Biden Rejects Republicans’ Latest Offer on Infrastructure
Republicans led by Sen. Shelley Moore Capito (R-WV) on Friday upped their infrastructure offer by about $50 billion, but President Biden said it’s still not enough, according to the White House. The two sides agreed to speak again on Monday.
"Senator Capito conveyed to the president a new offer from her group which consisted of an about $50 billion increase in spending across a number of infrastructure programs," White House Press Secretary Jen Psaki said in a statement. "The president expressed his gratitude for her effort and goodwill, but also indicated that the current offer did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs. He indicated to Senator Capito that he would continue to engage a number of senators in both parties in the hopes of achieving a more substantial package."
Republicans had previously presented a $928 billion infrastructure package that included $257 billion in new spending. Biden, who initially proposed a wide-ranging $2.25 billion plan, had scaled back his offer to $1.7 trillion and, in a meeting with Capito earlier this week, reportedly insisted on $1 trillion in new spending. If the latest GOP offer increased the new spending by the roughly $50 billion cited by the White House, it would still leave the two sides nearly $700 billion apart.
Manchin not ready for Democrats to go it alone: Biden is continuing the talks in the face of increasing pressure from some Democratic lawmakers and progressive activists to move ahead without GOP support. Some analysts have suggested that the ongoing negotiations are, at least to some degree, a prolonged act of political theater aimed at eventually securing the backing of Sen. Joe Manchin (D-WV) for a Democratic infrastructure package. Manchin, a key vote in the evenly divided Senate, has been outspoken about his desire for bipartisanship — and he said again Thursday that he doesn’t believe Democrats should try to pass legislation on their own.
In interviews with CNN and NBC News, Manchin said he wants bipartisan talks to continue and believes they can yield results. "We need to do something in a bipartisan way," Manchin told CNN. "These [talks] take time. I know everyone is in a hurry right now. If anyone understands the process it’s President Joe Biden. … I hope his staff understands it also. ... We've got to work together, and that takes a lot of time and energy and patience."
Any effort to pass an infrastructure package using the special process called budget reconciliation would require unity among all 50 Senate Democrats, meaning that Manchin’s objection could threaten the prospects for passage.
Manchin said his push for bipartisanship also applied to voting rights legislation being considered. He added that he would not bend to pressure from fellow Democrats who want to move ahead on infrastructure without Republicans and have pressed to change the Senate’s filibuster rules, which now require 60 votes to advance most legislation.
The pressure to strike a bipartisan deal may also have been ratcheted up by a ruling from the Senate parliamentarian last week that effectively means that Democrats will only be able to use the reconciliation process one more time this year. "Aides say there’s now more pressure on Biden to cut a deal with Senate Republicans on a scaled-down infrastructure package because that would allow for more spending in a reconciliation package with priorities that are unlikely to get GOP support," The Hill’s Alexander Bolton reports.
Progressives ramp up the pressure: Still, some other Democratic lawmakers are increasingly urging Biden to cut off talks with Capito or warning that the president may give up too much in trying to win over Republicans — and could lose needed Democratic votes in the process.
"If what we’ve read is true, I would have a very difficult time voting yes on this bill—$2 trillion was already the compromise," Rep. Jamaal Bowman (D- NY) said Thursday, according to The Wall Street Journal. "President Biden can’t expect us to vote for an infrastructure deal dictated by the Republican Party."
And Sen. Sheldon Whitehouse (D-RI) tweeted earlier this week: "Best case: shrunk infrastructure bill w no serious climate stuff; Rs get bipartisan cred. Worst case: delay for nothing. Either way: climate to the curb."
What’s next: Psaki told reporters that the White House is keeping a "range of pathways" open on the infrastructure package and pointed to the transportation bill moving through the House Committee on Transportation and Infrastructure. Biden also spoke with Rep. Peter DeFazio (D-OR), the Transportation and Infrastructure Committee chairman, on Friday afternoon. DeFazio on Friday introduced a five-year, $547 billion surface transportation reauthorization bill called the INVEST in America Act that includes $343 billion for roads, bridges and safety improvements, $109 billion for transit and $95 billion for passenger and freight rail projects.
The package, which will be debated by DeFazio’s panel next Wednesday, comes after the Senate Environment and Public Works Committee unanimously advanced a $304 billion reauthorization bill that lawmakers have suggested could form the basis for an infrastructure deal.
Hiring Picks Up, but Pace of Recovery Disappoints
The U.S. economy added 559,000 jobs in May, the Bureau of Labor Statistics announced Friday in a report that managed to be both reassuring and disappointing at the same time.
On the positive side, job growth in May was significantly stronger than it was a month earlier, and the unemployment rate dropped three-tenths of a point to 5.8%, the lowest level since March 2020. The jobs numbers are moving in the right direction, increasing confidence that the economic recovery from the Covid-19 pandemic is gathering momentum.
Job growth was weaker than expected, though, with many economists hoping to see more than 670,000 jobs added in May. And the labor participation rate was little changed, suggesting that millions of workers remained on the sidelines last month, despite growing demand that is beginning to show up in significant wage increases.
