Nearly three months after the announcement of President Biden’s $2.3 trillion economic stimulus recovery plan, one of the major infrastructure packages has finally seen the light of day for congressional approval.
On Thursday, June 24 EST, Biden announced that after meeting with a number of Republican and Democratic senators, the White House reached an agreement with senators from both parties on a major infrastructure package to improve America’s roads, bridges and broadband. This means that the framework of the infrastructure package has the support of 11 Republican senators as well as 10 Democratic senators and could win at least the 60 votes needed to pass a bill in the Democrat-held Senate.
Biden noted Thursday that lawmakers from both parties have made “serious concessions,” and we will see the results in the budget reconciliation process and in the reconciliation bill. However, Biden did not mention the scale of the infrastructure program investment. The media has learned that the program plans to invest a total of $1.2 trillion over eight years, of which $559 billion is new spending. If true, this scale is lower than the $1.7 trillion infrastructure plan proposed after the Biden administration gave in late May, and closer to the $1.25 trillion infrastructure case recently proposed by the bipartisan House Problem Solving Caucus.
The latest statement shows that the Biden administration has made concessions on taxes.
This comes after Republicans promised not to change the tax cuts passed in 2017 under the Trump administration. On Wednesday evening, Senate Majority Democratic Leader Schumer and House Speaker Nancy Pelosi, a Democrat, met with White House officials, and both congressional leaders hinted they would support a cross-party infrastructure framework. The White House said both men agreed with Biden’s call not to raise taxes on nationals earning less than $400,000 a year. The Biden administration has said it would not support a gas tax hike and increased fees for electric vehicle users as part of a cross-party framework.
Pelosi and Schumer are currently aiming to pass a bill with larger funding that addresses more Democratic priorities without the need for Republican lawmakers to vote for it. A second package could include programs for child care and elder care, education, health care and climate change.
Several media outlets said last week that Senate Democrats are considering submitting a $6 trillion spending plan to go through the budget reconciliation process. The media noted that the Senate has begun working on a budget resolution that would allow Democrats to use the budget reconciliation process to approve their package. Both parties must also determine how to fund the infrastructure package. Democrats must convince progressive lawmakers to support a narrower, cross-party infrastructure deal, while convincing centrists to support expanding the program to social programs and anti-climate change projects.
Schumer said this Thursday that when the Senate resumes in July, it’s time to hold the first vote on a cross-party infrastructure bill. Senators should also be prepared to consider a budget resolution that would clear the way for approval of a budget reconciliation bill as soon as possible.
Pelosi said the same day that the House would not approve a cross-party infrastructure deal unless the Senate first approves a budget reconciliation bill. Media commentary said this puts pressure on moderates who want the cross-party deal to become legislation to support the budget reconciliation package. Democratic sources said progressives, on the other hand, are under pressure to support a cross-party agreement because the authorization regarding the federal highway program will expire at the end of September and the agreement will include an extension.
Looking at the current process, with both the House and Senate voting on the budget resolution, Senate leaders have informed Democratic lawmakers to prepare for approval of the budget resolution the week of Aug. 9, then the Senate may vote on the cross-party bill first in July. Throughout the August summer recess, Democrats will draft the budget reconciliation bill. in September, the Senate will vote to approve the bill, and the House will vote on the budget reconciliation and the cross-party agreement.
This means that the cross-party infrastructure bill may not be passed by Congress until September. And, it is possible that the budget reconciliation bill will drag on into October.
This is roughly in line with Goldman Sachs’ expected timing mentioned earlier in the Wall Street Journal article. Goldman Sachs’ report this Monday expects that an agreement on a broad infrastructure bill will not be reached because of serious bipartisan differences in the funding sources for spending, and that a consensus infrastructure bill may be reached on a narrower range of road and bridge construction, public transportation and other issues.
In terms of tax increases, Goldman Sachs expects that the corporate tax rate will eventually increase to 25%, lower than the 28% proposed by Biden; the long-term capital gains tax rate will increase from 20% to 28%, also lower than the 39.6% proposed by Biden.
Goldman Sachs believes that, even if the Democratic Party “only hands to cover the sky”, the passed infrastructure bill will not take effect until the fourth quarter of this year. Its estimates, the next ten years of infrastructure legislation brought about by the fiscal stimulus scale of about 2.5 trillion U.S. dollars to 3 trillion U.S. dollars between.