Here’s the Real Obstacle to Biden’s $4 Trillion Infrastructure Bill

Josh Gottheimer, co-chair of the Problem Creators Caucus. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images

Happy moderates are all alike; every unhappy moderate is unhappy in their own way.

Or so it may seem to the Democratic leadership.

Earlier this month, a contingent of centrists in the Senate gave the White House an ultimatum for its impending infrastructure bill: “It’s got to be paid for.” Specifically, Joe Manchin, Jon Tester, and Angus King told the press that their appetite for deficit spending was nearly exhausted by the American Rescue Plan, and that they would only support Biden’s next legislative priority if the bulk of it were offset with new taxes on corporations and high earners.

But now, moderates in the House have presented Biden with contradictory demand. Representatives Josh Gottheimer and Tom Suozzi told Axios this week that they will not vote for the infrastructure bill unless it includes roughly $357 billion in tax cuts for the affluent (with about $200 billion of that sum going to households in the top one percent). Specifically, these lawmakers — and, if Axios is to be believed, several others who prefer to remain nameless — demand Biden repeal the cap that Republicans placed on the State and Local Income Tax (SALT) deduction. In addition to directly increasing inequality (in defiance of the White House’s stated goals), such a measure would exacerbate the difficulty of finding enough revenue to reconcile Biden’s ambitions for spending with his pledge to raise taxes on no one except the rich. But there are a lot of rich Democrats in the state of New York — and so Senate Majority Leader Chuck Schumer reportedly plans to make restoring the full SALT deduction a priority in negotiations with the White House.

Graphic: Center on Budget and Policy Priorities

Meanwhile, the House’s progressive faction isn’t wholly content with Biden’s outline, either. Among other things, they would like the bill to make the American Rescue Plan’s child allowance permanent; currently, Biden’s proposal only extends it through 2025. Meeting the left’s demand — which enjoys the vehement support of some relatively moderate senators like Michael Bennet — would cost $500 billion. Persuading progressives to stomach this shortcoming is one thing. But asking them to forfeit spending requests that the White House has already endorsed would be another. To scale back existing plans significantly could trigger enough progressive defections to jeopardize the plan’s passage out of a narrowly divided House.

Thus, the Democratic leadership finds itself confronting a seemingly impossible dilemma. If they cut the bill’s size, they alienate the progressives; if they debt-finance the package, they lose the Senate’s penny-pinchers; if they pay for it with tax increases, they antagonize Romney-Biden suburbanites with “In this house, we believe in science and regressive taxation” lawn signs. And the mutually exclusive demands aren’t just coming from competing factions of the party; some Senate moderates are simultaneously calling for the infrastructure bill to include trillions in tax increases and win Republican support (which is a bit like asking for the legislation to repeal the Second Amendment and enjoy the NRA’s endorsement).

Whether Chuck Schumer and Nancy Pelosi have a plan for easing these intraparty tensions — and/or for steamrolling one of the intransigent factions — remains unclear. At present, the majority leader appears focused on overcoming a legislative obstacle that might not actually exist.

To enact the American Rescue Plan without Republican support, Democrats crafted it as a budget reconciliation bill, a special category of legislation that cannot be filibustered in the Senate. With the GOP already demagoguing Biden’s forthcoming tax increases before they’ve even been unveiled, the White House expects it will need to push infrastructure through using the same mechanism. And yet, Congress is only allowed to pass one budget reconciliation bill per fiscal year. Since Congress did not pass a reconciliation bill in 2020, Democrats still have one more in the docket this year. But if they use reconciliation on infrastructure, they will be incapable of using the tool again before 2022.

Or at least, this has been the conventional wisdom. Schumer believes he’s found a loophole in the Congressional Budget Act of 1974, which would open the door to a third reconciliation bill (if not more). As Politico reports:

This section of the law that governs the congressional budgeting process essentially says that Congress may revisit and amend an already-passed budget resolution, like the one used to pass the COVID relief package. Or at least that’s what Schumer aides are arguing.

Recently, top policy aides to Majority Leader Schumer made the argument to the Senate Parliamentarian that Section 304 allows for at least one additional set of reconciliation bills related to revenue, spending, and the public debt to be considered for Fiscal Year 2021,” a Schumer aide previewing the strategy told us Sunday night.

