Biden's Spending Plan Faces a Major Snag

Biden's Spending Plan Faces a Major Snag

U.S. President Biden signs the Infrastructure Investment and Jobs Act at the White House in Washington
JONATHAN ERNST
By Yuval Rosenberg and Michael Rainey
Monday, November 15, 2021
Congress is back, and it’s going to be busy. A bipartisan group of lawmakers joined President Joe Biden as he signed the $1.2 trillion infrastructure bill Monday afternoon. Biden and Democrats hope to be able to host another celebratory signing ceremony before long, but their Build Back Better package faces a number of hurdles — potentially including some new ones from the Congressional Budget Office.

Here’s a look at today’s win for Biden and what’s ahead.

Biden Signs Bipartisan Infrastructure Bill, Celebrates a Much-Needed Win

Following months of delays and legislative maneuvering, President Joe Biden signed the $1.2 trillion bipartisan infrastructure bill into law Monday, notching a significant political victory amid slumping polls and an uncertain future for other elements of his agenda.

“For too long, we’ve talked about having the best economy in the world,” Biden said in his prepared remarks. “We’ve talked about asserting American leadership in the world with the best and safest roads, railways, ports, and airports. Here in Washington, we’ve heard countless speeches, promises, and white papers from the experts. But today, we are finally getting it done.”

The Infrastructure Investment and Jobs Act, which passed the Senate in August and the House earlier this month, allocates roughly $1.2 trillion over 10 years for a wide variety of infrastructure projects. About $550 billion of that total is new spending, with the rest representing a renewal of expected funding.

The new spending is divided into $284 billion for surface transportation — which includes roads and bridges, rail, airports, ports, public transit and electric vehicles — and $266 billion for core infrastructure, which includes the power grid, broadband services, water systems and environmental resiliency. Some highlights:

* $73 billion to upgrade the nation’s electrical grid;

* $66 to improve Amtrak rail service;

* $65 billion for broadband internet service, with an emphasis on access in rural areas;

* $47 billion to improve resistance to fires, hurricanes and floods;

* $21 billion for environmental clean-up projects overseen by the Environmental Protection Agency;

* $15 billion to remove lead pipes;

* $7.5 billion for electric vehicle infrastructure.

Some of the spending will be offset by revenue sources, including $200 billion in unused Covid-19 relief spending and about $50 billion in unemployment benefit funds returned by the states, but the offsets will not cover the full cost. According to the Congressional Budget Office, the infrastructure package will add $256 billion to the federal deficit over the next 10 years.

A bipartisan effort: Lawmakers from both parties attended the signing ceremony on the White House lawn, including key negotiators Sens. Kyrsten Sinema (D-AZ) and Rob Portman (R-OH), and the president said that the passage of the bill is “proof that despite the cynics, Democrats and Republicans can come together and deliver results.”

Still, the votes on the bills were lopsided, with all but a handful of Democrats voting yes and the majority of Republicans voting no. In the Senate, 19 of 50 Republicans supported the bill, while just 13 out of 213 Republicans in the House did so — and they have since faced a backlash for their bipartisan cooperation.

Most Republican supporters of the legislation did not attend the signing ceremony, including Senate Minority Leader Mitch McConnell (R-KY).

Bipartisan support weakening: While the White House is hoping to win some political points from the long-awaited signing of the infrastructure bill, support for the effort appears to be slipping among voters. In August, 58% of respondents in a Morning Consult poll said they support the bill, but by last week that number had dropped to 50%. While support among Democrats has remained steady at about 80%, approval among Republicans fell from 40% to 22%.

Supervisor named: The White House said Sunday the former New Orleans Mayor Mitch Landrieu will oversee the implementation of the infrastructure bill. “In this role, Landrieu will oversee the most significant and comprehensive investments in American infrastructure in generations,” Biden said in a statement.

Landrieu, who also served as lieutenant governor of Louisiana, will be a senior White House adviser, working through the National Economic Council to coordinate the infrastructure spending. According to The Wall Street Journal, Landrieu was chosen in part for his experience in helping to rebuild New Orleans after Hurricane Katrina devastated the city in 2005.

Dems' $1.85 Trillion Spending Plan Faces New CBO Stumbling Block

House Democrats are racing toward a vote on their Build Back Better package of social spending, climate programs and tax changes this week — though their race has been less like a sprint and more like a marathon run through a maze. Now, as they near what they hope is the finish line, their path to the tape still depends on — and could be complicated by —an official cost estimate of the legislation from the Congressional Budget Office.

