GOP's latest infrastructure counteroffer to cost roughly $1 trillion

A group of GOP senators negotiating on infrastructure is preparing a $1 trillion counteroffer for the White House this week, a key leader said, far closer to President Biden’s target than previous overtures.Why it matters: Senator Roger Wicker (R-Miss.) signaled that Republicans will be moving in a big way toward the Biden administration's plan, reigniting hopes that a bipartisan deal is possible. Get market news worthy of your time with Axios Markets. Subscribe for free.This comes as talks fell apart late last week and over the weekend, as the two sides seemed as far apart as ever on a potential agreement.What they're saying: "We're not going to disturb the 2017 tax bill, which was the best economy of my lifetime," Wicker said. "We're going to make it eight years, as the President said he would accept. We're going to hit a figure, very close to what the President said he would accept.""It will end up being the most substantial infrastructure bill ever enacted by the federal government. And if the president gets to make the decision, he will accept this."He then confirmed the price tag of the GOP proposal will be "close to a trillion dollars."Wicker also cited Larry Summers, who has been raising alarms about inflation, and said the Republican counter will suggest repurposing money appropriated to deal with the coronavirus pandemic. One big thing: Wicker also said there will be "hardly anything" on user fees — a sticking point among Democrats who don't want to raise user fees in order to pay for the bill.White House Press Secretary Jen Psaki, responding to Wicker's comments, told reporters Tuesday: "Certainly, them coming up on the number is progress."What to watch: Wicker also said that he and other GOP negotiators have been "a little bit concerned" that their previous suggestions on a bill have been "mischaracterized" by White House staff in press releases. "This is going to be the end of our rope," Wicker said. Timing: Sen. Shelley Moore Capito (R-W.V.), top Republican on the Senate Committee on the Environment and Public Works, told reporters Republicans plan to present their counter offer to the White House on Thursday morning.Like this article? Get more from Axios and subscribe to Axios Markets for free.

McConnell Says ‘Zero’ Republicans Will Back Biden’s Infrastructure Package

No Republican senator will back President Biden’s infrastructure plan as written, Senate Minority Leader Mitch McConnell (R., Ky.) said at a press conference on Monday. “I don’t think there will be any Republican support — none, zero — for the $4.1 trillion grab bag which has infrastructure in it but a whole lot of other stuff,” McConnell told reporters. “We’re open to doing a roughly $600 billion package which deals with what all of us agree is infrastructure….If it’s going to be about infrastructure, let’s make it about infrastructure.” McConnell’s reference to a “$4.1 trillion grab bag” would include Biden’s roughly $2 trillion infrastructure package as well as his $1.8 trillion “American Families Plan,” which invests heavily in education and childcare. The minority leader has previously vowed to “fight” the infrastructure bill “every step of the way.” “My view of infrastructure is that we ought to build that which we can afford and not either whack the economy with major tax increases or run up the national debt even more,” McConnell said in April. In addition to repairing roads, bridges, and other infrastructure networks, the Biden infrastructure bill provides $174 billion toward a national network of charging stations for electric vehicles, along with other incentives to manufacture EV’s. Senate Republicans have proposed a $568 billion infrastructure plan that would upgrade roads, public transit, and rural broadband access over the next five years. However, with the Senate tied 50-50 and Vice President Kamala Harris as the tie-breaking vote, Democrats will likely attempt to pass their infrastructure plan via budget reconciliation rules. Those rules allow legislation to pass the Senate via a simple majority vote, rather than the filibuster-proof 60-vote threshold.

Senators’ Case for a Bigger Navy Is Worth Heeding

There is good news at last for America’s armed forces, or at least for the Navy. A bipartisan group of legislators has sponsored a bill that has the potential to address at one stroke a first-order priority for American national security: upgrading and expanding the nation’s shipyards. It’s the appropriately named Shipyard Act, filed by Senators Roger Wicker (R., Miss.), Tim Kaine (D., Va.), Jeanne Shaheen (D., N.H.), Susan Collins (R., Maine), and Angus King (I., Maine) and, in the House, by Representatives Rob Wittman (R., Va.) and Mike Gallagher (R., Wisc.). The bill would fund in one year the Navy’s $21 billion recapitalization plan for shipyards, enabling the Navy to authorize shipyard improvements as capacity became available to make them and to do so with flexibility and therefore in the shortest possible time. The Shipyards Act is an outstanding first step on the path to revitalizing America’s sea power. Given the pressing need for a bigger Navy, however, the sponsors should also seek to set aside additional money from the proposed infrastructure bill to increase the Navy’s shipbuilding accounts and buy more vessels as the shipyards expand. Currently, the United States Navy has 297 ships. It is sized and shaped for an era that is now long passed, when the global commons were uncontested and there were no peer competitors positioning themselves to seize control of critical choke points across the Indo-Pacific region. The Navy can still perform constabulary duties and littoral strike missions in areas of the world where it can safely operate close to shore. But it possesses insufficient numbers and staying capacity, and its main surface striking power is concentrated in ships, such as the aircraft carriers, that are increasingly vulnerable in competitive environments. Contrast that with the Chinese navy — the People’s Liberation Army Navy, or PLAN. The Office of Naval Intelligence reports that the PLAN currently counts a fleet of 360 ships, most of which are modern and multi-mission-capable. This equates to a five-to-one numerical advantage over the American Navy in the western Pacific. Moreover, ONI projects that the PLAN will grow to 425 ships by 2030. Achieving that goal will not be a problem for China; it has the largest shipbuilding capacity in the world and can easily produce two dozen vessels each year. So the Navy needs a lot more ships. No less than six recent reports and studies — including the Navy’s formal position of a 355-ship fleet by 2030 — recommend a combined total of between 355 and 688 manned and unmanned vessels in the fleet. The exact nature of the needed expansion will depend on our maritime strategy; the evolution of technology, doctrine, and tactics; the size and capabilities on the PLAN, and the contributions of our allies and security partners. That said, the Navy needs to do at least the following over the next decade. First, sustain production of aircraft carriers, destroyers, and both attack and ballistic-missile submarines . Second, in keeping with a growing consensus, ensure a substantial number of smaller surface combatants that can provide both forward presence across the Indo-Pacific region, to conduct the wide array of missions necessary in littoral environs, and the kind of distributed threat that will strengthen deterrence against Chinese aggression. Third, upgrade and replace military sealift capacity substantially over the next several years. No great naval power in time of conflict has succeeded without a robust sealift and merchant-marine and convoy-escort capability. During World War II, U.S. shipyards built 6,000 vessels, one half of which were Liberty ships, and almost 600 of which were destroyer escorts. Currently the United States has no convoy escorts and relies for its merchant-marine capacity mostly on other countries that cannot be counted on in the event of a conflict with China. Fourth, sustain and exploit the Navy’s current advantage in the undersea domain. Given the lack of capacity to build additional nuclear-powered boats, the Navy will need a capable and more affordable nonnuclear submarine fleet suited for operations within the littoral environs. Procuring these vessels will require substantial and sustained increases in the shipbuilding accounts, but that is by no means the only problem. From 1975 through the end of the Cold War, there were nine shipyards producing, on average, 19 naval vessels annually. Today, there are five major shipyards, located in Brunswick, Maine; Groton, Conn.; Pascagoula, Miss.; Norfolk, Va., and San Diego, along with two smaller yards in Marinette, Wisc., and Mobile, Ala. They produce, on average, eight battle-force ships per year, with an unutilized capacity of possibly 25 percent — nowhere near enough to meet the need in the next decade and beyond, especially since the PLAN will during the same period be pressing to enlarge the advantage it currently possesses. That is why the Shipyard Act is such a vital step. The Navy needs increased industrial capacity as soon as possible, both to reduce the current backlog of maintenance and to fund the additional expansion that will be necessary to begin producing upwards of 20 ships per year rather than eight or ten. The one big shortfall in the Shipyards Act is that it does not yet contain set-aside funding to procure additional ships as industrial capacity grows. The Navy needs more and better shipyards because it needs more ships, and current budgets are insufficient even to sustain today’s fleet, much less to fund expansion over this decade and beyond. Moreover, if Congress wants private industry to go all in with their own dollars on the Navy’s shipyard program, it needs to make clear that there will be business for the industrial base as new capacity comes online. The good news is that many of the needed additional vessels — the frigates, corvettes, patrol craft, sealift vessels, and light amphibious warships — will be smaller and less expensive than most of the ships in the current inventory. In addition, those ships can be built in smaller yards, which means that, if Congress makes clear that it will be buying them in substantial numbers, smaller, commercial-only shipyards may well invest in the capacity to produce for the Navy. The sponsors of the Shipyards Act should be certain to include funding for robust technical training for machinists, electricians, nondestructive testing personnel, and welders. Capital improvements are meaningless absent a highly skilled workforce. Naval-oriented training programs exist — and must be replicated elsewhere. In short, the Shipyard Act, if passed in its current form, would be a solid extra-base hit in a game where the home team has to this point been almost shut out. But it would be a home run if its sponsors could include funding to, for example, purchase two dozen frigates as an addition to the existing shipbuilding accounts. We’re going to need them. It’s not like anyone could oppose such a proposal on the grounds that it is unaffordable — not after Congress has spent $4 trillion in the last two years on pandemic relief and economic stimulus. The fact that the administration didn’t include shipbuilding in its own infrastructure bill shows that Biden’s team does not understand the vital connection between defense and diplomacy. Their policy toward China has begun well, but without sufficient power on the ground, or in this case on the seas, Beijing can and will disregard the reputational damage that diplomacy can inflict. The protests of the world did not prevent China from occupying Hong Kong in violation of its international obligations. There’s a lot of talk in Washington now about the danger that China will invade Taiwan. Admiral Philip Davidson, commander of the United States Indo-Pacific Command (INDOPACOM), recently testified to Congress that the “threat is manifest . . . in the next six years.” He’s right to be concerned, but nobody should be surprised about the growing risk. The balance of hard power in the Western Pacific has been shifting for a number of years. The implications of that are obvious. Unless deterrence is strengthened — and that means, first and foremost, a stronger American naval presence in INDOPACOM — it is only a matter of time before Beijing attempts to use force to snuff out democracy in Taiwan. That would be a disaster for America’s vital national interests in the region. The Shipyard Act, if it passes, will be the first signal in a long time that Congress is really serious about preventing it. Jim Talent, as a former U.S. senator from Missouri, chaired the Seapower Subcommittee. He is currently the chairman of the National Leadership Council at the Reagan Institute. Lindsey Neas, a former Army armor officer, served for 15 years as a defense aide for several members of the Senate and House Armed Services Committees.