Cart and Horse

Update 544 — Cart and Horse:
SOP on Bipartisan, Budget Deals

After two-weeks off, both Congressional chambers are back in session, with two-track negotiations on big-ticket infrastructure bills topping the agenda. Eleven legislative days remain in the House and 17 in the Senate before recesses are slated to start. Democratic leadership has its sights on passing both a bipartisan infrastructure plan and a $3.5 trillion budget package before then.

Despite the announcement of a budget resolution agreement yesterday, the bipartisan bill, if it happens, must come first, as the second may include what the first omits. The White House and Senate Democrats are working with a clutch of Republicans, but the deal isn’t near the 60 votes it needs. Today, we examine the state of the bipartisan package talks, roadblocks to passage, and the implications of success or failure.

Best,

Dana

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Last month, a bipartisan group of 10 Senators announced a $579 billion infrastructure framework at the White House. This package would be the nation’s largest long-term infrastructure bill in nearly a century, investing in roads, bridges, rural broadband, and weather resilience. In addition, Senate Budget Committee Democrats announced a $3.5 trillion budget resolution agreement to move alongside the bipartisan deal. 

State of Play in Washington

The Biden Administration and both chambers of Congress are approaching this bipartisan package with different perspectives and expectations.

White House Perspective: President Biden is meeting today with a group of governors and mayors to discuss how the bipartisan plan would benefit their states and cities, suggesting that the administration is still working under the assumption that some bipartisan deal can still be reached. The administration is trying to walk a fine line between giving Republicans and moderate Democrats enough political room to work out a deal without affecting the rest of its legislative agenda. A lengthy process could run into legislative fights over a government shutdown or raising the debt ceiling and risks GOP demands for concessions or delay the Build Back Better agenda. 

Senate Perspective: This week, the Senate began committee hearings for sections of the bipartisan infrastructure framework. Majority Leader Schumer’s legislative goals call for passing both the bipartisan legislation and the FY2022 budget resolution with reconciliation instructions through the Senate before the August recess. While around half a dozen Republican Senators seem open to a two-track approach, Minority Leader McConnell has remained skeptical. He has even called on moderate Democrats to commit to not voting for reconciliation instructions if a bipartisan bill is passed, predictably in vain. 

Democratic Senators are getting worried that Republicans are preparing to slow walk or ultimately back out of bipartisan negotiations in order to delay the reconciliation process and sow discord among their ranks. Senate Democratic leadership and caucus members of the Budget Committee have signaled that they will proceed with a simple majority reconciliation bill whether or not there is separate bipartisan infrastructure legislation. 

House Perspective: Speaker Pelosi came out early and firmly against the bipartisan deal unless accompanied by reconciliation legislation with substantial investments in the care economy. Last week the Problem Solvers Caucus endorsed the Senate’s bipartisan infrastructure framework, while a group of ten progressives wrote a letter to leadership demanding a firm commitment on green infrastructure before supporting any deal. However, it seems that most House Democrats are taking a wait-and-see approach to the bipartisan package and working behind the scenes on reconciliation. 

Roadblocks to Compromise

The deal on the table is far from finished, and many issues still need to be addressed before it comes to the floor. The issues most likely to derail the bipartisan framework include: 

Only Bite at the Apple: A misapprehension among many Democrats that there may not be a reconciliation bill to follow — without concrete assurances — that this bipartisan bill, therefore, may be the one bite at the apple for everything from climate change to immigration. Were that risk reasonable, the bipartisan bill would draw opposition as inadequate. But with yesterday’s budget deal announcement, these concerns have much less currency. 

Poison Pills: While a handful of Republicans seem genuinely interested in making long-term investments to improve our nation’s infrastructure, there are more than a few that see this as an opportunity to make deep cuts in the social safety net and further privatization of public services. 

Revenue TBD: The bipartisan framework takes more than a few liberties massaging the financing numbers to make the package “deficit neutral.” This is primarily due to Republicans refusing to consider any tax changes to pay for infrastructure, resulting in creative accounting techniques as a remedy. The Congressional Budget Office may not score some of the financing, such as UI program integrity and IRS enforcement, as raising enough revenue. Furthermore, some Republican Senators in the working group are already claiming that the pay-fors are insufficient.

Deal or No Deal? 

On the Republican side, the bipartisan deal’s path to 60 votes appears in jeopardy. Several Republican Senators who initially endorsed the framework are voicing concerns about beefing up IRS enforcement as a pay-for, a future reconciliation package, and the agreement’s funding mechanisms more broadly. McConnell will ultimately determine how many Republican Senators support the framework beyond its five drafters. A deal will not happen unless Republicans negotiate in good faith and accept the pay-fors. The next few weeks will test the ability of Republicans to whip 10 votes without losing Democratic votes in the process. 

As deliberations on pay-fors, legislative language, and other nuances continue mostly among Senate Republicans, their internal divisions are on display. Should an actual bill come forward in the next few days, Senate Democrats would benefit from supporting a reasonable compromise close to the size and scope of the current agreement. However, they should not agree to anything that cuts Unemployment Insurance or enacts a new round of budget sequestration. 

Enacting bold legislation is still the main priority regardless of political shuffles for infrastructure agreements. Although the budget reconciliation process offers a favorable avenue for Democrats to pursue their human/care infrastructure and green investment proposals, that process is unlikely to take final shape until the fall. There are few downsides to working with Republicans on a smaller spending package, as Democrats appear willing to accept a reasonable deal as long as the caucuses remain optimistic their priorities will pass through reconciliation. 

Looking Ahead 

Amidst a successful but slowing post-pandemic economic recovery, it’s important for Democrats to legislate on their promises of bold change and rapid recovery. The current bipartisan deal on the table is poised to improve physical infrastructure and equitable rural investments. If the Democratic caucus has its fingerprints on a failed attempt to pass infrastructure in the near future, the electoral consequences of holding up a good bill and overseeing a stalled economic recovery will be grave.

Passing a physical infrastructure package of this scope and in a bipartisan manner would be good for both an economic and political recovery. Delaying passage of infrastructure spending for months could be highly negative; nevertheless, Republicans may include one-too-many poison pills in order to tank the agreement. An agreeable compromise is on the table, but if enough Republicans block it, Democrats should go it alone.