Four Burning Questions about the Bipartisan $1 Trillion Infrastructure Agreement

1. Show me the pay-fors!!!

The table (below) provided by the White House gives only the topline funding for various infrastructure sectors. Only brief mention is made of how the president and the group of 21 bipartisan senators plan to pay for the new funding – closing the "tax gap," redirecting "unspent emergency relief funds," and "other offsets." Reports are that user fees, such as indexing the current gas tax to inflation or a new tax on average vehicular miles traveled, are off the table. Republicans had discussed specific clawbacks, such as unspent unemployment funds or unobligated state and local COVID-19 relief funds, but Democrats have previously been cool to this type of offset. Similarly, Republicans have said that raising the corporate or personal marginal rates is an unacceptable offset. However the parties decide to pay for the spending (spectrum proceeds, extending the sequester, sales from the petroleum reserve, etc.), the Congressional Budget Office will provide a scorecard to judge the comparative effectiveness of the identified pay-for.

2. It ain't easy being green, is it?

The administration and Congress have spent the last six months discussing how to harness a massive infrastructure package to address climate change. While there are areas the administration can prioritize and greener initiatives toward which it can direct funding, the infrastructure sectors addressed in the bipartisan package are markedly traditional. While the package provides funding for electric vehicles ($7.5 billion), the spending is comparatively modest compared with the administration's stated aspirations for EV infrastructure. Perhaps the power infrastructure sector will fund electric grid modernization to enhance climate resilience, and funding for the water infrastructure sector could be for coastal and floodplain adaptation projects intended to counteract the effects of climate change. It now seems likely that any significant increase in spending to address climate change will have to come in another package, such as reconciliation.

3. But what about reconciliation?

Almost immediately after the bipartisan infrastructure framework was announced, Speaker Pelosi and Majority Leader Schumer announced that the bipartisan package would move in parallel with a larger, multi-trillion-dollar reconciliation package focused on "human" infrastructure. President Biden expressed support for that approach, saying that he would not sign the bipartisan package without the larger reconciliation package. Linking a widely supported bipartisan infrastructure package to a partisan reconciliation package greatly increases the legislative level of difficulty. Republican senators are going to have concerns about supporting a bipartisan bill that may unlock a reconciliation package that raises taxes and greatly expands social programs. Moderate Democratic senators, such as Sen. Manchin (D-WV), have said they will not agree in advance to support reconciliation without first seeing what will be in that package. Furthermore, House and Senate progressives are unlikely to support any bipartisan infrastructure package until they know their priorities are addressed via reconciliation. If Democrats insist on linkage, it would appear to be an insurmountable hurdle. But perhaps if a good faith effort is made to move a reconciliation bill, and that package fails, the administration and congressional leadership could then persuade members to advance the bipartisan package on its own.

4. So when will "infrastructure week" happen?

Despite calls by Democratic leadership to wrap up infrastructure this summer, the budget reconciliation process will surely slow things down. Additionally, Senate leadership has indicated they want the committees of jurisdiction to mark up their provisions from the bipartisan package. So the Senate may use all of the time between now and the August recess to move the bipartisan package through the Senate and pass a budget resolution. Passage of a budget resolution is the first step in the budget reconciliation process. Reconciliation itself would need to wait until the fall. In the House, Speaker Pelosi has stated her intention to move a slender surface transportation bill through the House before July 4. That would leave the July work period to craft a budget resolution and, as in the Senate, put reconciliation off until the fall.

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New spending + baseline (over 5 years) = $973B.
New spending + baseline (over 8 years) = $1,209B.