In the abstract, having more reconciliation bills at one’s disposal is better than none. But given the intra-Democratic conflicts summarized above, it’s hard to see what problem Schumer’s proposal would actually solve.

After all, the fundamental constraint on Biden’s spending plans is moderate Democrats’ limited tolerance for tax and/or deficit increases. The parliamentarian could grant Schumer infinite reconciliation bills; if Manchin will only condone another $500 billion in deficit spending, while Gottheimer & Co. won’t abide more than $500 billion in new taxes, then one more reconciliation bill will be as good as one million.

In fact, if the goal is to get as much of Biden’s agenda into law as possible, it’s not obvious that having two more reconciliation bills would be preferable to having just one. Forcing moderates to take a single “yes or no” vote on a massive pile of unrelated policy priorities is the model for passing major legislation in the Biden era: Had Democrats divided the American Rescue Plan into separate bills — one focused on extending previously enacted COVID relief measures, the other on establishing new social benefits like the child allowance and ACA subsidies — they almost certainly would have had more difficulty wrangling moderate votes for the latter.

This said, Schumer’s quest for a third reconciliation bill isn’t coming out of nowhere. The Biden administration itself plans to break up its own infrastructure plan into separate bills. As the Washington Post reports:

The plan will center on proposals to repair the nation’s physical infrastructure, such as its bridges, railways, ports, water systems, and more, as well as revive domestic manufacturing; invest in research and development; expand clean energy investments, and create a nationwide infrastructure for electric vehicles. This part of the plan also will include major investments in child care and educational facilities, and major investments in caretakers for the elderly and disabled amid the nation’s major aging crisis.

The second part of the plan, which will be unveiled next month, is expected to include initiatives to expand child care; provide paid family and medical leave; approve an expansion of health care and the Affordable Care Act, and extend a larger child benefit recently approved by Congress, among other measures.

When the White House first floated splitting the “Build Back Better” agenda into separate pieces of legislation, the idea was presented as a strategy for securing at least one major bipartisan bill during Biden’s first term: Democrats would do whatever version of infrastructure that ten Senate Republicans could support first, then pass the rest through a reconciliation bill. But today, as Politico reports, “there is deep skepticism in both the White House and among Senate Democrats that any 60-vote bill on any significant issue is possible this year.”

If such a bill is indeed impossible (as seems certain), then it’s hard to see what breaking the agenda up accomplishes; at least, if the White House is not content with accepting half a loaf. Giving Joe Manchin the option of voting for a bunch of infrastructure pork for West Virginia — without also supporting expensive new social-welfare programs — seems plainly counterproductive to securing the latter. Similarly, given that the second package involves recurring annual spending increases, it will likely contain a large percentage of the overall plan’s tax increases. So why give Gottheimer types the chance to say they supported Biden’s real infrastructure plan before they obstructed the fake one? (Some moderate Democrats appear to be certain that care work is a frivolity that is in no way foundational to the economy of a nation that’s both rapidly aging and struggling to increase female labor-force participation.)

The only answer I can think of: If Democratic leaders are more worried about coming up empty-handed than they are committed to passing Biden’s entire infrastructure agenda, then isolating the moderate-friendly provisions in one bill might maximize their odds of passing something. Getting House progressives to formally accept a 50 percent cut to the size of Biden’s proposal would be impossible. But persuading them to vote for the less controversial half of the president’s agenda first might be doable — especially if there is still one more reconciliation bill left in Biden’s quiver.

To be clear, I am not saying that this is the leadership’s thinking. The White House’s proposals have grown more ambitious in recent weeks, not less. And if the administration were rope-a-doping progressives — by assembling a “part two” on infrastructure that was really just a messaging bill — it presumably wouldn’t have antagonized the left by leaving a permanent child allowance out of that pseudo-legislation.

But if the Democratic leadership plans to resolve the party’s internal tensions over infrastructure without rolling progressives, then securing a third reconciliation bill won’t get them very far. The constraint on new spending is moderates’ limited appetite for raising taxes or the deficit. The obstacle to the non-budgetary items on Biden’s agenda is moderates’ aversion to abolishing the filibuster. These are not problems that creative interpretations of the Congressional Budget Act can solve.

Here’s the Real Obstacle to Biden’s Infrastructure Bill