Infrastructure week, infrastructure decade...
Infrastructure bill will pass through reconciliation w/o R-votes. Dems consider their slim majority as mandate to reshape America, not prioritizing progressive policy push over keeping majority...
Today’s email is a guest piece by James Cross, a team member of ours who’s currently taking a gap year working for House Minority Leader Rep. Kevin McCarthy (R-CA 23) on the Capitol Hill. This is part of his “Deep-Dive From the Hill” series – about what he experiences and overhears first-hand. Please let us know what you think – feedback, comments, disagreements, or suggestions for future topics.
Biden’s Infrastructure proposal, released last Wednesday, is huge. In the next few months, the push to pass a bill based off of this plan is poised to dominate the political landscape here in Washington. In this piece, I’ll take a look at the procedure and policy choices that could get an infrastructure package through the House and Senate, and what it all means for the people and politics of Congress.
Here’s what’s in it (this graphic is much better than any summary I could give):
A few highlights: only $115 billion for highways, bridges, and roads -- the most narrow definition of infrastructure -- with major investments in electric vehicles ($174 billion) and care for the elderly and disabled ($400 billion).
The plan’s $2.25 trillion would be spent over the next 8 years, while the bill would be paid for by a hike in the corporate tax rate from 21% to 28% and higher taxes on companies’ foreign profits; the receipts expected over the next fifteen years would pay for the plan.
The 2nd part of Biden’s plan will likely be around $1 trillion in “social infrastructure” spending – an expansion of social welfare benefits. He has also signalled that he will soon unveil a plan to raise tax rates on wealthy Americans and on income from investments, but we don’t have specifics on that just yet.
Since the provisions of the package have been laid out, there is an ongoing debate over the definition of infrastructure. Kirsten Gillibrand recently tried to stretch the definition of infrastructure to new extremes, tweeting that “Paid leave is infrastructure. Child care is infrastructure. Caregiving is infrastructure.” For me, the infrastructure definition debate is semantics.
Regardless of what’s in the plan, the GOP will argue that the plan isn’t really an infrastructure bill. Dems will say it is. Whether that matters is less clear -- Republicans argued the American Rescue Plan wasn’t really about COVID-19 relief, but it remained popular because people liked its contents.
Senator Marsha Blackburn’s (R-TN) strategy for highlighting non-infrastructure components has backfired rather spectacularly -- it turns out that a big “$400 billion for elder care” graphic isn’t great attack messaging. On either side, trying to build a strategy around expanding or limiting what you can label “infrastructure” might be less effective or important than commonly thought.
The Democrats’ Mandate: A Margin of 55,000 Georgians
If Democrats pass something like the Biden plan, they would be pretty clearly overstepping their mandate, and they’re fine with that. 55,000 Georgians who constituted Jon Ossoff’s winning margin are the only reason Biden isn’t legislatively impotent right now. The voters elected a 50-50 Senate and a House that’s divided almost as equally, and failed to deliver the “blue wave” that many predicted. To me, it’s clear that they did not ask for transformational change in the vein of FDR’s New Deal or LBJ’s Great Society.
Nonetheless, mainstream Democrats think that by using their slim majorities to reshape America, they can convince Americans that they actually do want monumental change. Under this approach, building policy around a fundamental liberal principle -- that the government, not businesses and the wealthy, can spend those $2 trillion dollar best -- will grow their coalition, not alienate moderates. This means one thing is certain: no one on the left believes that they are prioritizing a progressive policy push over keeping their majorities.
Early signs support this theory -- almost all provisions of the proposal poll really well. But it could be politically dangerous to two huge pieces of legislation on party lines. Recent polling suggests that a plurality of Americans -- especially swing-vote moderates -- prefer divided government.
Even if most voters find the contents of the infrastructure package appealing, many may be concerned that Democrats could soon pass other, more controversial progressive priorities. It’s possible that voters won’t not trust Democrats to keep the levels of government for another two years.
Reconciling with Reconciliation
Democrats recently have learned they may be able to move much more spending legislation than previously thought. Here’s the issue in brief:
The filibuster rule in the Senate means most legislation needs 60 votes to pass. The only exception is for legislation related to the federal budget that can be passed through a procedural process known as budget reconciliation. This process for taxing-and-spending legislation requires just 51 votes for bills to pass.
Senate rules limit the majority to one reconciliation package per fiscal year, and Democrats have already passed the $1.9 trillion COVID-relief legislation. But, using language in the Congressional Budget Act that allows budget resolutions (the primary vehicles of the reconciliation process) to “revise or reaffirm” previous resolutions, Maj. Leader Chuck Schumer is arguing he can pass a second bill through the process.
On Monday, the Senate Parliamentarian, who settles these types of disputes, seemed to side with Schumer, according to a statement from the New York Democrat. The details of her ruling are unclear, but it seems like a majority can pass at least one more bill (and potentially as many as they want) with 51 votes in the Senate, so long as the Parliamentarian thinks they are related to the budget.
Here’s what this means:
It’s looking like the final bill will pass without R-votes. Democrats have little reason to look for Republican buy-in, especially when GOP leadership in both chambers has already come out firmly against the proposal.
On other fronts, Democrats will get very creative. The ruling opens up an entirely new path for moving legislation throughout the year. Lawmakers could find creative ways to contort their agenda on decidedly non-budgetary issues like gun control, health care reform, or climate issues into spending bills.
