President Biden is reminding Senate Republicans how frustrating a Democratic administration can be—especially when it’s pushing a gigantic expansion of government accompanied by huge tax increases like the American Jobs Plan.
It’s still smart for GOP senators to try to negotiate a reasonably sized and focused infrastructure package unsullied by tax increases. If Congress passes that, Republicans show they can find common ground on necessary legislation, since most everyone agrees U.S. infrastructure badly needs repair. And if Democrats’ insistence on massive spending and tax hikes kills any possibility of a deal, Republicans will be on the right side of important issues for the midterms.
The administration began this dance on March 31 with a $2.3 trillion “infrastructure” plan that included a wish list of non-infrastructure items—including child and senior care, low-income housing and subsidies for electric-car purchases—financed by mammoth tax increases.
GOP senators countered three weeks later with a $568 billion alternative focused on actual infrastructure. It would fund roads, bridges, ports, waterways, airports, public transit and broadband without undoing the 2017 tax reforms.
Democrats had already ridiculed Republican criticism of the president’s plan, employing a laughably expansive definition of infrastructure spending. “Paid leave is infrastructure. Child care is infrastructure. Caregiving is infrastructure,” Sen. Kirsten Gillibrand tweeted.
Nonetheless, the president invited GOP legislators to the White House on May 12 to discuss their ideas. Last Friday, Mr. Biden’s negotiators appeared to move closer to the Republican position, offering to reduce their package to $1.7 trillion.
But that was largely misdirection. The administration apparently plans to stuff the hundreds of billions in spending they’ve taken from their American Jobs Plan into another bill with strong bipartisan support. This bill, the Endless Frontier Act, is set to fund the research and development of critical technologies and manufacturing processes over which the U.S. is competing with China for dominance. However the GOP sponsors are unlikely to let the act be hijacked.
On Thursday, Senate Republicans will offer another counterproposal, close to $1 trillion, the magic number sought by Mr. Biden. The GOP senators have four tricks up their sleeve they could use to get there without further blowing up the deficit.
First, they’re likely to count the infrastructure spending that the Congressional Budget Office has already built into the budget for future years. Sen. Shelley Moore Capito (R., W.Va.), a leader of the GOP negotiating team, says as much as $394 billion of the $568 billion Republican plan is already in the next five years’ baseline.
Second, Republicans could include the next eight years’ worth of infrastructure spending in the plan’s specifics, not merely the next five as the administration plan did. That makes practical as well as political sense. The federal government will be dredging ports, building roads and repairing bridges in years six, seven and eight—though exactly how much will be spent depends on the decisions of future congresses unless it’s appropriated this year.
Third, GOP legislators could roll in their proposed replacement for the current Highway Trust Fund authorization that expires Sept. 30. The Senate is already working on its version of the Surface Transportation Reauthorization Act that spends $303 billion, mostly covered by existing revenue. Adding that to the Republican infrastructure counterproposal would push its total cost toward the $1 trillion target.
Finally, GOP senators could redirect unspent money from the six Covid relief measures to the infrastructure bill. As of March 31, there was $1.3 trillion in unobligated balances. The next update on what money is left will come after June 30 and it’s likely to total hundreds of billions.
Is a bipartisan deal likely? No. The ideological gaps between the parties on spending and tax policy are probably too big to bridge. And the White House likely has other plans for that unspent Covid money.