But Senate Republicans are not on board with the plan.
Senate Majority Leader Mitch McConnell (R-Ky.) is working with his committee chairmen to cobble together funding to extend the program beyond the 2016 election and has expressed skepticism that a multi-year reauthorization can be achieved with President Obama in the White House.
House Ways and Means Chairman Paul Ryan (R-Wis.) backed the five-month extension in hopes of using the extra time to finalize a plan to pay for a long-term reauthorization of the fund through a pot of money generated by changing the tax code for multinational corporations. While McConnell does not favor this approach, the bipartisan House vote could increase pressure on Senate Republicans to now embrace a short-term extension of the program so negotiations over a years long extension can be given a chance to work.
McConnell has said he would prefer to pass an extension into early 2016 that would be funded through a combination of spending cuts and other unidentified funding sources, but it will be difficult to cobble together such a proposal that can pass both the House and the Senate.
The tax reform proposal backed by Ryan currently lacks critical details for how the plan would be implemented. Earlier this month, Sens. Charles E. Schumer (D-N.Y.) and Rob Portman (R-Ohio) released a framework for shifting the international portion of the corporate tax code to a system where U.S. companies would be taxed on all income earned abroad. Those earnings would be taxed at a rate lower than the current 35 percent top rate.
Money for highway funding would come from a one-time tax on all of the cash and assets companies are already holding overseas, a process known as “deemed repatriation.”
The broad outlines of the plan are in place but critical details, like what rates companies will pay, have not yet been determined. The process of setting the rates and determining which, if any, exemptions will be granted is the most politically difficult part of striking a final deal.
More revenue is needed for the highway program in future years because of a shortfall between the revenue raised by the federal gas tax and the funding levels set by Congress. The Congressional Budget Office estimates that the trust fund will likely fall $169 billion short over the next 10 years.
The deficit has been growing in recent years, making it increasingly difficult to find enough funds to patch the program. One solution would be for Congress to raise the gas tax but both McConnell and the White House have dismissed that option in recent weeks.
“Let me just say, we’re not going to raise the gas tax,” McConnell said last week.