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Senate Republicans to Mull Debt Limit Approach: Stimulus Update

Bloomberg News
·6-min read

(Bloomberg) -- Senate Republicans are set to debate whether to push for spending cuts to balance any increase in the federal debt ceiling later this year. A senior Republican senator said separately that fees for airports and other infrastructure, along with levies for highways, could be used to fund a bipartisan investment package, amid GOP opposition to the corporate tax hikes proposed by President Joe Biden.

The White House said Biden will meet with a bipartisan group of lawmakers Monday as outreach continues on his $2.25 trillion infrastructure-and-tax plan. That would Biden’s second straight Monday session with bipartisan legislators. Moderate Democratic Senator Joe Manchin, whose support would be essential in the event of any Democrat-only bill, has demanded the administration pursue Republican support.

House Speaker Nancy Pelosi has targeted passage of Biden’s plan in her chamber by July 4. Biden is expected to unveil another, social program-focused initiative in coming weeks. The president will deliver his first address to a joint session of Congress on April 28, right before his 100th day in office, in which he’s likely to again tout his push for a ramp up in long-term federal spending.

Senate GOP to Debate Debt Ceiling Approach Next Week (4:09 p.m.)

Republican Senator Rick Scott of Florida plans to force a debate at a Senate GOP conference meeting next Wednesday on how to approach raising the nation’s debt ceiling, an issue looming later this year.

Scott plans to offer an amendment to GOP rules that would require spending cuts equal to the amount of any debt-ceiling increase. While the rules aren’t strictly binding on Republican members, adopting such a measure could complicate future efforts to raise the debt limit.

“Established Republican Conference rules clearly protect Medicare, Medicaid, Social Security and other vital benefits from funding cuts. Given these protections, which Senator Scott strongly supports, he is offering an amendment to ensure that the debt ceiling is not suspended and may not be increased unless it is accompanied by equal or greater cuts in federal spending,” Scott spokesperson McKinley Lewis said.

The U.S. debt ceiling was suspended for two years in July 2019, after Congress and the Trump administration reached agreement on budget caps over that period. The Treasury Department is expected to need to begin deploying extraordinary measures this fall to prevent a breach of the debt ceiling unless Congress raises it before that suspension expires.

The debt-ceiling issue has proved politically challenging in the past, with impacts on financial markets amid the drama. Democrats will be able to use budget-reconciliation legislation, which would let them bypass the GOP in the Senate, so long as they maintain the slim control they now have of the chamber.

Federal debt has surged since 2019 thanks to pandemic-related spending, and will continue to climb if Biden’s proposed longer-term economic programs are enacted.

The Wednesday meeting will also feature a debate within the GOP on resuming so-called earmarks for spending bills. House Republicans voted in favor of letting lawmakers request dedicated-spending projects last month, after both parties had banned the practice in 2011.

Senators Ted Cruz of Texas and Mike Lee of Utah are planning to offer amendments to limit or ban them. Proponents of allowing lawmakers to direct spending say that even if the rules are strengthened against joining in this year’s earmarking, individual senators are not bound by them and could still request earmarks. -- Erik Wasson

Senior Republican Floats User Fees for Infrastructure Plan (1:05 p.m.)

Senator Roy Blunt of Missouri, a senior appropriator and member of Minority Leader Mitch McConnell’s leadership team, said an infrastructure package of about $600 billion to $700 billion “could be acceptable” to Republicans in a bipartisan measure -- so long as it doesn’t stray from traditional items like roads and bridges.

Blunt said “there’s an easy path” to a deal if Biden and Senate Democrats set aside their drive to include far more extensive goals embraced only in their party. And he said during a Washington Post Live event that there are ways to agree on paying for a plan that is about one-third what Biden wants.

Blunt said he’s talking to Senate Democrats and the administration about his recommendation that an infrastructure package be funded with a combination of ideas that include bolstering the Highway Trust Fund, which is now based on a gasoline tax, and levying higher fees related to airports, ports and railroads. He said public-private partnerships also could provide an added source of financing for projects.

Blunt said he doesn’t think that a single GOP senators will back Biden’s plan, given its reliance on increases in corporate taxes. -- Laura Litvan

Biden to Meet With Bipartisan Lawmaker Group on Monday (11:17 a.m.)

President Joe Biden will hold a meeting with a bipartisan group of lawmakers as he continues to sell his $2.25 trillion infrastructure-led spending program funding with corporate-tax hikes.

White House Press Secretary Jen Psaki announced the plans at a briefing Friday, without specifying which members of Congress will be in the meeting. The group will discuss “historic investments in the American jobs plan including in highways drinking water systems broadband and the care economy,” she said.

Talk about a potential bipartisan agreement on a scaled-down version of Biden’s so-called American Jobs Plan intensified this week. Democratic Senator Chris Coons of Delaware, an ally of the president, said Thursday he was speaking with GOP counterparts about breaking up the Biden package into two bills, and passing a bipartisan one first.

Coons said, “That could end up being an $800 billion to $1 trillion bipartisan bill.”

Even so, Republicans haven’t presented a specific counter-proposal, and comments from senators suggested differing views on whether one will be forthcoming. GOP members have also refrained from suggesting how a smaller spending plan could be paid for, while emphasizing that it should be funded.

Shelley Moore Capito of West Virginia, the top Republican on the Senate Environment and Public Works Committee, said Thursday the GOP is working on a “conceptual” GOP bill that includes funding measures, which is aimed to be released as a paper. She herself has talked about a $600 billion to $800 billion bill.

But moderate Republican Senator Lisa Murkowski of Alaska told reporters Thursday that a GOP alternative would simply provoke the Democrats into going solo and that bipartisan talks are preferable.

“If you put up a proposal like that, I can pretty much tell you what the outcome is going to be,” Murkowski said. She said the issues on a bipartisan package are scope of the program and how to fund it, calling Biden’s corporate tax hikes “not a very imaginative approach” and likely to prove unsuccessful.

Psaki said the White House is awaiting a GOP counterproposal. “We’re on the receiving end,” she said Friday. “We look forward to considering any good faith proposal that comes our way.” -- Jennifer Jacobs, Erik Wasson

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