Democrats Ask Trump to Find $2 Trillion for Infrastructure Work

(Bloomberg) -- Democratic leaders said President Donald Trump agreed to aim for a $2 trillion infrastructure plan, while leaving open the pivotal question of how to pay for it.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer left a Tuesday meeting at the White House saying they will meet with Trump again in three weeks to talk about the revenue source for such an ambitious plan. White House Press Secretary Sarah Huckabee Sanders in a statement didn’t mention any funding goal but said the administration seeks to spend record levels on infrastructure.

“The good news here is we agreed on a big package and now it’s up to the president and the White House to tell us how they pay for it,” Schumer said. “It was repeated over and over again that unless he is willing to come up with the pay-fors for this large package, it will never get done, and he agreed.”

Infrastructure is the rare public policy issue that unites voters across the ideological spectrum and is certain to play into 2020 elections when Trump is seeking a second term. Yet agreeing on tax increases to finance more roads, bridges and other public works has been a chief stumbling block for decades.

Financing Differences

Democrats favor direct government investment, while Republicans generally prefer public seed money to leverage private capital. Schumer said Trump agreed that there “has to be a very large federal share” of investment, although he said Trump didn’t endorse the Democratic proposal for a plan that is 80 percent funded by federal dollars.

Schumer said the White House was supportive of including investments in broadband and to give preferences to American-made goods in construction.

“We have to invest in this country’s future and bring our infrastructure to a level better than it has ever been before,’’ Sanders said in a statement. “We will have another meeting in three weeks to discuss specific proposals and financing methods.’’

Trump allies earlier Tuesday downplayed what could be accomplished with Democratic lawmakers whose colleagues are investigating almost every aspect of the Trump administration, and in some cases calling for impeachment. Mick Mulvaney, the acting White House chief of staff, said at an event in California he wasn’t optimistic about getting an infrastructure plan done this year.

Low Priority

Trump promised in his 2016 campaign to direct unprecedented investment to infrastructure, which set him apart from most Republicans in Congress who are generally wary of expanded government spending. Although the GOP controlled both chambers of Congress for the first two years of Trump’s presidency, developing an infrastructure investment plan was not a priority for Republican leaders.

The GOP-led Congress did manage to cut taxes -- deeply for corporations, moderately for individuals -- which they said was aimed at stimulating the economy. The cuts also curtailed revenue, making it harder to increase spending on infrastructure without further adding to yearly budget deficits.

This tax overhaul is exactly where some Democrats, led by Schumer, would like to look for revenue. The Democratic leader from New York said Monday on the Senate floor he would prefer to roll back some of the tax cuts for the highest earners. Increasing the gas tax or a highway user fee have also been suggested as sources of revenue.

Senate Finance Chairman Ron Wyden, an Oregon Democrat, said he raised the issue of “tax fairness” at the White House meeting, telling Trump and other officials that middle class taxpayers shouldn’t pay significantly more for infrastructure after multinational corporations benefited from rate cuts in the 2017 tax law.

Wyden said Trump agreed that fairness in the tax code and economic growth can occur simultaneously, but administration officials didn’t react to his suggestion that companies should finance added infrastructure through higher taxes.

‘Common Denominator’

Republicans have roundly rejected raising taxes to pay for infrastructure. House Minority Leader Kevin McCarthy said before Tuesday’s meeting that he didn’t think the talks would “go very well,” since Democrats’ opening bid included undoing some of the GOP changes to the tax code.

“A common denominator, no matter what Democrats bring up, is a tax increase,” McCarthy told reporters Tuesday morning. “They’re walking into the meeting today saying you have to change the tax cuts.”

Mulvaney said he’s not interested in spending more than $1 trillion now for something that doesn’t get built for more than a decade, criticizing current environmental regulations that he said hold back nimble investment in public works. Speaking at the Milken Institute’s conference in Los Angeles, Mulvaney also said he’s more optimistic about a North American trade deal getting through Congress this year than a comprehensive infrastructure plan.

Democratic leaders said they also discussed trade with Trump in Tuesday’s White House meeting, as well as immigration and health care. Schumer said the demands from some House Democrats to begin impeachment proceedings and expand investigations of the Trump administration did not come up.

The White House statement from Sanders said both sides agreed to continue working on ways to lower prescription drug prices.

--With assistance from Erik Wasson, Mark Niquette, Jennifer Jacobs and Alyza Sebenius.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Anna Edgerton, Laurie Asséo

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