Lawmakers have another recess planned for Thanksgiving week, so Democrats hope to be able to vote on BBB before then. They’re still waiting on the full CBO analysis of the legislation, though. The nonpartisan scorekeeper said Monday that it anticipates publishing its complete estimate by the end of the day on Friday — a timeframe that could push any House vote into the weekend or next week.

A stumbling block from CBO: The nonpartisan scorekeeper, which has been releasing portions of its BBB analysis, may have already added another hurdle for Democrats, though. Their plan to fully pay for proposed new spending relies on spending $80 billion over a decade to beef up Internal Revenue Service enforcement and crack down on high-earning tax dodgers, an investment that the administration has projected could raise some $400 billion in revenue over a decade. The CBO analysis of that plan was always expected to come up well short of the administration’s revenue projection, and CBO Director Phillip Swagel reportedly said Monday that the IRS plan would generate far less — about $120 billion over 10 years.

That lower estimate could give fiscal conservatives in both the House and Senate pause about backing BBB, though the White House is reportedly already trying to make the case that its own projections are more accurate.

“The White House has begun bracing lawmakers for a disappointing estimate from the budget office, which is likely to find that the cost of the overall package will not be fully paid for with new tax revenue over the coming decade,” Alan Rappeport of The New York Times reports. “Senior administration officials are urging lawmakers to disregard the budget office assessment, saying it is being overly conservative in its calculations, failing to properly credit the return on investment of additional I.R.S. resources and overlooking the deterrent effects that a more aggressive tax collection agency would have on tax cheats.”

As Rappeport indicates, the markedly different projections result from different assumptions in modeling out how the stepped-up enforcement would play out over time: “On Monday, Mr. Swagel suggested that the Biden administration was betting too heavily on the idea that more aggressive auditing would deter rich people and corporations from finding ways to avoid paying taxes. He said such groups could take even more aggressive measures to keep their tax bills low, making it harder for the federal government to collect as much tax revenue as anticipates through better enforcement of the tax code.”

Ben Harris, Treasury’s assistant secretary for economic policy, told the Times that it was “patently absurd” that strengthening IRS enforcement wouldn’t result in greater compliance. The Treasury also expects that greater compliance to be sustained at higher levels over time than CBO does.

The bottom line: House moderates who insisted on seeing a CBO score before voting on the Build Back Better bill have pledged to work toward passage even if the official cost estimate diverges from the White House’s numbers, but the budget office’s analysis of the IRS plan could send at least some Democrats searching for other revenue — and CBO’s timeframe for completing its full estimate likely means lawmakers are in for a long week ahead. If or when the House does pass the bill, it will almost certainly have to take up the package again within weeks after the Senate sends back its own version.

The Rest of Congress’s Year-End To-Do List

While the Senate waits for BBB to come over from the House, it will take up the National Defense Authorization Act, the massive annual defense bill, this week. And the clock is ticking toward December 3, when government funding is set to expire. Senate Majority Leader Chuck Schumer (D-NY) said in a letter to colleagues Sunday that lawmakers will likely need to pass another short-term extension of funding to avoid a shutdown in less than three weeks.

Congress will also have to raise or suspend the debt ceiling again — though it remains unclear how Democrats plan to do that in the face of Republican’s renewed insistence that they will not help raise the borrowing limit again. The infrastructure bill Biden signed on Monday may speed the need for another hike. It directs the Treasury Department to put $118 billion into the Highway Trust Fund, which could move up the projected “X date” when the Treasury is no longer able to pay its bills. That date, according to the Bipartisan Policy Center, could be as soon as mid-December or as late and mid-February.

It all will make for something of a mad scramble. “Keep your schedule flexible for the remainder of the calendar year," Schumer wrote in his letter. "I am confident we can get each of these important items done this year, but it will likely take some long nights and weekends."

Support for Biden Hits a New Low: Poll

Though the White House is hoping for a big boost as the infrastructure package becomes law, a new poll shows that public support for President Biden continues to drop.

The Washington Post-ABC News poll of 1,001 adults found only 41% of respondents expressing approval of the Biden presidency, a decline from a peak of 52% in the spring — and the poll was conducted after the House passed the infrastructure bill.

Much of the drop in support seems to be driven by economic conditions, especially inflation, and Democrats’ months-long failure to pass two pieces of legislation that make up much of Biden’s agenda. Seventy percent of respondents rated the economy negatively, and more than 60% said that Biden hadn’t accomplished enough in his time in office.

In an ominous sign for Democrats, 51% of voters said they planned to vote for a Republican in the midterms.

“Overall, the survey offers a set of harsh judgments about the president’s performance and the state of the economy,” The Washington Post’s Dan Balz, Scott Clement and Emily Guskin report. “Together, they send a stark warning to Democrats about their prospects in the 2022 midterm contests.”

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