What’s Doable If Democrats Go It Alone on Infrastructure
(Bloomberg) -- President Joe Biden campaigned on a $2 trillion infrastructure package to fuel the economic recovery and tackle climate goals. Enacting that plan, and funding it in part with the first major tax increase since 1993, will test what Democrats can do with the narrowest-possible majority in the U.S. Senate. Winning the support of 10 or more Republicans opens the clearest route to passage but at the moment seems unlikely. Otherwise it’s back to the go-it-alone route known as budget reconciliation, through which Democrats could raise taxes with relative ease but perhaps not be able to put the money toward the projects they most value.
1. What are Democrats proposing?
They’re eyeing a range of transportation infrastructure upgrades plus investments in renewable energy and incentives for domestic manufacturing. Some of the more progressive-minded lawmakers also favor “social infrastructure” initiatives, such as making an expanded version of the child tax credit permanent and broadening access to health care and child care. To pay for it, the Biden administration is considering an array of tax hikes that would target corporate profits and households making $400,000 or more.
2. How have Republicans responded?
Republicans are interested in some upgrades to physical infrastructure, including transportation systems and manufacturing. But Senate Minority Leader Mitch McConnell says there is no enthusiasm in his party for any legislation that requires tax hikes.
3. Is there a workaround?
Democrats could try to split their task into two parts: one infrastructure bill funded partly by user fees (or other offsets known colloquially as “pay-fors”) rather than tax hikes, which might draw Republican support and thus not need to go through the budget reconciliation process; and another, tailored for reconciliation, raising taxes and funding other Democratic priorities.
4. What is budget reconciliation?
It’s a procedure created by the Congressional Budget Act of 1974 that allows for expedited consideration of legislation related to spending, taxing and the federal debt limit. Bills advanced in the name of “reconciling” tax and spending practices with a joint House-Senate budget resolution need only a simple majority vote to win approval in the 100-seat Senate, rather than the 60-vote supermajority required to pass most measures. But there are limits on what qualifies for reconciliation and on how many bills can use the process each year.
5. What limits are there?
The Byrd rule -- named for Robert Byrd, a Democratic senator who represented West Virginia for 51 years -- requires that all provisions in a reconciliation bill have an impact on federal revenue, spending and deficits, and that no extraneous provisions are included. The Senate parliamentarian advises on which proposals are extraneous. This process could make Biden’s agenda “look like Swiss cheese at the end because of things that will and will not fit,” said Tori Gorman, policy director for the Concord Coalition, a nonpartisan group that focuses on the federal budget.
6. What parts of an infrastructure bill might not qualify?
Biden wants the measure to be a long-term economic boost. But to comply with the Byrd rule, spending on infrastructure would have to be temporary or be offset so that it doesn’t affect the deficit outside a given budget window, usually 10 years, said Zach Moller, deputy director of the Economic Program at the think tank Third Way. That restriction would make it difficult to fund larger projects like high-speed rail, which can take decades to develop and build. Transferring billions of dollars to the Highway Trust Fund, the main source of federal support for highways and mass transit, wouldn’t be allowed. Spending from that fund needs to be reauthorized by Sept. 30, but the way the money is doled out from it wouldn’t pass muster in a reconciliation bill. Nor would specific earmarks, like funding for a Bay Area Rapid Transit extension into Silicon Valley. That had to be cut from the Democrats’ last reconciliation bill.
7. What does that leave?
Raising taxes or issuing tax credits for renewable energy or manufacturing would likely fit into the reconciliation structure. Congress could tweak the rate of the motor fuels tax -- the main source of money for the Highway Trust Fund -- under reconciliation since it would affect revenue, said Jeff Davis, a senior fellow with the Eno Center for Transportation, a think tank. Climate initiatives related to spending and revenue, such as tax credits for electric vehicles, could pass muster, but not rules and regulations on industry. General fund spending on infrastructure with clear budget effects could similarly pass through reconciliation, though it might still face hurdles depending on how the Senate parliamentarian rules.
8. What can Republicans do to prevent Democrats from using reconciliation?
Any senator can challenge any part of a reconciliation bill as extraneous by raising a point of order or offering an amendment to strike the provision. The Senate parliamentarian rules on whether the objection is valid; if so, the offending provision is typically deleted from the bill. While the Senate has traditionally deferred to the rulings of the parliamentarian on interpreting arcane rules, the actual ruling is made by the chair -- which, when Democrats need her in the chamber, will be Vice President Kamala Harris. Budgets are also subject to what is known as a vote-a-rama, when senators can offer theoretically unlimited amendments to try and force Democrats to take tough votes. At some point, however, Harris could shut down those efforts as dilatory.
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