Democrats Get a Big Boost in Bid for More Spending Bills

By Yuval Rosenberg

Democrats Get a Big Boost in Bid for More Spending Bills

Democrats in the Senate won a technical procedural victory on
Monday that could open the door to billions more in spending this
year.

Budget reconciliation, which allows the Senate to pass bills
related to spending and taxation with a simple majority, can be
used more than once per fiscal year, according to a decision by the
Senate parliamentarian.

The ruling gives Democrats more options for passing spending
bills — potentially including parts of the $2.3 trillion
infrastructure package President Joe Biden unveiled last week — by
allowing the Senate to reopen the previous reconciliation bill
passed in February and add new instructions, avoiding the 60-vote
minimum required for most legislation in the upper chamber.

The parliamentarian’s decision has far-reaching implications for
how the Senate operates. “The guidance could substantially weaken
the filibuster by allowing the majority party to use budget
reconciliation — a powerful tool that allows measures related to
taxes and spending to pass on a majority vote — multiple times in a
single fiscal year,” Emily Cochrane of The New York Times
wrote. “That would dilute the power of the
minority to stall or block such legislation in the Senate, the
latest bid by the party in power to chip away at the arcane
filibuster rules.”

It's not clear if or how Democrats will use the new procedural
option, but a spokesperson for Senate Majority Leader Chuck Schumer
(D-NY), who brought the issue to the parliamentarian, said the
ruling “allows Democrats additional tools to improve the lives of
Americans if Republican obstruction continues.”

Still, the decision is not a cure-all for Democrats, who still
need to confront divisions within their own caucus. But it does
potentially reduce the effectiveness of Republican opposition.
“It’s important because it gives us a little more flexibility — we
don’t have to push everything into one package,” Budget Committee
Chair Sen. Bernie Sanders (I-VT) told MSNBC, while highlighting the
issues he wants to address. “The ruling of the parliamentarian
gives us a little bit more opportunity in that direction.”

The bottom line: Democrats now have
another option for passing the kind of large-scale programs that
President Biden has called for, but the procedural win doesn’t
eliminate many of the essentially political constraints. In a note
Tuesday, Goldman Sachs analyst Alec Phillips
said that while the parliamentarian’s decision
could allow Democrats “to pass a variety of fiscal initiatives
separately, rather than one large bill,” maintaining unity on
complex issues could still be a challenge: “the constraint on
multiple reconciliation bills was not procedural, it was political,
and the political disadvantages haven’t changed,” he
said.

Quote of the Day: What Counts As Infrastructure?

“Washington has an attention span of several weeks, and this
debate is a century old.”

– Shane M. Greenstein, an economist at Harvard Business School,
talking to The New York Times about the newly revived debate over
what qualifies as infrastructure.

Republicans accuse the Biden administration of stretching
the term in its
$2.3 trillion infrastructure plan to include
questionable items, such as electric vehicles and care for the
elderly, while arguing that only more traditional issues such as
roads and bridges should be in the proposal. President Biden pushed
back against GOP complaints Monday, saying that previous
infrastructure plans backed by Republicans touched on a wide
variety of issues, including, for example, broadband internet.
“Their definition of infrastructure has changed,” Biden told
reporters.

Biden Officials Overstated Infrastructure Jobs Estimate,
Fact-Checkers Say

President Biden is calling his $2.25 trillion infrastructure
plan the “American Jobs Plan,” and he claimed last week that the
economy will create 19 million jobs if it is passed. In celebrating
a strong March employment report that showed 916,000 jobs added
last month, Biden on Friday
said: “Independent analysis shows that if we pass
this plan, the economy will create 19 million jobs — good jobs,
blue-collar jobs, jobs that pay well.”

Other administration officials have also used that number in
promoting the president’s plan, more directly attributing the job
growth to the infrastructure plan. But
multiple
fact-checkers
say that claim is an exaggeration — and a pretty
big one at that.

The 19 million figure comes from a
report published last week by economic research
firm Moody’s Analytics that projected that the economy would add
about that many jobs by 2030 if the infrastructure plan was passed.
But the report also said that the economy would add 16.3 million
jobs over the same time period without the infrastructure package,
and 15.65 million jobs without Biden’s Covid rescue package or the
infrastructure bill.

So the more accurate measure of the expected job creation
resulting from the American Jobs Plan is about 2.7 million jobs,
far fewer than Biden or other officials have claimed.

The White House and the Transportation Department
told CNN that both National Economic Council
Director Brian Deese and Transportation Secretary Pete Buttigieg
had intended to say that the infrastructure plan would “help”
create 19 million jobs rather than attributing all the growth to
Biden’s proposal. Buttigieg told CNN on Monday that he should have
been more precise and that the real number of jobs attributable to
the American Jobs Plan in Moody’s modeling is 2.7 million.

The bottom line: Moody’s analysis is
largely positive on the plan’s expected effects. “The
infrastructure plan results in a stronger economy over the coming
decade, with higher GDP, more jobs and lower unemployment,” the
report says, “Passage of the American Jobs Plan would ensure that
the economy quickly returns to full employment, and the plan would
provide a meaningful boost to long-term growth.” But in crafting
its infrastructure sales pitch, the Biden administration has
unnecessarily muddled its messaging by overreaching on the jobs
number.

Record Growth Seen for World Economy: IMF

Driven by mass vaccinations and enormous amounts of government
support, the rebound from the Covid-19 pandemic will produce record
economic growth, the International Monetary Fund said Tuesday in
its
latest forecast.

The global economy is now projected to grow at a rate of 6% in
2021, the IMF said, raising its estimate of 5.5% made in January.
If the projection holds, it will mean the fastest economic growth
for the world economy in IMF records, which date to 1980.

“A way out of this health and economic crisis is increasingly
visible,” IMF chief economist Gita Gopinath said.

US growth even faster: The IMF expects US growth to come
in at 6.4% in 2021, the fastest pace since 1984, with the economy
surpassing its pre-Covid level this year. Advanced economies as a
group will grow at an estimated 5.1% rate, with most returning to
pre-pandemic levels next year.

Governments deserve credit: While the pandemic took a
terrible economic toll over the last year, it could have been much
worse if governments had not responded so aggressively. “Although
difficult to pin down precisely, IMF staff estimates suggest that
the contraction could have been three times as large if not for
extraordinary policy support,” the report says.

More work to do: The IMF warned that there is still
considerable uncertainty about how the recovery will play out, and
that policymakers will need to proceed cautiously. The
Washington-based financial organization recommended that
governments make public investments to boost long-term productivity
while avoiding “sudden cliffs” in support for the unemployed:

“Considering the large uncertainty surrounding the outlook,
policymakers should prioritize policies that would be prudent,
regardless of the state of the world that prevails—for instance,
strengthening social protection with wider eligibility for
unemployment insurance to cover the self-employed and informally
employed; ensuring adequate resources for health care, early
childhood development programs, education, and vocational training;
and investing in green infrastructure to hasten the transition to
lower carbon dependence.”

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