This takes pressure off the filibuster. This isn’t exactly related to infrastructure, but it could be one of the lasting impacts of an infrastructure bill’s passage through Congress. With the new procedural opening of endless reconciliation, calls to end the filibuster might die down, as Democrats get to work using the legislative tools they now have.
But not all the Dems are on board with this fast-track trick -- Joe Manchin just penned an op-ed in WaPo that signalled his disapproval of both busting the filibuster and using reconciliation endlessly. Moderates can hold out hope for bipartisanship, but things aren’t looking good right now. While discussing a path to bipartisanship, Biden drew blowback from Senators he would have to court to pass the bill by suggesting that they refused to negotiate on his COVID-19 relief package.
Overall, the final bill will -- in all likelihood -- be passed through reconciliation, which is never the best way to write laws. It’s arcane, circuitous, and leaves few opportunities for debate or amendment. Whether you blame this lack of bipartisanship on the left’s radicalism or the right’s obstructionism, it’s regrettable.
Negotiations Begin: An Ultra-Marathon for Nancy Pelosi and Another Test for Schumer
Biden’s latest proposal is just that: a proposal. Without the urgency of the COVID relief package, members on all sides are going to loudly make their demands for what to spend on, and negotiations over how to pay for the bill will be long and contentious. Democratic leadership has to listen:
→ On the House side, Nancy Pelosi can afford to lose just two votes, and given Rep. Jared Golden’s (D-ME) recent voting record (including his lone D vote against the American Rescue Plan), it looks likely that he’s starting from “no.” In a caucus of 218, just two disgruntled members could upend Pelosi’s plans -- that’s gives a new meaning to “razor thin majority.”
→ In the Senate, Joe Manchin’s latest op-ed is further evidence of how powerful the centrist Senator will be for this process. With his skepticism about multiple reconciliation packages, he’s casting doubt on the entire premise of my analysis (and most others’) -- that Democrats will pass a massive package on party lines. Chuck Schumer has his work cut out for him.
Overall, unlike the American Rescue Plan, which passed largely untouched from Biden’s first proposal to Biden's desk, the final legislation will likely look very different from this proposal. Here’s how:
Topline total: Progressives want more money than what Biden proposed. Rep. Alexandria Ocasio Cortez recently argued on the Rachel Maddow Show that, to address the country’s infrastructure needs, “we’re realistically looking at $10 trillion over ten years.” That’s five times more than Biden’s proposal, which she labelled merely “encouraging.” $10 trillion is out of the question but expect a lot of upward pressure on the final number from progressives.
SALT Deductions: House Democrats from the Northeastern states want to get rid of the 2017 Trump tax bill’s limits on deductions for state and local taxes. This revision to the tax code would largely benefit blue-state, higher income taxpayers who saw a major tax increase under the Trump-era legislation. It’s a very regionally specific carve-out and members have mixed feelings about it, including progressives. The White House wants proponents of the deduction to suggest a way to pay for it, so watch out for this issue to keep popping up.
The Pay-For: Even though Biden hasn’t released his plan for a tax hike on wealthy households and investment returns -- which itself will be controversial -- Democrats are split on whether a major corporate tax hike is a good idea.
→ Sen. Joe Manchin (D-WV) wants to raise the corporate tax rate just to 25%. He’s worried about the U.S. being a competitive destination for international businesses.
→ Rep. Peter DeFazio (D-WV), chairman of the crucial Transportation and Infrastructure committee, is open to a tax on gas and diesel, while other members are also looking for ways to tax the use of electric vehicles.
→ Moderate Reps like DeFazio and Rep. Don Beyer (R-VA) are split on whether to borrow any money at all to pay for the bill. This could become a big sticking point.
Republicans: This isn’t exactly a provision of the bill, but there are still major disputes about how to approach the infrastructure bill. Rep. Stephanie Murphy (D-FL), a prominent moderate, co-signed a bipartisan letter calling for bipartisanship on infrastructure, and Rep. Jeff Gottheimer (D-NJ) has echoed this sentiment more recently. They chair the Blue Dog Democrats coalition and bipartisan House Problem Solvers Caucus, respectively.
Manchin has expressed his opposition to the proposal, voicing concerns about a corporate tax hike that is a non-starter with Republicans. The remarkable circumstances of the 117th Congress mean that Joe Manchin gets to decide whether Democrats have to get Republicans on board to pass this package. His op-ed indicates he’s leaning that way, and Sen. Chris Coons (D-CT) seemed to lay out a bipartisan path that GOP Senators might be open to: targeted spending up to $1 trillion, with no pay-for.
For their part, Republicans are blasting the tax hikes (with predictably vague language on who’s getting taxed), and criticizing all the spending that doesn’t cover highways and roads. They’re also pointing to the 916,000 new jobs created in February, arguing that in this recovery environment, the American Jobs Plan is a solution in search of a problem.
It’ll be fascinating to watch the legislative process as we see the contours of this package take shape. Whatever happens, its impacts will be felt both immediately and over the coming decade, so it may be the biggest thing to watch in politics and in the economy for the foreseeable future. In an upcoming newsletter, I’ll be covering the GOP approach to this process and the coming messaging wars over the bill, so watch out for that. As always, feel free to reach out with any questions, comments, or disagreements.
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