Infrastructure Talks: Pathway to Pay for $2 Trillion Package Without Raising Taxes Emerges

Speaker of the House Nancy Pelosi of Calif., and Senate Minority Leader Sen. Chuck Schumer
AP Photo/Evan Vucci

President Donald Trump and Democrat leaders in Congress met early Tuesday to commence infrastructure negotiations and, by both sides’ accounts, the start to the talks between Trump and House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer actually went well, despite the harsh political atmosphere in Washington right now.

They both agreed on the need for a $2 trillion package to rebuild America’s infrastructure, and they agreed they need to find a way to pay for it. They also agreed that sometime over the next three weeks, President Trump will be the driving force in developing a plan to pay for the $2 trillion infrastructure plan and that he will present that idea to the Democrat leaders when he does develop it.

According to Politico Playbook, Pelosi called the meeting a “productive meeting” and said that Democrats are “very excited” about doing an infrastructure package that both the Democrat leader and Trump agreed would be “big and bold.” Schumer, per the Politico report, confirmed that the size of the package would be $2 trillion–something everyone agreed on. But the only “sticking point,” Politico reports, is figuring out what is known in Washington-speak as the “pay for”–or the method of raising enough cash to fund the massive program.

“Schumer said Trump needs to find a way to pay for this package,” Politico wrote. “The two sides will meet in three weeks, and they expect TRUMP to present ways to pay for the $2 trillion bill. Of course, that’s going to be the singular thing to watch over the next few weeks.”

A number of ideas, some with different levels of probability of success, to pay for a $2 trillion infrastructure plan have been in various degrees presented over the past couple years. A top Democrat, speaking on condition of anonymity, told Breitbart News that some Democrats would like to undo a big part of President Trump’s tax cuts bill to pay for this–something that is likely to be a complete nonstarter with Trump and congressional Republicans, who still control the Senate. Another idea, being pushed by the U.S. Chamber of Commerce, is to raise the gas tax–but Schumer says he is opposed to that, and many Republicans would also likely come out in opposition to a gas tax increase.

That opens up a third way, which gained significant traction last Congress, to pay for the $2 trillion infrastructure plan. A House GOP leadership aide pointed Breitbart News back to a bipartisan bill from Reps. Mike Kelly (R-PA) and William Lacy Clay (D-MO) introduced last Congress that would not raise taxes but would also be able to raise significant revenue by selling off government debt and then using the proceeds for infrastructure funding and debt reduction.

The bill, called the Generating American Income and Infrastructure Now (GAIIN) Act, has broad bipartisan support. After Kelly and Lacy Clay rolled it out, it garnered the support of top Congressional Black Caucus (CBC) members and House Freedom Caucus (HFC) members–putting together a broad bipartisan coalition. Cosponsors to the original GAINN Act last Congress–it has not yet been officially reintroduced in 2019 in this Congress, but sources close to congressional leaders tell Breitbart News to expect it very soon–are as wide-ranging as Reps. Sheila Jackson Lee (D-TX) and Frederica Wilson (D-FL) on the Democrat side and Reps. Ted Budd (R-NC), Warren Davidson (R-OH), and Alex Mooney (R-WV) on the GOP side.

Kelly and Lacy Clay–again, a top Republican and a top Democrat–appeared together in a television interview with Soledad O’Brien to sell the plan last year as well:

It also, as Kelly told Breitbart News in an interview last year, has the support of President Trump himself. Kelly said in a radio interview he briefed Trump on the plan and the president backed it and said he would sign it if it hits his desk.

“’You know what? Great idea, great idea. I can’t tell you how many times I’ve done that in my business life and you do get ahead’,” Kelly said Trump told him of the plan. “He said ‘get it to me, and I’ll sign it.’”

A House GOP leadership aide said efforts to reverse Trump’s tax cuts–and to do a gas tax hike–are nonstarters. The aide added that the GAIIN Act is the pathway forward to pay for the infrastructure deal because it already has broad bipartisan support and could raise the money necessary to fund the infrastructure deal and pay off some of the national debt in the process, as it splits money raised both ways evenly. It is “the only bipartisan proposal out there,” the GOP leadership aide added.

