| | It’s been 34 days since President Joe Biden emerged from the White House flanked by a group of senators and announced that they had a bipartisan deal on an infrastructure package. Today, after more than a month of intense and uncertain talks, the negotiators fleshing out all the contentious details of the original framework said they really, actually had clinched an agreement on legislation to improve the country’s roads, bridges, transit, waterways and broadband network. The first procedural vote on the bill will likely take place tonight. Here’s what you need to know.
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| | Biden and Senators Reach $1 Trillion Infrastructure Deal
President Joe Biden and a bipartisan group of senators said Wednesday that they had resolved their major differences on a wide-ranging $1 trillion infrastructure deal, setting up a vote to advance the package as early as Wednesday evening.
What’s in the agreement: The deal calls for $550 billion in additional federal spending over five years, according to a White House fact sheet, down from $569 billion in the framework announced last month.
The bill includes:
* $110 billion in new funds for roads and bridges;
* $73 billion for clean energy and power grid improvements;
* $66 billion for passenger and freight rail;
* $65 billion for high-speed internet infrastructure;
* $55 billion for clean drinking water;
* About $50 billion for improving resiliency against climate change and cyber attacks;
* $42 billion for ports and airports;
* $39 billion for public transit, down from $49 billion in the original agreement; and
* $7.5 billion to build a national network of electric vehicle charging stations. The funding for those charging stations reportedly appears to be cut in half from the original deal, as the result of the elimination of a $20 billion “infrastructure bank” meant to spur private investment.
The White House touted the elements of the deal with a host of superlatives, saying it includes the largest-ever federal investment in public transit, the largest federal investment in passenger rail since the creation of Amtrak, the largest investment in electric vehicle infrastructure and clean energy transmission and the largest investment in drinking and waste water infrastructure.
Biden said the agreement would result in “the most significant long-term investment in our infrastructure and competitiveness in nearly a century” and touted the jobs he said would be created in repairing roads and bridges, replacing lead water pipes, upgrading the nation’s power grid and improving the resilience of critical infrastructure against extreme weather events. The White House said the new investments will add an average of about 2 million jobs a year over a decade.
“This deal signals to the world that our democracy can function, deliver, and do big things,” Biden said. “As we did with the transcontinental railroad and the interstate highway, we will once again transform America and propel us into the future.”
The financing: Portman said that the deal is paid for, and a summary of the package obtained by Politico says that the key pay-fors include $205 billion in unused Covid relief money, $53 billion in unused unemployment benefits, $50 billion from recouping fraudulently paid unemployment benefits, $49 billion saved by delaying a Medicare Part D rebate rule, $28 billion from applying tax information reporting requirements to cryptocurrency and $56 billion from projected additional economic growth, based on a 33% expected return on long-term infrastructure investments.
Big questions ahead for Biden’s agenda: It appears likely that 10 Senate Republicans will vote to proceed with debate on the bill, but even if the legislation does advance, it still faces a tough slog before it reaches Biden’s desk. Some Republicans may yet object to the funding sources in the deal, insisting that new spending be fully and credibly offset. And Biden’s overall agenda could still face some intraparty risks.
House members may put up some obstacles to the Senate infrastructure deal, for example. House Speaker Nancy Pelosi faces some pressure from fellow Democrats to ensure that their priorities are included in the final package. She wouldn’t commit Wednesday to leaving the bill as is once it gets to her chamber. “I can’t commit to passing something that I don’t know what it is yet,” Pelosi told reporters. “But I’m hoping for the best."
She and other Democrats will likely face intense pressure from the White House to avoid any tinkering that might derail the entire package.
Sinema says no to Democrats’ $3.5 trillion spending plan: Even as she celebrated the bipartisan infrastructure deal, Sen. Kyrsten Sinema (D-AZ), the lead Democratic negotiator, said she opposes the price tag on Democrats’ proposed $3.5 trillion “human infrastructure” spending package, the other major component of Biden’s economic plan, which would likely need the backing of all 50 Senate Democrats to pass.
"I have told Senate leadership and President Biden that I support many of the goals in this proposal to continue creating jobs, growing American competitiveness, and expanding economic opportunities for Arizonans. I have also made clear that while I will support beginning this process, I do not support a bill that costs $3.5 trillion," Sinema said in a statement.
