WASHINGTON The Senate approved a controversial bill to fund the country's highway spending Thursday, setting up a protracted fight for the banking industry that will continue through the August recess.
The legislation, which would fund federal transit projects, contains two key financial provisions that bankers are hoping to defeat. Both are used in the bill as budgeting tools to offset spending.
The Senate proposal, which passed the chamber 65-34, would cut the dividend for member banks' stock in the Federal Reserve System to 1.5% from 6% for all member banks with more than $1 billion in assets. The move could generate an estimated $1.7 billion to help pay for the costs of the bill.
The measure would also extend the use of heightened Fannie Mae and Freddie Mac guarantee fees through 2025, resulting in $1.9 billion in offsets. Congress originally raised the G-fees by 10 basis points in 2011 to pay for a short-term payroll tax cut, with the hike currently set to end in 2021. Many in the financial industry and some lawmakers have complained that using g-fees for budgeting purposes is inappropriate and harms homebuyers. Congress approved a point of order in a May budget resolution prohibiting the use of G-fees on unrelated spending.
Meanwhile, the Senate and House both passed short-term legislation this week to extend the highway program before it expires on Saturday, with debate to pick up again in the fall. House lawmakers voted 385-34 in favor of the three-month extension on Wednesday afternoon before breaking for summer, and the Senate approved the measure on Thursday 91-4. President Obama is expected to sign the bill.
Lawmakers will have much to discuss before coming to a deal on longer term funding for the highway system, including how to pay for the program more broadly. House members have objected that the Senate's six-year plan only provides funding for the first three years. Separately, Senate lawmakers added an amendment to authorize the Export-Import Bank in their bill, a program that many House Republicans continue to oppose.