President Biden’s bipartisan infrastructure deal was on, and then possibly off, and now seems back on again. But there are at least three major issues that could still blow things up.
One red flag was the apparent attempt to inflate the size of the package.
The White House described the deal as “$1.2 trillion,” which vastly overstates how big it is relative to what Biden had asked for. The fine print reveals that this “$1.2 trillion” tally includes hundreds of billions of dollars that were already expected to be spent on infrastructure; Biden’s original ask of $2.25 trillion had not included this already-scheduled spending and instead counted only “new money.”
Using the White House’s previous (new-money-only) accounting, the bipartisan agreement totals $579 billion — or roughly 26 cents on the dollar of Biden’s opening bid.
Perhaps wary that someone would construct an apples-to-apples comparison of the plans and conclude that Biden had ceded too much ground, Biden preemptively assured progressives that their other priorities still mattered. He even made what appeared to be a veto threat, saying he’d sign the bipartisan infrastructure deal only if a “reconciliation” bill also reached his desk.
Republicans then (somewhat histrionically) declared that they’d been double-crossed. They accused Biden of holding their deal hostage to a socialist, big-government agenda. After a turbulent 48 hours, during which Biden clarified that he would sign the bipartisan deal regardless of what happened with other legislation, the waters “calmed.” The deal appears to be on track again.
Still, three big obstacles remain.
First is that while Biden may now say the reconciliation bill is not a precondition for passing the bipartisan infrastructure deal, other Democrats do not agree.
“No reconciliation bill, no deal,” tweeted Sen. Bernie Sanders (I-Vt.), who caucuses with the Democrats and chairs the Senate Budget Committee. House Speaker Nancy Pelosi (D-Calif.) echoed this, declaring that the House wouldn’t take up the bipartisan bill until after the Senate votes on a reconciliation bill.
Second, no one seems to agree on what this vaunted “reconciliation bill” actually is.
Reconciliation legislation refers to a budget-related bill that can pass with a simple majority in the Senate (i.e., no Republican votes needed). Exactly what would be in this reconciliation bill is anybody’s guess. Some news coverage implies it would contain only Biden’s families-related proposal (child care, free community college, etc.). Some suggests it would include all that plus climate- and other infrastructure-related measures omitted from the bipartisan compromise. Some commentators suggest it’s the $6 trillion wish list being constructed by Sanders and Senate Majority Leader Charles E. Schumer (D-N.Y.), and so includes other unrelated initiatives such as a Medicare expansion.
Even if Democrats ultimately agree that a “reconciliation” precondition should be attached to the infrastructure deal, problems could ensue if everyone assumes that precondition refers to something entirely different. Especially since different assumptions lead to very different price tags.
Finally, there are serious issues with the proposed financing.
The senators involved in the bipartisan agreement — moderate Democrats and Republicans — have said they want any new investment to be paid for. Yet their own deal likely comes nowhere close to achieving that. This will become clearer once the Congressional Budget Office, the legislature’s independent referee, estimates the price of the eventual bill.
Fact sheets on the bipartisan framework released by the White House and lawmakers show more than a dozen “pay-fors.” Several of these items, such as reinstating Superfund fees on chemicals, would raise substantial revenue. But many are just budget gimmicks.
For example, among the listed pay-fors is “5G spectrum auction proceeds.” This refers to spectrum auctions that have been going on for years. These auctions have been bringing in more money than initially forecast, and the infrastructure negotiators are trying to retroactively claim credit. But their proposal doesn’t itself raise new revenue; it counts money that’s already been, or will soon be, collected no matter what they do.
Another pay-for is supposed to be “Unemployment insurance program integrity.” That’s the age-old Washington trick of eliminating unspecified “waste, fraud and abuse.”
A fact sheet distributed to lawmakers estimates that spending $8 billion on anti-fraud measures in unemployment would lead to gross savings of $80 billion. That return on investment — $10 back for every $1 spent — seems extremely optimistic. It’s equivalent to reducing unemployment spending by about a fifth over the next decade, based on estimates of spending under existing law.
Maybe lawmakers won’t care if their “fully paid for” financing plan collapses; they’ve hand-waved away inconvenient CBO scores before. But if Republicans are looking for an excuse to renege on their deal — as appeared to be the case this past weekend — this will give them exactly the opportunity they need.
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