Do or Die Time for Bipartisan Infrastructure Plan

U.S. President Biden visits Mack-Lehigh Valley Operations Manufacturing Facility in Macungie, Pensylvania
EVELYN HOCKSTEIN
By Yuval Rosenberg

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.

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.

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.”

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.

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.

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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