While Congress was out of session this week for the Memorial Day break, talks between the White House and Senate Republicans on infrastructure continued. Both sides appear to be moving towards a price tag of $1T, but the stumbling block to an agreement may be how to pay for the programs.
West Virginia Senator Shelley Moore Capito has been designated by Leader McConnell to be the principal negotiator for Republicans. President Biden, an experienced pro in Senate negotiating, is personally leading the White House team. What is becoming obvious is that the President is more interested in a bipartisan deal than many Congressional Democrats and even some progressive White House staff members.
Another factor that emerged this week is the ruling by the Senate Parliamentarian that makes it very unlikely that Democrats in Congress will get a second bite at Reconciliation for the 2021 fiscal year that began on October 1, 2020. The massive American Rescue Plan, that passed on a party line vote, was approved under Budget Reconciliation for FY 2020. The Budget Act of 1974 allows for Congress to take a two-step budget process that avoids Senate filibusters. Under the Budget Act Congress first approves a budget and then a related Reconciliation Bill that makes changes in spending and revenue to meet the budget targets. Senate Democratic Leader Schumer thought that there may be a roadmap to breaking with tradition and having two Budget Reconciliation Bills within one fiscal year. This past week the Senate Parliamentarian threw cold water on the idea by saying while technically it may be possible, there would be no shortcuts and the Congress would need to approve a whole new budget before a Budget Reconciliation Bill would be in order. That is likely a mountain too steep to climb.
The ruling by the Parliamentarian leaves the Democrats with only one Budget Reconciliation opportunity this year as part of the budget for fiscal year 2022 that begins October 1. Democratic leaders will have to put everything from climate to new schools and nursing homes in the Reconciliation package. If traditional infrastructure can be handled outside of the budget process, with a bipartisan bill, it will allow for more progressive program to be moved under Reconciliation. Confusing, but how too often legislation is created. In my view it strengthens the President’s hand in getting progressive Democrats to accept his bipartisan approach to traditional infrastructure and put the non-traditional programs in Reconciliation.
Timing: If there is a two-track process a bipartisan infrastructure bill could pass by the August break; but Budget Reconciliation is a longer process and is likely to stretch out until fall.
The fiscal year begins on October 1, but it has been many years since Congress has had the budget complete by the deadline. It is now accepted budget practice to start the new fiscal year using a Continuing Resolution (CR) which continues spending for the new fiscal year at the levels approved for the current fiscal year. The deadline of October 1 also sets up the drama of a government shutdown. Congress must take some action by midnight of September 30 or technically the government cannot operate and there is a government shutdown. Headline risk and media drama; but both sides know that they must find an agreement and open the government.
Infrastructure talks will also create headline risk over the next few weeks with on and off again progress between the White House and Republicans. However, it is still my view that there will be an infrastructure bill by the fall.
