Democrats open to user fees for infrastructure deal

Some Senate Democrats are open to paying for a compromise infrastructure package by imposing user fees, including increasing the gas tax and raising money from electric car drivers through a vehicle-miles-traveled charge.

Why it matters: By inching toward the Republican position on pay-fors, some Democrats are bucking President Biden's push to offset his proposed $2.3 trillion plan by focusing only on raising taxes on corporations and the wealthy.

• “User fees have to be part of the mix,” Sen. Mark Warner (D-Va.) told Axios on Thursday.
• “I am generally supportive of what the president is trying to do, but I think his initial unwillingness to include user fees makes it really hard."
• In separate meetings with Biden this week, both Sens. Tom Carper (D-Del.) and Kyrsten Sinema (D-Ariz.) discussed the possibility of imposing user fees, according to people familiar with the matter.

Driving the news: Senate Republicans emerged from their meeting with Biden on Thursday optimistic about a bipartisan deal, focusing on “hard” infrastructure projects like roads, bridges and waterways.

• “We think this infrastructure package can carry forward,” Sen. Shelley Moore Capito (R-W.Va.) said.
• The president agreed: “I am very optimistic that we can reach a reasonable agreement. But even if we don’t, it’s been a good-faith effort that we started.”
• He added: “We didn’t compromise on anything."
• White House press secretary Jen Psaki said: "How to pay for it has long been the area where we need to find more common ground."

The big picture: Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) told Biden during their own meeting on Wednesday that they would not support raising either corporate or personal taxes to pay for his spending proposals.

• "We both made that clear to the president. That's our red line," McConnell said.

Between the lines: Some Democrats are opposed to relying on user fees to fund new projects because lower-income Americans would pay a disproportionate share of their income to use the same roads as the wealthy.

• User fees also could be interpreted as a tax increase on Americans making less than $400,000 a year, which Biden promised not to do.

• “Republicans aren't serious about paying for anything,” Sen. Sherrod Brown (D-Ohio) told Axios.
• Complicating negotiations, one likely user fee — a potential increase in the federal gasoline tax — isn't popular in rural states. "Hell no, don't raise them," Sen. Joe Manchin (D-W.Va.) said last month.

Go deeper: Other Democrats want to find a way to explore user fees but make them less regressive.

• “I've asked the commissioner of the IRS to explore for us, whether or not there is a way to somehow give a rebate to lower-income families,” Carper said.

The bottom line: Biden and Republicans have signaled that they first have to agree to the overall size of an infrastructure package and then haggle on how to actually pay it.

• “The good news is, we all want to build on a big robust bill, and we want to pay for it,” Capito said before heading to the White House. “It's incumbent upon us to be very creative.”