Republicans pitch $568bn plan for infrastructure

Republican leaders in the US Senate are countering President Joe Biden's plan for a major infrastructure bill with a smaller $568bn package that would mostly focus on roads and bridges, without raising taxes on corporations.

Republicans say their plan would be fully paid for, by imposing new user fees and repurposing funds from earlier Covid-19 relief bills. But the plan as drafted is unlikely to draw significant interest from Democratic leaders, who see Biden's competing $2 trillion infrastructure plan as their best chance to address climate change, revive manufacturing, support electric vehicles and achieve a more equitable tax code.

The plan from Senate Republicans would direct $299bn toward roads and bridges, $61bn on public transit, $44bn on airports, $20bn on rail and $17bn for ports and inland waterways. The proposal offers more than twice as much funding for roads and bridges as the White House plan, and also higher levels of funding for airports and ports.

But the Republican plan lacks hundreds of billions of dollars that Biden is requesting for electric vehicles, manufacturing, subsidized housing, new schools, electric transmission, renewable energy, research and development, and workforce retraining. Republicans say those programs should not be part of a bill meant to focus on infrastructure.

Republicans have not released a breakdown on how they will pay for their infrastructure plan, but they have already ruled out raising fuel taxes set at 18.4¢/USG for gasoline and 24.4¢/USG for diesel that have not changed since 1993. US senator Shelley Moore Capito (R-West Virginia) said some of the new user fees would target electric vehicles, hybrids and alternative fuel vehicles.

"That does not mean raising the gas tax, that means looking at user fees and users of our infrastructure that to this point have not paid, or paid very little," Capito told reporters today.

But the amount of revenue that could be raised from vehicles now exempt from fuel taxes is likely to be relatively small in the near-term. By 2030, electric, plug-in hybrid, hydrogen and propane passenger vehicles are projected to account for fewer than 2pc of vehicles on the road, up from less than 1pc today, according to the US Energy Information Administration.

Democratic lawmakers this week started holding hearings on their infrastructure plan, which they want to be paid for mainly by raising corporate tax rates to 28pc from 21pc. US senator Joe Manchin (D-West Virginia) has been adamantly opposed to increasing user fees that would fall on lower-income families and has raised concerns with other potential revenue sources like carbon tax.

"Putting a higher tax on something, that is not going to fix it," Manchin said earlier this week.

Even if Democrats largely reject the Republican infrastructure plan, it could kick-start talks on areas of agreement for infrastructure. Biden is continuing to push lawmakers to move forward on negotiations and drafting legislation, touting his package during a global summit focused on addressing climate change.

"I have proposed a huge investment in American infrastructure and American innovation to tap the economic opportunity that climate change presents our workers and our communities, especially those too often that have been left out and left behind," Biden said.

By Chris Knight