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Conservative Advocates Align Against Infrastructure Deal

July 8, 2021, 6:00 PM

Conservative political groups are organizing in opposition to a tentative infrastructure deal, urging Republican lawmakers to reject the framework agreed on by the White House and a bipartisan group of senators.

A letter signed by six prominent conservative advocates, including former Trump Federal Reserve Board nominee Stephen Moore and Americans for Tax Reform president Grover Norquist, asked conservative members of Congress to establish four preconditions to any deal, including that any new spending be paid for by reprogramming already approved funding.

“With the Covid crisis over, the economy recovering, and the national debt crashing toward $30 trillion, Congress should be aggressively CUTTING spending right now—not adding to the record size and scope of government,” the advocates said in a Wednesday letter shared with Bloomberg Tax. The letter, first reported by the Washington Post, was also signed by Steve Forbes and leaders of conservative groups Freedomworks, the Leadership Institute, and the Conservative Action Project.

The bipartisan framework would direct $579 billion in funding towards infrastructure improvements ranging from roads and bridges to broadband access and improved water systems. Though specifics have yet to be released, the plan identified several strategies to pay for those investments, including repurposing pandemic-related emergency funds and increasing Internal Revenue Service enforcement funding by $40 billion over 10 years.

The signatories of yesterday’s letter urged lawmakers to reject that funding increase for the IRS, which is part of an effort to collect more of the unrealized tax revenues that the IRS and nongovernmental experts agree are not being paid.

The additional IRS funding is seen as low-hanging political fruit to offset additional spending when compared to the various tax hikes the Biden administration initially proposed to pay for infrastructure. The Congressional Budget Office estimated last year that a $40 billion enforcement funding boost would increase federal revenues by $103 billion.

But conservatives have been especially skeptical of the IRS since the Obama-era targeting scandal involving scrutiny of political groups seeking tax exemptions, a fact the conservative advocates raise in their letter.

“We have not forgotten about Lois Lerner’s tactics of using IRS enforcement to harass conservative groups and donors,” the letter reads, referencing the former head of the agency’s exempt organizations division. “Republicans in Congress shouldn’t either,” the letter adds.

The letter also asked conservatives in Congress to include authorization of the Keystone XL pipeline, a long-stalled project due to permit issues, and rejection of “Green New Deal” projects requirements for any infrastructure deal.

—With assistance from Kaustuv Basu.

To contact the reporter on this story: Colin Wilhelm in Washington at cwilhelm@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Yuri Nagano at ynagano@bloombergtax.com