Executives from Wall Street, major corporations and private equity firms are engaging with the White House and officials in the Transportation Department about how to pay for President Joe Biden’s eventual infrastructure bill, according to people briefed on the matter.
Tax hikes, private-public partnerships and fee increases for bridge and highway tolls are among the ideas being proposed by business leaders to the Biden administration.
The package’s cost is expected to be in the trillions of dollars, according to previous Biden proposals. It would come on the heels of the $1.9 trillion Covid relief and stimulus package, which has triggered concerns in Washington over how the government might pay for a massive infrastructure initiative.
Biden campaigned for president on a clean energy infrastructure plan that his team said would cost $2 trillion over four years. It included a push to make commuter trains, buses and passenger vehicles run on electricity or clean fuel. At the time, Biden’s campaign did not lay out ways to pay for it.
The White House has yet to commit to a plan to fund an infrastructure overhaul, according to people who described these conversations. A White House spokesman declined to comment. A spokesperson for the Department of Transportation did not return a request for comment.
Democrats and Republicans have already drawn battle lines over how to proceed with a bill. One of the debates in Congress is whether the legislation should go through a bipartisan legislative process or the more partisan reconciliation, which requires only a simple majority in the Senate.
Henry Cisneros, a co-founder of a private infrastructure investment firm, told CNBC on Tuesday that he has been having broad conversations with Department of Transportation policy advisors on infrastructure.
Cisneros, who was also the former head of the Department of Housing and Urban Development under Bill Clinton, has recently co-authored papers that describe the importance of including the input of local governments in large scale infrastructure projects.
Cisneros says he has talked to the DOT about these research papers and he told CNBC that the agency appears to be waiting for the White House to determine the next steps, including finalizing pay for methods.
Biden in recent days has publicly reaffirmed his campaign pledge to raise taxes on anyone making over $400,000 and explained during the campaign that corporations would also see a tax hike. Republicans have already started pushing back on any tax increases.
Former Sen. Blanche Lincoln, R-Ark, currently leads the RATE Coalition that advocates against raising the corporate tax rate. In a statement provided to CNBC she said that raising corporate taxes will hurt American businesses looking to recover from the coronavirus pandemic. Biden and Democrats in Congress recently passed a $1.9 trillion coronavirus relief bill.
“American employers will struggle to build back better if they pay a higher corporate rate than their competitors in China,” the former lawmaker said. Lincoln added that “Congress should focus on closing loopholes that enable profitable companies to pay little or nothing in tax.”
She recently sent a letter to the White House with a similar message.
One proposal financial executives are pushing is some form of a large scale private public partnership, these people explained. That could allow private equity firms to act as the vehicles for financing some of the larger and more expensive projects.
In some cases, private equity giants such as Blackstone, Carlyle Group, and KKR, have been helping finance state based projects for well over a decade.
Some of the people who described these conversations declined to be named in order to speak freely.
Those financiers, who haven’t spoken to the White House, are strategizing about the best time to approach the administration on how private capital can play a role in paying for the infrastructure plan, these people explained.
Other businesses and corporate friendly organizations, such as the Chamber of Commerce, have pitched various means of paying for the infrastructure plan that go beyond private public partnerships, such as raising the gas tax.
Records show that companies like General Motors and TC Energy have hired Jeff Ricchetti, the brother of Joe Biden’s counselor Steve Ricchetti, to lobby on infrastructure, among other issues.
“In regards to infrastructure, we look forward to working with the Administration and Congress on infrastructure and will advocate for investments in electric vehicle charging infrastructure to support an all-electric future,” Jeannine Ginivan, a GM spokeswoman, told CNBC.
“We evaluate our consultants on an annual basis to ensure we are well positioned to advocate for policies that support our customers, dealers and employees, help strengthen our manufacturing presence in the United States and advance our vision of a world with zero crashes, zero emissions and zero congestion,” Ginivan added in describing Ricchetti’s role lobbying for the company.
“Jeff Ricchetti is part of a diverse team of advisors who provide strategic advice and counsel to our company on a wide range of energy issues,” Marc Palazzo, vice president of U.S. stakeholder relations for TC Energy, told CNBC.
Another business executive with close ties to Biden says he has tried to encourage the administration to push ahead with a $4 trillion infrastructure spending package that would span 10 years. This person noted that within their conversations, the Biden White House has floated having their final proposal on Capitol Hill by Memorial Day.
Environment and Public Works Committee Chairman Tom Carper, D-Del., has said he wants to have his committee approve new highway legislation by Memorial Day.
Ed Mortimer, the Chamber of Commerce’s vice president of transportation and infrastructure, told CNBC in an interview on Wednesday that they have had regular communications with Biden White House officials and the DOT on infrastructure, including discussions on payment methods.
The Chamber has proposed temporarily raising the gas tax as one way to pay for the plan. Mortimer pointed out that the gas tax hasn’t been raised since 1993. DOT Secretary Pete Buttigieg has publicly pushed back on raising the gas tax as a way to pay for improvements to the nation’s infrastructure.
“They’ve listened. They’ve said they’re open but we don’t have a clear path yet on actually what it’s going to be,” Mortimer said. “In our view it’s still a work in progress. Based on our general conversations with them, we expect them to lay out some principles in mid-April when hopefully [Biden] can do a State of the Union address,” he added.
The Chamber, which was also a vocal advocate for infrastructure reform during the Trump administration, is one of the largest business advocacy groups. It’s currently in the midst of a campaign encouraging Congress to pass a comprehensive infrastructure bill by July 4.
The group recently started running TV ads in the key state of Ohio, calling for infrastructure reform.