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As Clinton Releases Infrastructure Plan, Congress Wrestles With Its Own Bill

Clinton’s tax-reform plan might seem ideal, but Congress is stuck with a pay-for patchwork.

While Con­gress scrambles to wrangle to­geth­er a mish­mash of fund­ing meas­ures to back up a long-term trans­port­a­tion bill, Demo­crat­ic pres­id­en­tial front-run­ner Hil­lary Clin­ton says she can do even more.

Clin­ton’s cam­paign de­tailed a five-year, $275 bil­lion in­fra­struc­ture plan as the back­bone of her eco­nom­ic plat­form that would go on top of in­fra­struc­ture spend­ing au­thor­ized by Con­gress. The plan would spend $250 bil­lion in dir­ect pub­lic in­vest­ment, with an­oth­er $25 bil­lion to start an in­fra­struc­ture bank that would lever­age fund­ing for large in­fra­struc­ture pro­jects.

Her fund­ing plan? “Busi­ness tax re­form.”

With the gas tax dwind­ling and the High­way Trust Fund on the verge of go­ing dry, the idea of pair­ing tax re­form with trans­port­a­tion fund­ing has been an ap­peal­ing op­tion. And des­pite bi­par­tis­an sup­port­ers ran­ging from House Speak­er Paul Ry­an and pres­id­en­tial con­tender Rand Paul to Sen. Bar­bara Box­er and the White House, the stars have not yet aligned.

So while Clin­ton is able to dream up big ideas on the cam­paign trail, Con­gress is stuck with the harsh real­ity of the le­gis­lat­ive pro­cess. And that means jug­gling a mis­matched set of fund­ing sources that nobody seems con­tent with—and that likely won’t even cov­er the full length of the policy pro­pos­als mem­bers came up with.

The House and Sen­ate each passed sep­ar­ate six-year trans­port­a­tion bills with three years of fund­ing, provided by a pack­age that in­cluded meas­ures like sales from the coun­try’s pet­ro­leum re­serve and fees from cus­toms pro­cessing. The pack­age passed the Sen­ate and House by over­whelm­ing mar­gins, even as mem­bers on both sides be­moaned the fund­ing pack­age as be­ing full of gim­micks.

The House, however, tacked on an ad­di­tion­al pro­vi­sion that would li­quid­ate a Fed­er­al Re­serve sur­plus ac­count, rais­ing as much as $40 bil­lion more for the bill, enough to cov­er two more years, while wip­ing out an­oth­er pay-for that cut gov­ern­ment di­vidends to large banks.

That’s led to a dis­cus­sion about wheth­er the bill should be shortened to five years—as­sum­ing the fund­ing works out—or stay at the full six years to of­fer long-term cer­tainty. Either solu­tion is prefer­able to the Sen­ate-passed bill, which would have re­quired Con­gress to come back to the table after just three years to work out a new fund­ing meas­ure.

It re­mains to be seen what pay-fors can even stick in the bill. Des­pite passing the House with a hefty bi­par­tis­an mar­gin, the Fed­er­al Re­serve pro­vi­sion has be­come con­tro­ver­sial as it spends more time in the open. Fed Vice Chair­man Stan­ley Fisc­her said it set a “dan­ger­ous” pre­ced­ent, and former Fed Chair­man Ben Bernanke said it was noth­ing more than “sleight-of-hand.”

There are also linger­ing ques­tions about vari­ous safety pro­vi­sions and oth­er policy lan­guage that have held up talks.

Mem­bers from both cham­bers are close to re­con­cil­ing the two bills, with a con­fer­ence re­port ex­pec­ted to be re­leased Tues­day. That would leave just four days for both the House and Sen­ate to pass the bill be­fore a self-im­posed Fri­day dead­line, when high­way funds would run dry.

If the two cham­bers can’t get the fi­nal bill to Pres­id­ent Obama’s desk by then, they’d have to pass an­oth­er short-term ex­ten­sion to keep money flow­ing.

While there’s bi­par­tis­an sup­port for spend­ing on in­fra­struc­ture, the money ques­tion has dogged Con­gress for the bet­ter part of a dec­ade. The fed­er­al gas tax, which fuels the High­way Trust Fund, hasn’t been raised or in­dexed to in­fla­tion since 1993, and im­proved fuel ef­fi­ciency has hammered its re­ceipts. Even talk­ing about rais­ing the tax has been a non­starter, leav­ing mem­bers look­ing for whatever money they can find.

But a tax-re­form-for-in­fra­struc­ture bar­gain has stood as a way to solve two prob­lems at once. Ry­an, then chair­man of the Ways and Means Com­mit­tee, and Demo­crat­ic Sen. Chuck Schu­mer had been en­gaged in talks about up­dat­ing in­ter­na­tion­al tax rules for mul­tina­tion­al cor­por­a­tions to back an in­fra­struc­ture bill, but the plan couldn’t come to­geth­er in time to be at­tached to a policy bill.

The White House pitched a trans­port­a­tion pro­pos­al fun­ded by a man­dat­ory “trans­ition tax” for mul­tina­tion­al com­pan­ies in its fisc­al 2016 budget. Paul and Box­erteamed up on a bi­par­tis­an bill that would al­low com­pan­ies to vol­un­tar­ily re­turn over­seas profits at a re­duced rate to shore up the High­way Trust Fund. Sen. Bernie Sanders, Clin­ton’s rival for the Demo­crat­ic nom­in­a­tion, in­cluded taxes on mul­tina­tion­al cor­por­a­tions as part of his $1 tril­lion in­fra­struc­ture spend­ing plan.

Clin­ton’s in­fra­struc­ture pro­pos­al seems to fol­low in that path, al­though her cam­paign’s fact sheet did not con­tain any more de­tail on what her tax-re­form fund­ing plan would look like. Clin­ton has touted her plan as a “down pay­ment on our fu­ture” that would cre­ate good-pay­ing jobs while help­ing the na­tion’s GDP.

But it de­pends on Clin­ton break­ing through on the tax-for-in­fra­struc­ture bal­ance that’s es­caped Con­gress for years. And crit­ics are already pres­sur­ing her to back up the big talk.

“With Hil­lary Clin­ton’s spend­ing binge already at a tril­lion dol­lars and count­ing, it’s clear she wants to treat Amer­ic­ans’ tax dol­lars like every day is Black Fri­day with no plan to pay the bill,” Re­pub­lic­an Na­tion­al Com­mit­tee spokes­man Mi­chael Short said, ac­cord­ing to ABC News. “The real reas­on Hil­lary Clin­ton isn’t say­ing how she’ll pay for her tril­lion-dol­lar spend­ing in­crease is be­cause she knows it means rais­ing taxes on the middle class.”

(Image via Arina P Habich / Shutterstock.com )