With the administration having made infrastructure development a priority, entities that build, operate or finance infrastructure should be paying close attention to developments in Washington. There are several scenarios in which an infrastructure package could become law, but which are most or least likely?
- Most Likely - Congress passes a short extension of the current surface transportation law to allow for more time on the infrastructure package. The prior authorization for surface transportation programs expired in 2020. The House, the Senate, and the administration were led by different parties, and agreement on a new bill was not achieved. Congress instead passed a one-year extension until September 30, 2021. Should this new Democratic-led Congress and administration fail to reach agreement on a larger infrastructure package by September 30, Congress could pass another short term extension of the current law, perhaps until the end of the year, to allow additional time to secure passage of a larger infrastructure package as well as other year-end priorities.
- Less Likely - Senate Republicans and the Biden administration could reach a bipartisan infrastructure deal. It is possible. The Biden administration may yet accept the certainty of a bipartisan deal that contains many desired policies that would be disallowed in a partisan, all-Democratic reconciliation bill. Getting there, however, would require overcoming the twin hurdles of reaching a mutually acceptable funding agreement and the securing support of progressives who may feel their priorities aren't reflected in a "skinny" infrastructure package.
- Slightly Less Likely - House and Senate Democrats pass a budget resolution and move a reconciliation package to fund infrastructure. The challenge of the majority doing this, with slim margins in the House and no margin in the Senate, is formidable. Democrats would need to fund programs at high enough levels to excite the progressive wing of the party, but not lose moderates by raising taxes excessively and/or incurring too great a deficit. Furthermore, the Budget Act prohibits a reconciliation package from containing "extraneous matters." This means that as a general matter a reconciliation package cannot make or alter existing policy, but can only fund/cut funding to existing programs and raise/lower taxes. Thus, reconciliation would curtail the addition of new types of infrastructure programs (e.g., conservation or climate programs).
- Least Likely - Congress passes a bipartisan infrastructure deal and then adopts a partisan reconciliation package. This approach combines the previous two heavy lifts, the theory being, do as much as you can on a bipartisan basis, and then return for as much of the rest as you can on a partisan basis. As the Magic 8-ball said, "Outlook not so good." Hard to see how a second reconciliation package gains enough velocity to pass both chambers, even on a partisan basis, after much of the important and popular programs are funded in the bipartisan infrastructure package.
June action will impact each of these scenarios as Congress and the White House continue efforts to reach agreement. Venable's legislative and government affairs team is tracking activity, including:
Will President Biden break through with Republicans? Lead negotiator Senator Capito (R-WV) and the president have not found common ground, but discussions continue between the White House and a bipartisan group of Senators. Still outstanding are how expansive the infrastructure package should be, and how to pay for it. Congressional strategy is pending the outcome, including what could move in bipartisan regular order versus party-line reconciliation. Will a minimum corporate rate of 15% emerge, or an increase in the rate to 25% or 28%? Every taxpayer could be impacted by the choices.
Speaker Pelosi's July 4 target for action will drive House committees to craft their parts of the infrastructure package quickly. The House Transportation and Infrastructure Committee is to markup the INVEST in America Act on June 9, likely on a party-line vote.(explore the legislative text, section-by-section, and fact sheet). Watch for the Energy and Commerce Committee to act on the LIFT Act in the coming weeks. Less certain is when the Ways and Means Committee could issue text on tax adjustments and other payfors but we are watching that closely.
Crucial steps remain, but the pace of Senate activity is picking up. The Commerce Committee expects to markup relevant surface transportation matters by June 16. Transit items could also be marked up in the Banking Committee in June. They would join the surface transportation bill passed by the Senate EPW Committee 20-0 last week. The Finance Committee has reported Clean Energy for America Act, which overhauls energy tax policy. Finance will also have to consider a broader bill incorporating tax changes and other matters within its jurisdiction to pay for the infrastructure package.
Engagement with Congress and the administration. It is not too late to be engaging with Congress and federal agencies to highlight your priorities and how an infrastructure package will impact you.
Our experienced Venable team continues to follow developments closely and is available to help. If you have specific questions, contact Jim Reilly, Mike Bloomquist, or Jim Burnley, who lead Venable's Legislative Infrastructure Group.