Biden Infrastructure Win Ramps Up Fight Over Economic Agenda
(Bloomberg) -- President Joe Biden scored a political win by sealing a $579 billion infrastructure deal with a group of Democratic and Republican senators, yet the bipartisan plan faces hurdles in Congress that reflect challenges to his broader economic agenda.
With the agreement, announced outside the White House on Thursday with grinning Republican senators at his side, Biden can claim he’s meeting a promise to govern for all Americans and seek compromise with his opponents.
However, he made clear that partisan divides remain. As the Republican senators looked on, he told reporters that he expects Democrats to ram through an even larger bill with more spending alongside the bipartisan legislation.
“I have a little different view on that one,” quipped Senator Rob Portman, an Ohio Republican.
The infrastructure plan faces further obstacles in Congress. Many conservative Republicans plan to fight all of it -- both the bipartisan agreement and the Democratic-written legislation. Liberals, perturbed by the lengths to which Biden went to secure Republican support for the bipartisan piece, say they won’t support it unless they’re assured the accompanying Democratic legislation will pass, too. Biden later made clear that he wouldn’t sign either bill without the other.
Republicans will seek to make Democrats pay a political price for the Democratic legislation, expected to carry a price tag in the trillions of dollars, by accusing Biden of driving up deficits, debt and inflation with profligate spending.
Regardless of the legislation’s future, Thursday’s announcement was a buoyant moment for the president, a former senator of 36 years who delights in regularly telling reporters that he understands Congress better than they do.
Both Democrats and Republicans hailed the compromise as an historic investment in American infrastructure, with funding for items ranging from fixing bridges to electrifying buses and upgrading airports and waterways.
Evercore ISI analysts Peter Williams and Tobin Marcus judged that the package, if enacted, would start boosting the economy from 2023. They wrote in a note Friday that they see it “increasing the level of GDP in 2025-26 by roughly 1% at its peak impact.”
Biden, in remarks after Thursday’s announcement, called it “a huge day” for half of his economic agenda. “This agreement signals to the world that we can function, deliver, and do significant things.”
Steve Ricchetti, counselor to the president and lead negotiator on the bipartisan framework, said in an interview that Biden got “two-thirds of everything he was looking for, especially in the high-priority items.”
The president and his aides have laid out some guardrails for the debate to come, saying they don’t intend to use the Democratic-only legislation to change the terms of the bipartisan deal, such as increasing funding for Amtrak.
But parts of Biden’s $2.2 trillion “American Jobs Plan” that were left out of the bipartisan agreement entirely are fair game, Ricchetti said, such as $400 billion to support home- and community-based caregiving and $200 billion for affordable and sustainable housing.
If passed, the bipartisan infrastructure legislation would direct hundreds of billions of dollars into projects ranging from public transit to road and bridge repair to installing electric vehicle chargers on highways and “resilient” new power lines across the country, according to the White House.
Lawmakers in both parties have long agreed that the nation’s infrastructure needs are acute. But their inability, to date, to reach a deal to address the issue -- while endlessly discussing it -- has led to a long-running joke in Washington that every week is “Infrastructure Week.”
And criticism swiftly emerged that while Biden and his Senate allies claimed the cost of their $579 billion plan would be offset by provisions that would increase tax revenue, many of those so-called “pay-fors” are mere budget gimmicks rather than actual spending cuts or tax increases.
“I don’t want to say smoke and mirrors, but it is soft, very soft,” said Bill Hoagland, senior vice president at the Bipartisan Policy Center and a former top Republican Senate staffer who worked on budget issues for 25 years.
He used as an example a provision that would dedicate money from auctions of 5G wireless spectrum to the infrastructure plan. “While there is money to be achieved there, to me, it is not long-term savings,” he said.
The bipartisan deal will fall to a Senate filibuster unless the Democratic caucus votes for it in unison and 10 Republicans can be persuaded to support it. Senator Mitt Romney, a Utah Republican who joined Biden at the White House on Thursday, said he expected at least that number to vote for it.
Eleven Republicans were among a group of 21 senators who issued a joint statement supporting the agreement Thursday.
Senate Minority Leader Mitch McConnell, who has made a career of foiling the aspirations of Democratic presidents, said earlier Thursday that he was “listening” to the bipartisan group’s framework. But he later expressed outrage after Biden made clear he wouldn’t sign the bipartisan bill without accompanying legislation backed by progressives.
“Caving, completely, in less than two hours? That’s not the way to show you’re serious about getting a bipartisan outcome,” he said.
Democrats have their own challenges. House Speaker Nancy Pelosi said her chamber wouldn’t consider any bipartisan infrastructure deal until the Senate first passed the Democratic-only bill. That will require using the so-called budget reconciliation procedure to get around the filibuster.
It isn’t immediately clear if Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, two architects of the bipartisan plan, will support the reconciliation bill.
Manchin on Thursday said that a reconciliation bill is inevitable, but he indicated he can’t support one as big as the $6 trillion that Senate Budget Chair Bernie Sanders has said he’ll draft.
“I don’t think we can take much more debt,” Manchin said.
The reconciliation bill is expected to address Biden’s campaign promises to expand federal support for child care, access to community college and elderly care -- issues the president called “human infrastructure.” To try to appease progressives, Biden promised not to sign either bill alone.
“I’m not going to rest until both get to my desk,” he added.
Climate advocates, unions and progressive groups are closely tracking the reconciliation bill to ensure their priorities are addressed. Within the bipartisan deal, there is money for electric vehicle chargers, electric school buses, pollution cleanup and replacement of lead water pipes -- but for the left-most wing of the Democratic party, that isn’t enough.
“Regardless of how bipartisan legislation develops, we cannot throw priorities like climate, prescription drugs and tax fairness overboard,” Senate Finance Committee Chair Ron Wyden said on a Thursday call with reporters.
Democratic lawmakers are under pressure to pass all of the major pieces of legislation by early fall, before members of Congress shift their focus to the 2022 midterm elections. The Biden White House views the number of jobs created by any infrastructure deal as a major part of its economic message to voters.
A senior White House official said the infrastructure spending will add to the country’s economic growth, while creating good, union-paying jobs. The official declined to specify the number of jobs the infrastructure deal will create, though a White House statement said it would be in the “millions.”
The infrastructure deal came together from a 10-member bipartisan group of senators, who agreed to a framework late Wednesday night following days of negotiations with Biden’s top aides including Ricchetti, National Economic Council Director Brian Deese and the head of White House legislative affairs Louisa Terrell.
White House aides viewed the proposal favorably and told Senate negotiators Wednesday evening Biden was likely to support it.
Less than 12 hours later, after a brief meeting with some of the senators, Biden emerged from the White House, flanked by lawmakers, to announce they had reached a deal.
A previous attempt at a bipartisan compromise, led by GOP Senator Shelley Moore Capito of West Virginia, collapsed after the White House and Republicans could not agree on the best pay to pay for any deal. One lawmaker said those talks helped to establish some red lines in the negotiations, such as not changing the 2017 Republican tax-cut bill and defining infrastructure in a traditional, physical-project sense.
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