Sinema’s statement could actually help line up Republican support for the bipartisan infrastructure deal, but it calls into question the size and scope of the reconciliation package Democrats are preparing — a package that Pelosi said has to pass before she’ll bring the bipartisan deal up for a House vote. Progressives pushed back against Sinema’s stance and threatened to exert their own leverage on the bipartisan package, with Rep. Alexandria Ocasio-Cortez (D-NY) tweeting: "Good luck tanking your own party’s investment on childcare, climate action, and infrastructure while presuming you’ll survive a 3 vote House margin."
The bottom line: Last month’s deal to make a deal is now a deal for real. But there’s still a long road ahead on both infrastructure bills.
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| Fed Says Economy Still Improving
The economy continues to strengthen but still has a way to go before hitting the Federal Reserve’s employment and inflation targets, central bank officials said Wednesday.
“We’re not there,” Fed Chair Jerome Powell told reporters after a meeting of the Federal Open Market Committee. “And we see ourselves as having some ground to cover to get there.”
The committee said it would hold interest rates near zero and continue to purchase assets up to $120 billion a month until “substantial further progress” is made.
“With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered,” the committee said in a statement. “Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”
Fed watchers saw today’s announcement as a sign that officials are now beginning to think about reducing their support for the economy. “The Fed is starting the clock on tapering,” Neil Dutta, head of U.S. economics at Renaissance Macro Research, told Bloomberg. “It is not happening now or even in September, but expect the pace of asset buying to slow down late this year or early next.”
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| Republican Senators Delay Emergency Security Bill
The $2.1 billion supplemental spending bill we told you about yesterday that would provide funds for the Capitol Police, enhanced security in the Capitol complex and a relocation program for Afghans who aided U.S. forces has hit a wall of “holds” placed by several Republicans in the Senate.
Sen. Richard C. Shelby (R-AL), the ranking member on the Appropriations Committee who helped forge the deal on the spending package, said that as many as seven Republicans had placed holds on the bill at one point or another. According to Roll Call, the lawmakers still currently objecting to the bill include Sens. Marsha Blackburn (TN), Mike Braun (IN) and Tom Cotton (AR).
Braun said he was using the hold to provide an opportunity to express his objections to the bill, as well as to the appropriations process in general. “I think a budget point of order is just going to eat up a little time on the floor, and it’ll give me a chance to talk about the dysfunctionality in general in terms of how we treat stuff, even something important like this,” he told Roll Call.
Just one objection to the bill would be enough to slow it down significantly by forcing it to go through more procedural steps. The legislation has received support from both Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY), and Schumer expressed optimism that the Senate will advance the bill “swiftly,” despite the current delay.
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| Quote of the Day
“People think that the president of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress.”
— House Speaker Nancy Pelosi (D-CA), speaking about student loan debt at a press conference Wednesday. In sharp contrast to progressives in her party, Pelosi indicated that she didn’t think student debt forgiveness is a good idea. “Suppose your child at this time does not want to go to college, but you’re paying taxes to forgive someone else’s obligation. You may not be happy about that,” she said.
Some Democrats maintain that the president does have the authority to forgive student loan debt. “President Biden can undo this debt — can forgive $50,000 of debt — the first day he becomes president,” Sen. Chuck Schumer (D-NY) said in December 2020, before Biden took office. “You don't need Congress. All you need is the flick of a pen.”
On Tuesday, Sen. Elizabeth Warren (D-MA) repeated the call for debt forgiveness. “The President of the United States can remove this sword,” she said. “The president can prevent this pain. The president can cancel $50,000 in student loan debt.”
The Biden administration has reportedly asked Education Secretary Miguel Cardona to provide an opinion on the president’s legal authority to forgive student loan debt, but no conclusions have been made public.
The cost of forgiving up to $50,000 student loan debt is estimated to be about $1 trillion, according to an analysis published by the Brookings Institution.
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| Number of the Day: $1,686
The IRS is sending out another 1.5 million refunds for taxes paid on unemployment benefits in 2020, with an average payment size of $1,686. Unemployment benefits are usually taxable, but under the American Rescue Plan, signed into law in March, the first $10,200 is exempted from taxation in the 2020 calendar year. The IRS says it has already issued refunds to 8.7 million people, with a total value of more than $10 billion. (h/t CNBC)
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