Will Biden Back Bipartisan Senate Infrastructure Deal?
The White House said Thursday evening that it had been briefed on the infrastructure agreement emerging from a bipartisan group of 10 senators but had questions about the details of the deal, leaving it unclear whether President Joe Biden will support it. It’s also not clear whether the “compromise framework” tentatively agreed to by five Republicans and five Democrats can garner enough support among other lawmakers to ensure its passage.
“The president appreciates the senators’ work to advance critical investments we need to create good jobs, prepare for our clean energy future, and compete in the global economy,” Deputy Press Secretary Andrew Bates said in a statement. “Questions need to be addressed, particularly around the details of both policy and pay-fors, among other matters. Senior White House staff and the Jobs Cabinet will work with the Senate group in the days ahead to get answers to those questions, as we also consult with other members in both the House and the Senate on the path forward.”
The bipartisan deal under discussion reportedly calls for some $974 billion in infrastructure spending over five years, with the funding focused on "core, physical infrastructure." Extrapolated to eight years, the total cost would come to $1.2 trillion, and the package includes about $579 billion in new spending.
The plan would not increase taxes as Biden has proposed, but it reportedly would repurpose unspent Covid-19 relief funds, rely on public-private partnerships and include an option to index the gas tax to inflation, an idea the president has opposed as a violation of his pledge not to raise taxes on Americans making less than $400,000 a year. “The White House has made it clear to the group of 10 senators that the indexing provision, as well as any discussion about an electric vehicle mileage tax, would violate Biden’s red line and that he would reject it,” The Washington Post reported, citing a person familiar with the negotiations.
The deal will face hurdles in Congress as well. Some Republicans will likely object to the size of the package, while progressives are already voicing concerns that the deal is too small and passing legislation focused on roads, bridges and other physical infrastructure will make it harder to pass the climate, caregiving and education plans they say are needed. "We cannot allow climate denial to masquerade as bipartisanship," said Sen. Ed Markey (D-MA). "No climate, no deal."
Democrats also worry that talks on a bipartisan deal will drag on and use up the precious few weeks they have left to pass a package this year.
The bottom line: Congressional Democrats are working on two tracks, with Senate Democrats preparing to proceed with a budget process called reconciliation that would allow them to pass legislation with 51 votes rather than 60. But plenty of obstacles remain on both tracks.
Poll of the Day: Americans’ Priorities for Congress
Just over a third of American voters say that passing an infrastructure spending bill should be a top priority for Congress, according to a Morning Consult-Politico poll out this week — lower than the share who want lawmakers to prioritize economic recovery from the Covid-19 pandemic (55%), reduction of the federal budget deficit (42%) or enact health care reform (41%).
While 35% call infrastructure legislation a top priority, another 31% say it is “an important, but lower priority” and 21% say it’s not too important or should not be done.
The poll also found that Biden’s proposal for a 15% corporate minimum tax is the most popular option among proposed ways to finance new infrastructure spending (see chart below). Biden’s nearly $2.3 trillion infrastructure proposal garnered slightly more support than the nearly $1 trillion counteroffer from Senate Republicans, which the president rejected.
The survey of 1,990 registered voters was conducted from June 4-7 and has a margin of error of 2 percentage points.
Biden Returns $2 Billion in Trump Border Wall Money to Pentagon
The Biden administration returned $2 billion to the Defense Department that had been redirected by former President Donald Trump to fund border wall construction in the Southwest.
The money is the unspent balance of the $3.6 billion in Pentagon funds Trump shifted to barrier construction after declaring a national emergency on the border with Mexico.
The $2 billion will be used as Congress originally intended, to fund more than 60 construction projects at military installations in the U.S. and overseas. The projects include an elementary school in Germany for the children of U.S. military personnel, a fire and rescue station in Florida, and a missile interceptor site in Alaska, all of which had been put on hold after Trump redirected the funding.
In announcing the move, the White House denounced Trump’s handling of the border situation and accused the former president of wasting public funds.
“Building a massive wall that spans the entire southern border and costs American taxpayers billions of dollars is not a serious policy solution or responsible use of federal funds,” the administration said in a statement. “In total, the previous administration built 52 miles of wall where no barrier previously existed, with some wall segments costing American taxpayers up to $46 million per mile. The effort diverted critical resources away from military training facilities and schools, and caused serious risks to life, safety, and the environment. It also took attention away from genuine security challenges, like drug smuggling and human trafficking.”
