Infrastructure Talks Are Going Off the Rails

M oderate Republicans keep trying to rein in the Democrats’ spending, and they are having a rough time of it.

When President Biden wanted to spend $2 trillion on “COVID relief” this year — a bill that came right on the heels of President Trump’s $2 trillion COVID-relief package and far exceeded any real need — moderate Republicans responded, “How about $600 billion?” The Democrats ignored that offer, pushing their own plan through on a party-line vote and using the “reconciliation” process to avoid a filibuster.

We’re seeing the same dynamic play out in negotiations over Biden’s infrastructure plan, which started out around $2.25 trillion. Much of the proposal has nothing to do with “infrastructure” as any normal person would define the word, and the state of the nation’s actual infrastructure is not nearly as bad as some like to pretend, meaning there’s lots of room to shrink that number. So the moderate Republicans again asked, “How about $600 billion?” Biden replied, “How about $1.7 trillion?” And now things are spiraling downward, with many Democrats ready to bail as Republicans concede the gap might be unbridgeable yet mull another counteroffer. The talks face an unofficial deadline of Memorial Day, though there could also be a last-ditch effort to reach a deal when Congress returns to D.C. early next month.

Biden’s slightly smaller offer is still nothing any actual conservative could support. It does, obviously, trim some fat from his initial proposal, including some funding for broadband. And the Biden administration has also said that it could consider funding more projects through public-private partnerships, which might lessen the cost to taxpayers.

But a lot of that trimmed fat is simply being shifted to other bills that Democrats could run with after passing an infrastructure package. Indeed, given all the other spending Biden has proposed — including his separate American Families Plan — it’s always been clear that there will be an effort to pass many of his expensive priorities into law through reconciliation, no matter what happens with the infrastructure deal.

Biden’s counteroffer also still includes a bunch of non-infrastructure spending (excuse me, spending on “social infrastructure”). And it still hikes taxes on corporations to pay the bill, which will fall in part on the middle-class workers Biden pledged not to hit with tax increases; runs the risk of reducing economic growth more than the resulting new infrastructure stimulates it; and cuts into a pool of revenue that, if nothing else, could be better spent addressing our existing debt crisis.

Yes, I raised deficit concerns during the debate over the 2017 tax cuts, too. But more important to the politics here is that congressional Republicans see those tax cuts as a red line and will not vote to roll them back.

Meanwhile, Republicans tend to be open to funding infrastructure by charging “user fees” (such as tolls and mileage charges) to those who benefit from it, but Democrats would prefer to hammer the rich, and Biden worries about whether user fees would count as a violation of his no-tax-hikes-unless-you-make-$400,000 pledge. Is it a “tax” if you pay to use something the government built?

To pass a bill without using reconciliation, Democrats need to get ten Republican senators on board. Failing that, they’ll need unanimous Democratic support to move forward with reconciliation in the Senate. This, by itself, could derail the effort or at least force some compromises.

Traditionally, reconciliation bills have been limited to one per fiscal year. (You can read about the gory procedural details in this piece.) The COVID bill was fiscal year 2021’s reconciliation bill, and fiscal year 2022 doesn’t start until October. But in April, the Senate parliamentarian decided that the Democrats could get around this by revising the current year’s budget resolution.

Even so, however, the Democrats can’t pass anything without the support of moderates Joe Manchin and Kyrsten Sinema. Both of them have been hesitant to weaken the filibuster, and Manchin has said explicitly that reconciliation should not become the normal way of passing legislation. Manchin has also raised some objections to elements of Biden’s initial infrastructure proposal, particularly its huge corporate-tax hike. The White House is reportedly working to with Manchin and Sinema to shore up their support as talks with Republicans stretch on, offering them the chance to control the process if they’ll eventually vote for the bill.

Where those two come down is key to Republicans’ strategy. If Manchin or Sinema refuse to go forward with extra reconciliation bills, Republicans can simply refuse to vote for any package they don’t like and stop it from becoming law, at least for now. Otherwise, the optimal strategy is trickier. Supporting a bad infrastructure package could satisfy Manchin and Sinema, dissuading them from voting for even more through reconciliation — but this would also give a veneer of bipartisanship to a wasteful proposal and require the moderate Republicans to own their support of it.

And don’t forget, even if an infrastructure bill does pass with bipartisan support, there will be an effort to pass more spending through reconciliation — especially once the new fiscal year starts in October — and we’ll be counting on the moderate Dems to stay strong.

Chances are looking slim for a bipartisan deal, because there’s too big a gap between Biden and the moderate Republicans. But where we end up will probably depend on the gap between the White House and the moderate Democrats.