Grover Norquist, of Americans for Tax Reform (ATR), published an op-ed at the Washington Examiner on Tuesday warning Trump of the perils of Democrat-pushed tax hikes–and pushing the GAIIN Act as the solution to get around raising taxes.

Norquist wrote:

House Speaker Nancy Pelosi and the Democrats have a strategy to destroy the Trump legacy and defeat him in November 2020. It’s a trap that has worked once before. President George H.W. Bush’s administration had no shortage of accomplishments. He managed the collapse of the Soviet Union. He drove Iraq out of Kuwait without getting stuck occupying it for a generation. He enhanced a 7-year economic boom started by President Ronald Reagan. At one point, his approval rating hit 89%. And then, in November 1992, he lost re-election. He didn’t just lose — he was humiliated. He was defeated by the little-known governor of Arkansas and won a smaller percentage of the vote (38%) than Goldwater had in his historic defeat. How did this happen? It was simple. Democrats talked Bush into signing a tax hike. Democrats framed it as a necessary move to reduce the deficit. To sell it, they promised to cut spending by $2 for every $1 of tax increases. To no one’s surprise, taxes were raised. But to the public’s dismay, federal spending actually increased, and increased by more than previously planned. All of the tax hike went towards new spending programs, and the deficit increased.

Norquist continued by pointing to the GAIIN Act as the blueprint for the bigger plan to raise significant revenue for infrastructure without raising taxes–all while reducing the size and scope of the federal government. The GAIIN Act focuses just on the U.S. Department of Agriculture (USDA)–which is a sizable chunk of debt that would raise more than $150 billion–but Norquist argues taking this blueprint federal government-wide would raise well more than the $2 trillion necessary to fund the full infrastructure plan.

Norquist wrote:

Introduced by House Freedom Caucus and Congressional Black Caucus members, the Generating American Income and Infrastructure Now Act would authorize the Department of Agriculture to sell off distressed assets and use the proceeds to fund infrastructure investments in urban and rural communities living below the poverty line,” Norquist wrote. “Though the bill only involves loans in the Department of Agriculture, the agency has a whopping $155 billion in non-guaranteed debt on its books. Lawmakers can and should use the GAIIN Act as a blueprint to go agency-by-agency, selling off loans to fund infrastructure. For perspective, federal agencies currently hold more than $2 trillion in debt-and-lease assets that can be easily sold off. The federal government shouldn’t be in the money-lending business to begin with. Sitting on a pile of uncollected loan payments totaling trillions of dollars is strong evidence that politicians make poor moneylenders. Instead, the government should sell off these loans to private lenders and use the revenue to fund infrastructure. Doing so is a proposal that keeps Trump’s commitment to lowering taxes and reducing the size of government.

The GAIIN Act has its origins with a bipartisan group of lobbyists who founded the first-ever bipartisan minority-owned K Street firm United By Interest. As Breitbart News has reported before, they did not have a client–and still do not–paying them to push this idea, but are simply doing it to prove that their concept of outside-in, bottom-up coalition-building in passing major big-picture conceptual legislation like infrastructure bills–rather than the inside-out, top-down approach leaders of both parties have traditionally taken to legislating–can work. Sam Geduldig, a top GOP lobbyist, and Mike Williams, a top Democrat lobbyist, joined together with others to work on the idea, and then it came to fruition when Kelly introduced it last Congress and Lacy Clay signed on for the rollout.

If Trump goes this route of the GAIIN Act for his effort to fund infrastructure, it essentially presents a third way other than reversing his tax cuts or raising the gas tax or other taxes to pay for it. It would also be hard for Pelosi and Schumer and other Democrats to oppose it when so many other Democrats have endorsed it.

What’s more, going this route could permanently change the way Washington works–in that ideas like this, rather than ones drafted in a back room by leadership of whichever party happens to be in power at any given moment–can win out, and outsiders like the United By Interest team start winning while typical K Street insiders get left behind. It remains to be seen what happens next, but for now–as the Democrat leaders made clear leaving their meeting with Trump on Tuesday–the ball is in Trump’s court.


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