According to CBS News, Trump’s effort to build the border wall with Mexico ranks as one of the most expensive federal construction projects in American history. The Trump administration dedicated $15 billion to the project, including roughly $10 billion taken from defense and narcotics interdiction programs.
Social Security Less Damaged by Covid Recession Than Experts Feared
As the Covid crisis took hold in early 2020, budget experts worried that rapidly disappearing jobs and plummeting tax receipts would put a serious dent in Social Security’s finances. But according to The Wall Street Journal’s Kate Davidson Friday, the retirement and disability system is emerging from the recession in better shape than the experts feared.
Before the pandemic struck, the Social Security trustees estimated that the system would exhaust its reserves by 2035. In light of the Covid recession, the trustees updated their estimate last fall and moved that date up by one year, to 2034.
Other projections were more pessimistic. The Bipartisan Policy Center, for example, said the Social Security trust funds could run dry five years early if the recession proved to be as long-lasting and damaging as the one in 2008-2009, resulting in a 25% cut to benefits for retirees and a 13% cut for those on disability.
Now, however, BPC estimates that the cumulative effect of the Covid recession will be more modest, but still result in a loss of one or two years in the lifespan of the trust funds. The Social Security trustees are expected to release a new estimate that incorporates the most recent economic data, as well, but have delayed the update that typically comes in April as they gather more information.
What happened? Jobs have rebounded much faster than the last time around, with two-thirds of the jobs lost in the pandemic already recovered. By comparison, it took about four years to get to that point after 2009. In addition, claims for disability fell in 2020, the opposite of what usually happens in a recession, possibly due to the increased difficulty of traveling to Social Security offices to file claims, as well as the closure of many facilities.
The bottom line: Although there was great risk of serious harm, the Social Security trust funds survived the Covid crisis in better-than-expected shape. Still, the system is facing serious long-term financial challenges, which Congress appears to be in no hurry to address.
Chart of the Day: How Covid Changed Americans’ Spending
Boosted by record amounts of federal income support, consumer spending in the U.S. has rebounded close to the level of its pre-pandemic trend, but the mix of things Americans are buying has changed significantly. According to an analysis of data from the Bureau of Economic Analysis by economists Jason Furman and Wilson Powell III, as of April 2021, Americans have been spending a lot more on food and housing services, stock trades and used cars. Not surprisingly given the nature of the pandemic, spending on international travel and going to the movies has been down sharply.
“Note that some of these categories are quite small and by themselves are not macroeconomically consequential,” the authors write, “but together they are illustrative of the large change in spending patterns to date—and likely large ones that are ongoing.”
- The Tax System Is Working as Intended. So if We Want to Tax the Rich, Here Are Some Alternative Options – Catherine Rampell, Washington Post
- America's Tax System Is Rigged to Protect the Rich and Powerful – Jeffrey Sachs, CNN
- The Limits of a Wealth Tax – Eric Levitz, New York
- How the Gas Tax Could Help Pay for a $1 Trillion Infrastructure Proposal – Ian Duncan, Washington Post
- Is the America of Today Even Capable of Performing Great Building Feats? – George F. Will, Washington Post
- Why Won’t Republicans Rebuild America? – Paul Krugman, New York Times
- Carve-ins and Carve-outs: Open Questions for Global Tax Reform – Daniel Bunn, Tax Foundation
- Biden Unlikely to Get Corporate or Individual Tax Hikes – Dan Primack, Axios
- “Populist” Conservatives Rush to the Defense of Megarich Tax Dodgers – Alex Shephard, New Republic
- Biden Is Showing That the U.S. Can Help Vaccinate the World — and Lead It – Washington Post Editorial Board
- The Vaccines We Have Are Good. But They Could Be So Much Better – Michael V. Callahan and Mark C. Poznansky, New York Times
- Make Medicare and Medicaid Telehealth Coverage Permanent – Lyndon Haviland, The Hill
- The Bogus Claim That Democrats Voted Against Funding for Israel – Glenn Kessler, Washington Post