Senate to Weigh Contractor Tax-Rule Repeal, Infrastructure Plan

Senate Democrats will seek action this week on two parts of President Barack Obama’s jobs agenda: a House-passed bill repealing a tax-withholding requirement for government contractors and a $60 billion measure funding infrastructure projects, Majority Leader Harry Reid said.

Senate Republicans previously blocked the overall $447 billion jobs plan that Obama detailed in September, as well as a $35 billion piece of it that would have sent money to state governments to prevent layoffs of public-sector workers.

Repeal of the 3 percent withholding requirement for contractors, scheduled to take effect in 2013, was approved Oct. 27 by the Republican-led House on a 405-16 vote. The bipartisan support signals that the measure may be the first section of the jobs plan with a chance of getting to Obama’s desk.

“It is my understanding the Republicans want to vote on this,” Reid said today at a news conference in Washington, referring to his decision to advance the legislation. “That’s fine with us.”

One snag the repeal effort could face in the Democratic- controlled Senate is the House’s method of financing the move. The House plan would alter the 2010 health-care overhaul to count the nontaxable portion of Social Security benefits among income used to decide whether someone is eligible for government health coverage. The change, opposed by some Senate Democrats, would save money by pushing some people out of Medicaid or other subsidized health-insurance coverage.

Asked today whether he will attempt to change that offset, Reid didn’t respond. The Nevada Democrat said he wants to amend the legislation to ensure that contractors who are delinquent in their taxes don’t benefit from a repeal.

‘Infrastructure Bank’

The infrastructure bill, drafted by Senate Democrats, faces Republican opposition. It includes $10 billion to create a national “infrastructure bank” to leverage private and public capital for various projects. The other $50 billion would directly fund projects including rail, transit, and roads and bridges.

Republicans object to the added spending as well as to Democrats’ proposal to finance it with a 0.7 percent surtax on millionaires.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, predicted that legislation will fail. He said that Republicans are open to expanded spending on roads and other infrastructure this year.

“Infrastructure is pretty important and pretty bipartisan,” he said.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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