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Key Republican says infrastructure talks with Biden are advancing but ‘big gap’ remains

U.S. Sen. Shelley Moore Capito (R-W.Va.) asks questions during a Senate Appropriations Subcommittee hearing to examine the FY 2022 budget request for the Centers for Disease Control and Prevention in the Dirksen Senate Office Building in Washington, May 19, 2021.

Greg Nash | Pool | Reuters

Republicans and President Joe Biden have moved closer to agreement on an infrastructure plan but still need to resolve fundamental issues about the scope of a package and how to pay for it, a GOP senator leading the effort said Thursday.

Sen. Shelley Moore Capito and a group of Senate Republicans plan to unveil their infrastructure counteroffer to Biden on Thursday morning. The West Virginia Republican said the sides are “inching closer” in negotiations ahead of Memorial Day, the date by which the White House wanted to see progress in bipartisan talks.

“We’re still talking. I’m optimistic, we still have a big gap,” Capito told CNBC’s “Squawk Box.” “I think where we’re really falling short is we can’t seem to get the White House to agree on a definition or a scope of infrastructure that matches where we think it is, and that’s physical, core infrastructure.”

“The White House is still bringing their human infrastructure into this package and that’s just a nonstarter for us,” she continued, referencing Biden’s plans to put money into programs including care for elderly and disabled Americans.

The GOP lawmakers have signaled their proposal will cost nearly $1 trillion. Biden’s revised offer to Republicans came in at $1.7 trillion — $600 billion less than his original plan.

It is unclear if the two parties can overcome broad ideological differences over what constitutes infrastructure, and how to pay for improvements to it, to strike a bipartisan deal. If negotiations do not show promise, Democrats will have to decide whether to try to pass an infrastructure bill on their own using special budget rules.

The process would bring its own headaches, as Senate Democrats would have to both keep all 50 members of their caucus on board and comply with strict rules about what can go into a budget reconciliation bill.

Republicans have said they do not want to raise taxes to cover the costs of improving transportation, broadband and water systems. Biden has called to hike the corporate tax rate from 21% — the level set by the GOP after it cut taxes in 2017 — to at least 25%.

“We can do this without touching … those tax cuts,” Capito told CNBC.

She mentioned that lawmakers could redirect unused coronavirus relief funds to state and local governments to infrastructure, or implement user fees on transportation like electric vehicles. Those Republican solutions could put Biden in a bind.

The president has promised not to raise taxes on anyone who makes less than $400,000 per year. User fees or an increase to the gas tax would put an extra burden on many Americans whose incomes falls under the threshold.

This story is developing. Please check back for updates.

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