This story has been updated
Senate Republicans have floated a package of options to fund a multi-year extension of the Highway Trust Fund that includes a controversial change to federal employee retirement plans, according to a list obtained by The Washington Post.
The total package of spending cuts and program changes would raise about $80 billion, enough to pay for between three to four years of federal funding for road, bridge and transit projects while fulfilling Senate Majority Leader Mitch McConnell’s promise to introduce a long-term highway bill this month. The retirement proposal would raise more than $30 billion of that total by cutting the rate of return on a popular retirement investment for federal employees.
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The list of financing options is extremely tentative and negotiators are expected to continue working through the weekend to reach a deal.
“That menu… it has the support of neither the Democratic or Republican caucuses at this point,” Sen. Charles E. Schumer (D-N.Y.) told reporters.
McConnell (R-Ky.) on Thursday announced that he expects the Senate will vote on a highway bill next week.
“A bipartisan group of senators are working out the final language,” he said on the Senate floor.
Most lawmakers say they would prefer a long-term highway bill, but if negotiators cannot reach a deal on the funding measures soon then a short-term patch, such as the five-month extension passed by the House on Wednesday, will likely be the only option to prevent highway funding authority from expiring on July 31.
Lawmakers on Thursday downplayed the possibility that the retirement program would ultimately be targeted for savings, but without it negotiators will have a big funding hole to fill.
“It’s not gonna happen,” Sen. James M. Inhofe (R-Okla.) said when asked about changes to the federal employee retirement plan.
“Anybody who knows anything about where these negotiations are knows that this isn’t happening,” said Sen. Barbara Boxer (D-Calif.).
The proposed change was originally included in the fiscal 2016 budget blueprint approved by the House earlier this year and it makes up the largest single item in the list of Highway Trust Fund financing options being considered.
Under the proposal, the popular G-Fund option in the federal Thrift Savings Program would be changed in a way that Democrats and union officials argue would drastically cut returns for federal employees saving for retirement.
The interest rate on the G-Fund is currently based on a four-year average, making it a relatively safe fund with high returns. The proposal would change the rate to a three-month average, which would raise an estimated $32 billion over 10-years for the government.
Other less controversial items being considered for the highway financing bill include raising approximately $5 billion from tax compliance measures and an increase in Transportation Security Administration fees, which would raise a just over $3 billion.
The financing options also include $7 billion from the sale of oil from the strategic petroleum reserve. The House passed legislation last week that would use a similar proposal to pay for medical research. That bill, known as 21st Century Cures, passed with strong bipartisan support and taking away its funding source could kill any hope of reaching an agreement on the legislation in the Senate.
Other payment options on the list are:
- Raising about $4 billion by phasing out the Home Affordable Modification Program (HAMP), which was established by the Obama administration in 2009 to help eligible home owners refinance mortgages by using funds from the 2008 bank bailout law;
- Generating $1 billion from selling federally-owned airwaves in what is known as a spectrum auction; and
- Collecting $17 billion by reducing dividend payments the Federal Reserve makes to member banks from 6 percent to 1.5 percent.
The House plan that passed earlier this week would fund the highway program through Dec. 18 with $8 billion in revenue from tax compliance and related changes. House Ways and Means Committee Chairman Paul Ryan (R-Wisc.) wants to use this time to negotiate a narrow reform of the international tax code based on a proposal written by Schumer and Sen. Rob Portman (R-Ohio) and then use the revenue it generates for a long-term reauthorization of highway funding.
McConnell has been skeptical that Schumer, Portman and Ryan can complete work on their bill this Congress and has opted instead to push for a bill that would ensure the highway funding issue does not come up again before the 2016 election.
The White House backs the short-term extension and the tax reform plan. Schumer said he thinks Senate Democrats could back either the House plan or a longer-term extension depending on how McConnell ultimately decides to fund his bill.
“I think our caucus could support either depending on the details,” he said. “Our hope would be for a 6-year [bill] but we know we probably can’t get that in the short term.”
Mike DeBonis and Ashley Halsey III contributed to this report.