White House rules out gas tax hike as Republicans craft alternatives to Biden’s $2.3T plan

President Biden is quickly running out of ways to pay for his $2.3 trillion infrastructure plan as the White House cracks open the door to allowing another deficit-financed spending package.

After bipartisan pushback on Mr. Biden’s proposed 28% corporate tax rate, the White House ruled out a gas tax increase despite some Republicans signaling that they could support “user fee” taxes to pay for a smaller package focused on traditional infrastructure projects such as roads and bridges.

The White House says Mr. Biden has only a few “red lines” at the moment: not passing anything, and increasing taxes on individuals and households earning less than $400,000 per year.

“His starting place is that we should pay for it,” press secretary Jen Psaki said. “But we’re at the beginning of the discussions here, and ultimately his only red line is investing in our infrastructure, making sure we are putting Americans back to work over the long term.”

Mr. Biden mentioned the gas tax at a meeting with lawmakers this week only to dismiss it as a unrealistic way to pay for his proposals.

Several Senate Republicans who previously met with Mr. Biden on coronavirus relief said Wednesday that they could support a more narrowly tailored package in the neighborhood of $600 billion to $800 billion.

Sen. Mitt Romney, Utah Republican, said a group of 10 Democrats and 10 Republicans are talking about a path forward.

“Broadband will be part of that, water, sewer, as well as roads, airports and so forth,” said Mr. Romney, who also backs “user fee” taxes as a funding mechanism.

“If it’s highways, it ought to be gas if it’s a gasoline-powered vehicle; if it’s [an] electric vehicle, some kind of mileage associated with that electric vehicle that would be similar to or the same as the gasoline tax,” he said.

Sen. Lisa Murkowski, Alaska Republican, said that neither the White House nor Republicans on Capitol Hill should be drawing lines in the sand this early in the proceedings.

“How about if we put everything on the table?” she said. 

“Can we talk, please, Mr. President, about the gas tax?” she added, despite representing a state heavily dependent on oil and gas drilling.

Senate Budget Committee Chairman Bernard Sanders of Vermont swiftly dismissed the emerging GOP proposal.

“That is nowhere near what we need,” said Mr. Sanders, a socialist who caucuses with Senate Democrats. “The bottom line is we have major crises and we have to deal with them.”

Conservatives rallied against Mr. Biden’s proposal, pointing out that most of it is not earmarked for traditional infrastructure projects like roads, bridges and railroads.

The package includes $620 billion for transportation infrastructure, $650 billion for universal broadband, clean water, upgrades to the electric grid and affordable housing, $400 billion for caregiving for older adults and people with disabilities, and $580 billion for research and development, manufacturing and training.

Tim Phillips, the president of Americans for Prosperity, a conservative advocacy group, said Mr. Biden’s plan is “beyond redemption.”

“It’s just deeply disappointing to see an administration that came in promising at least a certain level of trying to reach across the aisle to find common ground to take this hard-left extreme partisan approach,” Mr. Phillips said in an interview.

Republicans and some Democrats also say they can’t stomach the $2.5 trillion in corporate tax increases Mr. Biden wants to approve to pay for the new spending.

This week, 17 House Democrats from New York demanded that Mr. Biden repeal a cap on the deductibility of state and local taxes as part of his plans, which would make the package even more expensive.

“We’re certainly happy to hear more from them on the impact and why they think this is so important to their states and communities,” Ms. Psaki said. “We’re also interested in proposals on how to pay for a package.”

The movement on infrastructure comes after the Treasury Department reported this week that the federal government ran a record $1.7 trillion deficit for the first six months of the budget year that ends Sept. 30.

Revenues for March increased 13% compared to a year ago but spending nearly tripled, sending last month’s deficit to $660 billion.

Congress passed Mr. Biden’s $1.9 trillion relief package last month, rushing direct payments and other benefits to millions of Americans amid the sea of red ink.