Capitol Hill Continues Debate Over Separate Infrastructure Package
President Joe Biden reached a deal with a bipartisan group of 10 Senators on June 24 to spend $973 billion over five years, and $1.2 trillion over eight years, on a package that would fund improvements to roads, bridges, ports, inland waterways, transit, airports and enhanced infrastructure for broadband, water and electric vehicles. It bypasses many of Biden’s top priorities for “human infrastructure” such as childcare, elder care, and education provisions. Those will be the subject of a second bill.
The bipartisan plan’s authors describe it as a “framework.” Details remain to be ironed out, but they agreed on the major provisions and how to pay for them.
The agreement would increase federal spending by nearly $600 billion in new spending including $360 billion for roads, bridges and major projects; $48.5 billion for public transit; $66 billion for rail; $55 billion on water infrastructure; $65 billion for broadband and $73 billion for power infrastructure. In addition, it would spend $47.2 billion on climate resiliency, $25 billion for airports, $10 billion on electric buses and $16 billion for ports and inland waterways. In all, the proposal is expected to clock in at around $1.2 trillion.
The plan would be paid for, at least in part, with a suite of revenue increases that do not violate either Biden’s pledge not to raise taxes on the middle class or Republicans’ refusal to reverse business tax cuts passed under President Trump in 2017. No issue proved more intractable for the bipartisan infrastructure negotiations than deciding how to pay for the plan. The White House initially pushed higher taxes on the rich and corporations, an approach ruled out by Republicans. Republicans pressed for higher gas taxes and fees on vehicles, an approach ruled out by the White House, creating an impasse that almost tanked negotiations.
The compromise deal includes a hodgepodge of measures. Full details have not yet been released but the largest consists of increasing the IRS budget by $40 billion to raise an additional $140 billion in revenue through more aggressive tax enforcement. Other measures include more than $100 billion in cuts to unemployment benefits and more than $100 billion from selling public infrastructure to private interests.
There remain many points at which the compromise could fail. The “details” may yet prove impossible to work out and the Senate bipartisan group has not yet received support from their respective caucuses. Biden almost scuttled the deal by stating that he would not sign the compromise unless it was accompanied by the human infrastructure legislation. He has since backed off that connection and the compromise appears, at least at this writing, to be back on track.
The approach to obtaining the agreement was to divide the President’s $4.4 trillion economic agenda into pieces. The first step addresses America’s aging infrastructure system. The agreement leaves large swaths of the president’s economic proposals—including much of his spending to combat climate change, along with investments in childcare, education and other types of what administration officials call “human infrastructure”—for a potential future bill that Democrats are expected to try to pass through Congress without any Republican votes using a procedural mechanism known as reconciliation.
Progressive Democrats in the House and the Senate, along with liberal activists, have complained bitterly that Biden’s negotiations with Republicans toward a bipartisan deal may result in much of the agenda he campaigned on failing to see the light of day. Business groups support the compromise as their best chance of blocking Democrats from raising tax rates on businesses and high earners as the infrastructure bill would raise revenues in other ways.