Infrastructure Moves Toward Bipartisan Deal
This past week saw the White House and a bipartisan group of Senators agreed on a nearly $1T infrastructure deal that included old fashioned traditional projects likes roads and bridges; but also included broadband expansion and upgrading of electricity transmission lines.
The bipartisan deal is narrow enough to get some Republican support, but large enough to keep Democrats at the table. Infrastructure has always had bipartisan support, bringing money back to the Senator’s home state, or a Representatives district has always been a core part of a Congressional job description. In fact, I suspect that if the deal can hold together there is a chance that the bipartisan bill will get more than the 11 votes of the group that worked on the compromise. Roads are crumbling, bridges are falling down, and broadband is too slow in both red and blue areas of the country. But in the highly partisan shape DC finds itself the deal could also fall apart.
In order to get more progressive Democrats on board, there was an acknowledgement that there will need to be a Democrats only package that will include what Democrats are calling Human Infrastructure. While Bernie Sanders has talked about a $6T price tag, in my view, it will be much smaller. One question that has emerged since the White House announcement of a deal has been Republicans saying the two track process is a deal breaker
The second infrastructure bill will likely pass under Budget Reconciliation, but to get Reconciliation they will need all 50 Democratic Senators. Joe Manchin is not alone in objecting to the $6T price tag. It is important to remember when Senator Sanders and others tried to add an increase in the minimum wage to $15.00 an hour, there were 8 moderate Democrats who opposed the effort. Democrats not only have a tied Senate at 50/50, but in the House their current majority is narrow with 220 Ds to 211 Rs and four vacancies. Both Schumer and Pelosi will need to craft agreements that can hold both sides together, an act they accomplished when passing the Covid Relief package with only Democratic votes using Budget Reconciliation.
Also, very important, I believe the Reconciliation Bill will be the vehicle for suspending the debt ceiling. The current debt ceiling suspension ends on August 1, and at some time in the fall the suspension will need to be renewed. Republicans won’t help with this tough vote so the White House and the Congressional Democratic Leadership will have no alternative than to add the Debt Ceiling suspension to the Budget Reconciliation Bill. Depending on Treasury action under their extraordinary measures program, the debt ceiling action could determine the timing of the Budget Reconciliation Bill which will have the Democratic only infrastructure proposals. Indeed, including the debt ceiling suspension and avoiding a technical default by the US Government could serve as an extra incentive to get any wavering Democrats on board when the bill comes up for a vote.
Bottom line: I continue to believe that there is a 75% chance of infrastructure this fall. If the bipartisan strategy falls apart, Democrats will combine both traditional and human infrastructure into one bill under Budget Reconciliation. Resolving the debt ceiling issue in the Budget Reconciliation Bill adds another incentive to get it accomplished.
