McConnell Vows to Fight Biden’s Infrastructure Plan

By Yuval Rosenberg

McConnell Vows to Fight Biden’s Infrastructure Plan

The fight over President Joe Biden’s $2.25 trillion
infrastructure plan is just getting started, and it’s bound to drag
on far longer than the race to pass his $1.9 trillion Covid rescue
law.

White House Press Secretary Jen Psaki told reporters Thursday
that Biden hopes to see Congress pass the infrastructure package by
the summer. “The American Rescue Plan was an emergency package, we
needed to get it done as quickly as possible to get the pandemic
under control, to get relief, direct checks out to Americans,”
Psaki said. “We’ve got a little bit more time here to work and have
discussions with members of both parties.”

Senate Minority Leader Mitch McConnell (R-KY) on Thursday
pledged to fight Biden’s proposal. "That package that they're
putting together now, as much as we would like to address
infrastructure, is not going to get support from our side. Because
I think the last thing the economy needs right now is a big,
whopping tax increase," McConnell
told reporters at an event in Kentucky.

McConnell also pointed to the national debt as a reason
Republicans would oppose the massive spending plan. "You're either
alarmed about the level of national debt and the future impact of
that on our children and our grandchildren or you aren't," he said.
"My view of infrastructure is we ought to build that which we can
afford, and not either whack the economy with major tax increases
or run up the national debt even more."

White House Chief of Staff Ron Klain
told Politico that Biden would try to work with
Republicans, but he left the door open to again use the budget
reconciliation process to get the package through Congress without
GOP votes. “In the end – let me be clear – the president was
elected to do a job and part of that job is to get this country
ready to win the future. That’s what he’s going to do. We know it
has bipartisan support in the country and so we’re going to try our
best to get bipartisan support here in Washington,” Klain said.

Biden on Thursday named five members of his Cabinet to help sell
the package to the public: Transportation Secretary Pete Buttigieg,
Secretary of Housing and Urban Development Marcia Fudge, Energy
Secretary Jennifer Granholm, Commerce Secretary Gina Raimondo and
Labor Secretary Marty Walsh.

The bottom line: Democrats are likely to take the
reconciliation route again, but the White House’s summer timetable
is ambitious and keeping Democrats united won’t be easy.

The package faces a “brutal slog,” as
Politico puts it: “Absent a seismic political
shift, Speaker Nancy Pelosi and Senate Majority Leader Chuck
Schumer will have to draft a sprawling bill that can only afford to
lose three Democratic votes in the House and zero in the Senate.”
Democratic lawmakers will be coming up with their own demands,
pushing what at times will likely be competing interests. “The
first package was obviously a pandemic, an emergency. It was his
first ask. It was wildly popular,” said one Democratic lawmaker
told Politico. “This one, it’s different territory.”

5 Things You Should Know About Biden’s Infrastructure Plan

Here’s a roundup of some initial reaction to and analysis
of Biden’s $2.25 trillion plan.

Critics find plenty to dislike:
“While there’s widespread support across the political aisle
to upgrade the nation’s infrastructure, critics of Biden’s plan ―
and even some of its supporters ― have raised questions whether all
the spending in the plan is truly needed, whether the tax increases
on corporations are excessive and why the White House is using an
unusual accounting approach to capture the deficit impact,” The
Washington Post’s Heather Long
writes.

Biden is making a big bet on the benefits of tackling climate
change: The president is trying to make the case that
fighting climate change can create jobs, not destroy them. “For
decades, Democrats have insisted ‘jobs versus the environment’ is a
false choice. But in the scale of his proposal and the audacity of
his promises, Mr. Biden may be laying his political future on that
idea,” The New York Times
reports. “He faces a lot of skepticism.” Union
leaders, the Times adds, “are skeptical that the well-paying union
jobs the president promises will materialize, noting that, so far,
the ecosystem of manufacturers, contractors and utility developers
that has grown up around the green economy has often been
low-paying and hostile to unions.”

And he’s challenging GOP orthodoxy on taxes and economic
growth: The 2017 Republican tax cuts were based on the
argument that lowering taxes on businesses would spur investment
and job creation. But gross domestic product grew at a 2.4% rate in
the two years before the tax overhaul and 2.4% in the two years
after,
writes Patricia Cohen of The New York
Times.

“By contrast,” Cohen says, “the animating idea behind the
tax plan put forward by the Biden administration on Wednesday is
that the best way to increase America’s competitiveness and foster
economic growth is to raise corporate taxes to finance huge
investments in transportation, broadband, utilities and more. … By
shifting the tax burden, the Biden administration is saying
corporations — among the biggest winners the last time around —
should pick up more of the tab this time.”

Not surprisingly, that’s drawn strong opposition from the
business community. “We strongly oppose the general tax increases
proposed by the administration, which will slow the economic
recovery and make the U.S. less competitive globally — the exact
opposite of the goals of the infrastructure plan,”
Neil Bradley, chief policy officer of the U.S. Chamber of
Commerce said in a
statement Wednesday.

He’s also taking sides in a Democratic Party argument:
In announcing his infrastructure plan Wednesday, Biden said
he wants to build from the “middle out.” Bloomberg Businessweek’s
Peter Coy
explains that the phrase is more than just a
rhetorical flourish. Biden, he says, “was taking sides in a
long-running argument inside the Democratic Party. He was siding
with the populist, liberal wing of the party and implicitly
distancing himself from the low-tax, pro-business wing associated
with former Treasury secretaries Robert Rubin and Lawrence Summers,
among others.”

The phrase, Coy explains, was coined by Nick Hanauer, a
wealthy entrepreneur and venture capitalist who now advocates for
liberal causes, and it indicates an economic approach focused on
building a prosperous middle class in order to juice broad-based
growth. “It’s the left’s alternative to top-down, or trickle-down
economics, which is based on the concept that cutting taxes and
reducing regulation on the rich will unleash their entrepreneurial
energies and benefit all,” Coy writes. And Biden’s use of the term
is another indication that while he has long been seen as a
centrist, he’s taking a more progressive approach to the economy
than Bill Clinton or Barack Obama did.

“The Biden administration is the first administration in
my lifetime to actually believe that the neoliberal framework is
wrong and to advance a counter-narrative and new agenda,” Hanauer
tells Coy. “It’s incredibly exciting and will lead to ridiculous
prosperity for everyone.”

Tax hikes on the rich are popular. Corporate tax hikes
less so: A
Morning Consult/Politico poll released Wednesday
found that more than half of voters support tax hikes to fund
infrastructure spending — and voters by a two-to-one margin prefer
infrastructure improvements paired with tax increases on the rich
and corporations to those without tax hikes.

But the tax hikes on individuals earning more than
$400,000 a year and those on corporations aren’t seen the same,
with a 10 percentage point drop in support for the business
taxes.

The survey of 2,043 registered voters was conducted
March 26 to 29 and has a margin of error of 2
points.

A programming note: We're off
tomorrow and will be back in your inbox on Monday. Send your
feedback to yrosenberg@thefiscaltimes.com.
And please tell your friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis