeting last week in a bid to develop consensus before unveiling the plan publicly.

“The thing to avoid is to raise taxes to pay for the overspending driven by Davis-Bacon,” said Grover Norquist, president of Americans for Tax Reform, referring to the federal law that requires contractors on federal highway projects be paid the prevailing local wage rate.

An initial list of offsets circulated among lawmakers and lobbyists included a proposal to index customs fees to inflation, which one transportation expert said could be described as a tax increase.

Another option proposed would lower the dividend that the Federal Reserve pays to big banks to park their funds at the bank.

Don Stewart, McConnell’s spokesman, on Monday said that “there are hundreds of options under consideration” for paying for the bill and cautioned that no final decisions had been made.

The Senate will vote Tuesday to invoke cloture on the legislative vehicle that will be used to move a multi-year highway bill. One Senate GOP aide said the plan would likely span three years.

Democrats might block it, however, depending on the details.

“We have to wait to see what the actual bill looks like,” said a Senate Democratic aide. “There isn’t a deal yet — discussions are ongoing but there are still significant issues to be resolved.”

Senate Democratic leaders also say they would find it very hard to support another short-term extension of the Highway Trust Fund.

For McConnell, moving a multi-year bill now, two weeks before the Highway Trust Fund is set to expire at the end of July, serves several purposes heading into a difficult election cycle for his majority.

First, it would bolster McConnell’s claim that Senate Republicans know how to govern. 

If his bill were to pass, it would be the first time since George W. Bush’s administration that Congress enacted a highway bill spanning more than two years. Lawmakers have passed 34 short-term funding extensions in the past six years.

Passage of a multi-year bill could also help vulnerable Senate Republicans in swing states such as Ohio, Illinois, Pennsylvania, New Hampshire and Wisconsin. Moderate and independent voters in those battlegrounds want the gridlock in Washington to end, and passing the first long-term highway bill in years would be a major step.

GOP aides note that McConnell is working closely with Boxer, the senior Democrat on the Environment and Public Works Committee, who is one of the most liberal members of the Senate. On Monday, he referred to the emerging highway bill as the “McConnell-Boxer” plan.

He is also working with Senate Environment and Public Works Committee Chairman James Inhofe (R-Okla.), who has jurisdiction over highway programs, and Senate Finance Committee Chairman Orrin Hatch (R-Utah), who has jurisdiction over revenue raisers.

The Banking Committee, which has oversight of transit, and the Commerce Committee, which is in charge of safety, also have a hand in crafting the legislation.

Moving a longer bill could thwart the attempt by Ryan and House Republicans to pay for a six-year transportation bill by taxing corporate profits stashed overseas.

Ryan is pushing for a five-month highway patch that would give lawmakers more time to negotiate a six-year deal. The short-term patch passed the House last week with more than 300 votes.

But McConnell wants the revenues expected from repatriated profits to serve as a down payment for broader tax reform, rather than going toward highway projects. Corporations have an estimated $2.1 trillion in profits stored abroad.  

The Senate leader ruled out the possibility of enacting comprehensive tax reform this Congress when he told the Morning Consult last month: “We’re certainly not going to be able to be doing big, comprehensive tax reform with this president. The president is not interested in revenue neutrality, and he’s not interested in treating all taxpayers the same, so I don’t think we’ll get there on comprehensive.”

Ryan, however, wants to reform the corporate tax code before the next president takes office in 2017 to stop U.S. companies from fleeing abroad in search of more favorable tax treatment.

“The reason we think it’s important to go now is we have a real problem with companies leaving this country because of inversions and takeovers,” said a House GOP aide.

Companies can avoid U.S. taxes by reincorporating in a foreign country or by merging with another company based overseas.

Ryan says it might make sense to use a tax on repatriated overseas profits to pay for a six-year highway bill, rather than for tax reform, because the revenue would amount to a one-time windfall. Changes to the law that produce revenue every year would be a better fit for a comprehensive tax reform plan that would change rates far into the future.

But Norquist, the right’s watchdog against any and all tax increases, argues the repatriation of corporate overseas profits must be voluntary, not mandatory, to keep kosher with his group’s anti-tax pledge.

“We’re trying to avoid a tax increase for highways, so to deem repatriation is to say your money is sitting over there, present law doesn’t allow us to touch it, we’re going to go grab it. That’s a tax increase,” Norquist said.

Bernie Becker contributed.