Is an Infrastructure Deal Close? What Democrats Want and How They (Don’t) Plan to Pay for it.

Right now, Congressional leaders are debating two legislative paths for the two marquee proposals of the Biden agenda, the America Jobs Plan (infrastructure) and the American Families Plan (healthcare, energy, climate change), as the issues make their way through Congress. Option A involves Democrats passing one massive bill with both proposals without Republican input nor support. Option B involves splitting the legislation into two pieces: the first, which is currently being considered, is a roughly $1 trillion bill that currently has bipartisan support, and the second is a partisan tax hike bill that is currently formulating and will likely drag into fall.

In order to skirt the Senate’s filibuster rules, Democrats can pass partisan legislation using a process called ‘budget reconciliation, which requires a simple majority vote. They used reconciliation to pass the $1.9 trillion COVID spending bill back in March, which also wasn’t paid for and added to the debt. According to the White House, Biden’s Jobs Plan and Family Plan have a price tag of $2.2 trillion and $1.8 trillion, respectively, although a study by the University of Pennsylvania’s Wharton School of Business found that the American Families plan will actually cost $900 billion more than what the White House figures.

Truth be told, a lot of the fighting has to do with the definition of infrastructure, which most people would agree means fixing our roads, bridges, railways, highways, seaports, and airports, which in Biden’s American Jobs plan accounts for only $157 billion, or 7%, of the White House’s estimated cost out of $2.2 trillion. Some might argue that infrastructure also means upgrading sewage lines, drinking water systems, and treatment plants, expanding high-speed broadband Internet and electric vehicle charging stations, upgrading the power grid, power plants, and related energy and water infrastructure. If you tally up all that in Biden’s proposal, you get $518 billion, or 24% of the total cost. Democrats would argue that infrastructure is more than that, about a couple trillion more.

The news is minute by minute, but it appears that Option B is being pursued and that a group of bipartisan lawmakers have reached a deal on infrastructure. The timeline going according to Nancy Pelosi, is to pass their bill (or bills) by early July before Congress breaks for the summer and returns in September with two major deadlines left on the agenda. But first, a budget must be passed through both chambers, which could end up proving more difficult than the media is admitting. Then the Congressional scorekeepers must produce an official estimate of the legislation, which many economists feel will not end up covering the cost of the package.

In the coming months, we will see if President Biden is willing to do the right thing and forget about the second part of Option B, which would involve raises taxes on small businesses and individuals to fund unneeded spending on partisan priorities. Senior Republicans believe that making this deal on infrastructure takes the wind out of the Democrat’s sails for a partisan tax hike bill, with moderate Democrats nervous about 2022 already. Stay tuned to AMAC Action for more details as the debate continues to advance on infrastructure and tax hikes.