The effort of President Biden and Congressional Democrats to get a two-track infrastructure plan through Congress had some pluses and minuses this past week.

One the plus side, Senate Democrats announced an agreement on a Budget Resolution that would be rammed through Congress on a strictly partisan vote. The Budget contains much of the Democratic domestic agenda. Labeled human infrastructure by the Biden Administration, the budget will contain campaign promises that don’t have the bipartisan support traditionally given to infrastructure. The budget process begins with the Budget Committee and starts with Congress passing a Budget Resolution. Senate Budget Chair Bernie Sanders started the talks suggesting a $6T price tag for the human infrastructure package. Under the leadership of Senate Leader Chuck Schumer, Democrats announced agreement on a Budget Resolution totaling $3.5T.

The Democratic proposed Budget Resolution would make some important changes to Medicare by adding long-wanted additions for vision, dental and hearing benefits. For poorer states like WV this is a big deal, hence the support of Manchin. Childcare and parts of the green new deal are added to bring in progressives. The details are still to be ironed out, and like so much in DC to what extent the proposals will be paid for could be a challenge. Democrats want to raise taxes on the rich and corporations; but with a 50/50 Senate, each Senator has a de fact veto pen and coming to a revenue plan will be tough. I believe an increase in the corporate tax rate is likely the easiest revenue raiser on which Democrats can agree. With respect to tax increases on the rich, an increase in the top rate and an increase in the capital gains rate may be doable, but making capital gains income equal to ordinary income may be a road too far for all 50 Democrats.

While the announcement of a $3.5T human infrastructure bill was a plus, a minus was the apparent stalemate of the bipartisan talks on the $1.2T traditional infrastructure bill. The stumbling block was how to pay for the programs. Earlier there had been agreement to give the IRS more funding to close the “tax gap” where some tax payers weren’t paying their share – tax cheats. But conservative groups, long suspicious of the IRS, appear to have blocked Republican support for granting the IRS new funding and powers.

To give a nudge to the talks, Leader Schumer proposed a test vote on a procedural motion related to the bipartisan package for next Wednesday, but as of Friday no agreement is at hand and no legislative language is available. Several Republican Senators have made the fair point that they can’t vote, even on a procedural issue, for a bill where there is no legislative language to review.

A busy week ahead as both infrastructure bills make twists and turns marching to a majority in the Senate; the House can only act after the Senate deals with its more complex rules to move legislation.

Disclosures (show)

Stay up to date with the latest articles and business updates. Subscribe to our newsletter

Articles Read 1/2

🎁 Unlock 1 extra article by joining our Community!

Stay up to date with the latest articles. You’ll even get special recommendations weekly.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)