The Chief
The Biden administration will spend the next couple weeks selling the American Rescue Plan, and hoping that its full suite of cabinet officials can get confirmed. It’s kind of an interregnum period for lawmaking, though executive action is
always available, as are majority-vote Congressional Review Act resolutions (more on that below). But “what’s next” will be a question to be asked for the next couple weeks.
The administration has signaled that they’re interested in a big infrastructure package, paired with what’s being called the first major tax increase since 1993. Any consideration that this would be a bipartisan package was dispelled by Sen. Ben Cardin (D-MD) on a
hot mic yesterday; “ultimately it’s going to be put together similar” to the ARP, through the reconciliation process. (Democrats have the Fiscal Year 2022 and 2023 reconciliation bills to use before the midterms.)
Speaker Pelosi has instructed committee chairs to work
with their Republican counterparts on the package, and she has expressed “
hope” for bipartisanship, saying that “building roads and bridges and water supply systems and the rest has always been bipartisan, always been bipartisan—except when [Republicans] opposed it with the Democratic president as they did with President Obama.” I think that’s your answer right there; obstruction is the game plan. There’s a bit of a ticking clock here, because the usual surface transportation bill must be reauthorized by September, and that could become folded into this project.
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The similarities between the infrastructure package and the ARP kind of end with reconciliation, however. First Democrats will have to agree on what counts as infrastructure; then they’ll have to agree on what tax measures to put in. All of this could fracture a caucus with practically no room for error.
“Infastructure” traditionally was what Pelosi mentioned above, roads and bridges and water systems. But
the definition has expanded and should expand. What about electric vehicle charging stations, necessary infrastructure as the vehicle fleet greens? What about broadband deployment? Or the electric grid and renewable arrays? Or improving schools and hospitals? Or building affordable housing? Or funding child care and in-home support services? The answer to all of this is really “yes,” but everyone has to agree.
Then you have to deal with the “old” infrastructure standby, the Highway Trust Fund. That’s the main funding mechanism for the surface transportation bill, and the gas tax, which funds it, has not increased since 1993. At the same time, Democrats want to fuel the transition to electric cars, which in intention would bring the gas tax down to zero, and eliminate federal highway funding. But the main alternative discussed, the vehicle miles traveled tax, is unwieldy and hard to collect.
Then you have to dole out the favors necessary to get the most reluctant Democrats on board. Earmarks have been restarted as a way to grease the wheels for a package like this, and in general I’m fine with that. They don’t create new money, just spray it around to different locations. But that push and pull is likely to be intense.
Then you have to figure out what taxes to include. You don’t “have” to do this, technically, but
centrist Democrats are demanding at least partially paying for infrastructure. Sen. Joe Manchin (R-WV) has
made the odd request of both getting bipartisan support and increasing taxes on corporations and the wealthy, which defies the laws of nature.
But even as a Democratic-only bill, there will be fights over what taxes to include, how much to offset, whether to leverage private money through an infrastructure bank (a
very delicate idea that could backfire spectacularly), and so on. There are trillions of dollars available just from reversing the worst elements of the Trump tax cuts, or eliminating the “
step up in basis” for wealthy heirs. Again, everyone must agree. Because of these minefields, you could
see the bill split between spending measures and tax measures (though that could cause reconciliation problems).
Because of these layers of issues to be worked out, there’s a bit of a vacuum legislatively right now. That’s why you see Chuck Schumer
freelancing with a China proposal, which is sort of orthogonal to the infrastructure push. It builds off a bill he had last year with Sen. Todd Young (R-IN) that spent $100 billion over five years at the National Science Foundation and gave another $10 billion for regional tech hubs. The idea is to infuse a home-grown advanced technology manufacturing industry, and because it sounds good, call it a “confronting China” bill. That could combine with a number of other proposals from Democrats and Republicans, including on producing telecom hardware and rare earth minerals locally.
The White House is
on board, particularly since their timeline is muddled in a way you’d have thought it wouldn’t be right now. Supply chain resilience definitely needs addressing, though it may be overstated to dump some science money somewhere and build a pop-up industrial policy. But I’m a little more unnerved by the lack of coherence from the administration on the next legislative lift. It’s a work in progress.
republicans arent gonna know what to do with themselves