"On the surface, yes, the jobs numbers were strong, a half million jobs is obviously a good thing, but given where we are in the economy, all else equal it could have been stronger," economist Michelle Meyer of Bank of America told Bloomberg News. "The fact that it wasn’t is likely a function in large part to supply constraints and labor shortages."
White House takes credit: Speaking to reporters in Delaware, President Joe Biden was quick to link the solid jobs growth to his policies, including a major push for vaccinations, enhance unemployment benefits and direct relief payments for millions of Americans, which he said have boosted the recovery.
"[W]e have now created over 2 million jobs in total since I took office — more jobs than have ever been created in the first four months of any presidency in modern history, triple the rate of my predecessor, eight times the rate of President Reagan," Biden said. "No other major economy in the world is growing as fast as ours," he added. "None of this success is an accident; it isn’t luck."
At the same time, the economy faces a number of hurdles, including a lack of childcare for workers and the long-running problem of wage inequality. "These challenges are also reflected in our jobs data, and they are why the American Jobs Plan and the American Families Plan are so important," Secretary of Labor Marty Walsh said. "We need to invest in our workforce and our communities to achieve an inclusive recovery and a competitive economy."
Republicans will disagree: Still, the strength of the report could work against the president’s push for more long-term spending on infrastructure and social welfare programs. "[T]he faster pace of job creation will offer a window for Republicans to say that the federal government does not need to spend a great deal more than the trillions of dollars already pumped into the economy since the virus swept through the country with startling speed last March," Politico’s Ben White and Rebecca Rainey wrote.
The bottom line: The economy is growing but the pace is disappointing, and although there are clear improvements, there are also signs that we have a long way to go before returning to anything like normal conditions in the labor market.
"[T]he economy still remains 10 million jobs short of its pre-pandemic trend," wrote economist and former Obama administration official Jason Furman. "At May’s pace of job growth it will take until August 2023 to close the jobs gap, and maintaining the May pace will be difficult as the lower hanging fruit of reopening is picked."
Biden Changes His Tune on Jobless Benefits
The $300 per week supplemental unemployment benefits being paid by the federal government through Labor Day have become increasingly controversial, with a growing number of Republicans and business-friendly interest groups calling for an early end to the program, blaming the payments for the sluggish jobs recovery.
Twenty-five states, all led by Republican governors, have announced they will end the program early, starting as soon as this month. And on Friday, several GOP lawmakers alluded to the enhanced benefits as they sought to blame Democrats for the lackluster jobs report. "Biden policies are disincentivizing work & harming our recovery," Republican Rep. Darin LaHood (IL) tweeted, echoing an oft-heard complaint that generous unemployment benefits, part of the $1.9 trillion Covid relief act signed into law in March, are allowing people to stay out of the labor market.
Some economists dispute the notion that the enhanced unemployment benefits are the main factor in disappointing job growth, though most agree that they have played at least a minor role. "[T]he idea that unemployment benefits are serving as a barrier to re-entry in the labor market suffered a major blow" in the May jobs report, Joseph Brusuelas, chief economist at the consulting firm RSM, wrote Friday. "Job gains of 292,000 in the leisure and hospitality sector in May and 1.24 million over the first five months of the year imply that such arguments are not tethered to empirical reality and have more to do with the politics of the Biden administration’s first year than an objective assessment of the data."
Still, the repeated criticism of the enhanced benefits appears to have had an effect on Democrats, some of whom had hoped to extend the payments or even make them a permanent feature of the unemployment system. On Friday, the president said for the first time that he thinks the program should expire on schedule, marking a shift in the administration’s attitude toward the benefits. The extra money "helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated. But it's going to expire in 90 days," he said, adding that it "makes sense it expires in 90 days."
Quote of the Day
"Raising taxes is always a bit risky politically. So even though there’s polling showing that taxing the rich is popular, I’d bet quite a few of them just aren’t convinced."
– Caroline Behringer, a Democratic strategist and former senior House aide, in a Politico piece detailing some concerns among Democrats about President Biden’s proposed tax hikes.
- The New Jobs Numbers Raise a Question: What Kind Of Economy Do We Want? – Paul Waldman, Washington Post
- Manchin Offers Little Comfort to Frustrated Democrats – Stephen Collinson, CNN
- Let's Pay for Infrastructure in Ways That Are Fair to Future Generations – Michael Granof, The Hill
- Hot Vax Summer Is Looking Lukewarm – Neil Irwin, New York Times
- Behind The May Jobs Report: Where Are The Workers? – Catherine Rampell, Washington Post
- A Sign This Economic Recovery Isn't Too Hot to Handle – Brian Chappatta, Bloomberg
- Biden's Budget Predicts The Roaring Twenties Will End In 2022. Uh Oh – James Pethokoukis, The Week
- The IRS: A Broken Home in Need of Repair – Samuel Hammond and David Koggan, Niskanen Center
- Will Congress Abandon America’s Seniors? – Michelle Cottle, New York Times
- Can the Rich Pay for a Better America? – Paul Krugman, New York Times
- The Fed's Inflation Logic Is Flawed, and Dangerous – Richard Cookson, Bloomberg
- DARPA Pioneered the Internet—Its Model Can Revolutionize Vital Research – Arati Prabhakar, The Hill
The Bottom 90% of Americans Are Borrowing From the Top 1% – Peter Coy, Bloomberg Businessweek