United States Senate photography studio, Public domain, via Wikimedia Commons
By Mark Mamerow
With the failure of Democrats’ election reform legislation in the US Senate, attention turns to infrastructure. As a bipartisan group of Senators prepare a compromise $1.2 trillion infrastructure package, their self-congratulatory backslapping is becoming hard to swallow. Morning Joe and The Situation Room are featuring a daily parade of self-important Senators, preening before the TV cameras, oozing smug self-regard for their colossal efforts to overcome political polarization and support America’s economic future.
The fact is, this “compromise” package, as currently constructed, is scarcely worthy of the adjective. President Biden’s original American Jobs Act proposed to spend $4 trillion across a variety of infrastructure, both “hard”—roads, bridges, ports, broadband—and soft—R&D, job training, and elder care. It was funded largely by an abrupt rollback of the most recent Republican tax cut, pushing the corporate tax rate from its current historic low of 21% back to 28%.
The bipartisan package doesn’t just slim down the spending in the Jobs Act. It has slashed it to the point that the contours of the original bill are unrecognizable. It’s not even a $1.2 trillion bill, as widely advertised. New spending is really only about $579 billion (though the adjective “only” must be used carefully when preceding an amount of that magnitude). The amputations of spending and scope are so drastic they bring to mind the Black Knight, hacked to pieces in the comedic sword battle by King Arthur in Monty Python’s Holy Grail. “Tis but a scratch”, the moderate Democrats assert, as the spending is radically shrunk. “It’s just a flesh wound” is their cry as the tax hike disappears. With a final, paltry version of the plan in place, the moderates boldly proclaim, as did the Black Knight to King Arthur’s back: “We’ll call it a draw.”
Of course, there’s no doubt that the original full Biden proposal was never going to make it into law. But the beating progressive heart of the bill was the financing proposal. Corporate America, which will benefit drastically from infrastructure improvements, was actually being asked to pay for something.
It’s worth noting here that the two financing mechanisms which made it into the latest compromise version are not actually all that terrible. The first mechanism involves the Federal gas tax. It would not be out-and-out raised, but it would be indexed to inflation. This actually makes perfect sense. As the costs of infrastructure funded by the gas tax inevitably rise due to inflation, the tax itself should keep pace. Why would we want it to immediately begin falling behind?
The second mechanism is Congress’s “go to” back up plan, deficit spending. For long term infrastructure investment, it’s a highly reasonable alternative. With interest rates near historic lows, investors are lining up to lend to the US Treasury at 30 year maturities, earning a return of only 2.11% (as of June 23rd), barely above inflation. Those funds would be paid back decades from now, in an economy that has grown and benefitted from today’s infrastructure improvements. It’s an easy win.
Nonetheless, basic fairness requires that the business community and wealthy individuals be asked to contribute something to infrastructure development. But they won’t do it. And it probably isn’t fair to lay all the blame on Senator Joe Manchin, although his fetish for bipartisanship has essentially handed a veto pen to the Republicans. Given the choice by Manchin, Republicans are not about to see their signature Trump era accomplishment—the drastic tax cut for corporations and the wealthy—be rolled back.
Manchin or not—the tax hike votes simply aren’t there. Democrats have only 50 votes in the Senate, and can consider themselves lucky to have that bare majority, having squeaked out two seats just this past January in the Georgia special elections. Manchin’s quixotic quest for comity wouldn’t even be an issue if the Democrats had more Senate power.
At this point, the original Biden bill is devolving into two pieces. Republicans do want to support the “hard” infrastructure bill, and as long as Democrats don’t force them to eat their tax increase vegetables before getting their infrastructure spending dessert, they will go along. The remaining “human infrastructure” piece—Biden’s climate change and social safety net provisions—will only pass if Democrats jam it through via the party-line “reconciliation” budget maneuver.
LIberal Democrats are getting worried, however. Once the Democratic moderates like Joe Manchin and Kirsten Sinema get their road and bridge spending, are they willing to help push through the “soft infrastructure” bill via reconciliation? Their votes would be needed. Prominent moderate Democrats remain noncommittal. This is becoming enough of an obstacle that the progressive Dems are threatening to hold back on supporting even the “hard” infrastructure bill.
As this post goes to press, however, the ever-slippery Senator Manchin has indicated a willingness to support a Democrat-only reconciliation version of the soft infrastructure bill. NBC News quotes Manchin as saying, “Republicans have drawn a line in the sand on not changing anything, and I thought the 2017 tax bill was a very unfair bill and weighted to a side that basically did not benefit the average American. …I think there are some adjustments that need to be made.”
Great news for Democrats, right? The only problem is that this position—and it may be the only position that ultimately works—violates Politics 101. Republicans are being allowed to stand shoulder-to-shoulder with Democrats, patriotically supporting America’s critical infrastructure improvements. After that, Democrats will stand in the corner they’ve painted for themselves, voting in favor of tax increases to enhance the social safety net, setting themselves up once again—at least in Republican campaign commercials—as job-killing socialists.
That may be the price of progress. Joe Biden and the Senate Democrats need to prove they can govern. After four years of chimerical “infrastructure weeks” in the Trump Administration, even a shrunken, withered infrastructure bill will be a major victory.