Infrastructure – Last week, a bipartisan group of senators (Cassidy (R-LA), Collins (R-ME), Manchin (D-WV), Murkowski (R-AK), Portman (R-OH), Romney (R-UT), Shaheen (D-NH), Sinema (D-AZ), Tester (D-MT) and Warner (D-VA) announced an agreement on a nearly $1 trillion infrastructure blueprint with several potential pay-fors.
Pay-fors under consideration include: repurposing unused COVID relief funds, creating a new infrastructure financing agency, promoting public-private partnerships, closing the tax gap, and imposing new user fees, including on electric vehicles. Also on the table: some degree of deficit spending. Importantly for Republicans, the proposal does not alter the Tax Cuts and Jobs Act.
Senators on both sides of the aisle are reserving judgment until they learn more details. However, there are early signs that the package will face multiple obstacles. During talks with the White House, Senators Pat Toomey (R-PA) and Shelly Moore Capito (R-WV) had for weeks proposed repurposing COVID relief funds for infrastructure but got nowhere.
Congressional progressives are already saying they will not vote for any bipartisan deal unless Senators Manchin, Sinema, and other Democrats commit to a follow-up reconciliation bill to address human infrastructure needs and “the climate crisis.” Congressman Ro Khanna (D-CA) tweeted last week that, “An infrastructure bill that doesn’t prioritize the climate crisis will not pass the House. Period.” In the same vein, House Speaker Nancy Pelosi said, “I don’t know how we can possibly sell it to our caucus unless we know there is more to come.”
As we have written before, many Republicans–if not the entire House Republican Conference–see no upside to voting for a $1 trillion infrastructure bill. By their lights, passing a “bricks and mortar” bill is the stepping-stone to the Democrats’ holy grail: reconciliation. This is not an unreasonable line of thinking. By passing a highway bill with modest climate change provisions—that is, by making them current law—Democrats could then leverage significant increases in climate programs under reconciliation. That becomes exceedingly more difficult if Democrats move to reconciliation without a regular-order infrastructure predicate.
This week, the Senate Commerce Committee will mark up the safety and rail portions of the Senate surface transportation reauthorization, getting the upper chamber one step closer to floor debate. House Majority Leader Hoyer (D-MD) announced that during the week of June 28th, the House will vote on H.R. 3684, the “INVEST in America Act,” which the House Transportation and Infrastructure Committee passed, on mostly partisan lines, last week.
We remain skeptical that a bicameral agreement on surface transportation can be reached before the September 30 deadline given the significant differences between the House and Senate bills, as well as the need to develop pay-fors acceptable to both bodies. As noted earlier, Republicans also are skeptical of including even modest climate or environmental policies in a surface transportation bill, as it would open the possibility that such programs could be greatly expanded within a reconciliation vehicle. Despite the challenges, some on Capitol Hill are hoping that a conference committee could be convened in August or September should both chambers clear their legislation before the August recess.
Inflation – You may have already noticed, but prices for goods and services are on the rise and Republicans want to politically capitalize on it for the 2022 elections. Last week, the Labor Department announced its consumer price index surged 5% year-over-year in May, the largest increase since August 2008 when oil was $140 a barrel.
That headline caught our attention because many of us were around for the 2008 Republican ‘takeover’ of the House floor during August recess to protest Democratic inaction on high gas prices. Reports of high lumber prices have been getting headlines outside of the Beltway for months, but now food and energy prices have increased at the highest rates since 1992. Appliances, used cars, transportation costs are all up more than 10% from this time last year.
Part of the blame may be COVID-related supply shortages and the Federal Reserve’s current accommodative monetary policies, but no matter: Republicans are solely blaming massive spending coming from the nearly $2 trillion stimulus bill in March. This is an important political consideration to think about as discussions on infrastructure continue. While a few Senate Republicans may be comfortable with almost $1 trillion in new infrastructure spending, the majority of the Senate and House Republican conferences may not be.
If Congressional Democrats use the new reconciliation package to pass significant parts of President Biden’s American Jobs Plan and American Families Plan, expect Republicans to continue blaming Democrats for the real-world consequences of inflation. House Republican Leader Kevin McCarthy (R-CA) previewed this message in a letter to House Republicans released last night, saying “This inflation is a tax on Americans and is directly related to the Democrats’ reckless policies.”
This could also have an impact on forthcoming negotiations on appropriations bills. House Democrats introduced a deeming resolution that provides a $1.5 trillion limit on discretionary appropriations for fiscal year 2022, which helps the House Appropriations Committee begin drafting their bills. With the Budget Control Act expiring, it could be very difficult for a bipartisan and bicameral agreement on topline spending this summer and fall.
Congressional Review Act – House Democratic leadership is currently planning to bring three CRA bills to the floor next week in an effort to rollback Trump Administration policies. We expect strong opposition from House Republicans to the measures, which include:
- SJ Res 13 – Equal Employment Opportunity Commission CRA
- SJ Res 14 – Methane CRA
- SJ Res 15 – True Lender CRA
Senate Floor This Week – The Senate will consider the nominations of Ketanji Brown Jackson to be United States Circuit Judge for the District of Columbia Circuit and Lina Khan, of New York, to be a Federal Trade Commissioner. Many in the financial services sector are following Ms. Khan’s nomination closely. Once she is sworn in at the Federal Trade Commission (FTC), current FTC commissioner Rohit Chopra would be able to receive a Senate floor vote to take over as the Director at the Consumer Financial Protection Bureau.