This week in Bidenomics: A bridge to somewhere
If you think Congress has been trying and failing to pass critical infrastructure upgrades for decades on end, you’re not wrong. But suspend your cynicism for a moment.
Now that the Senate has passed a trillion-dollar rebuilding bill, Congress may be poised to enact the biggest set of infrastructure improvements since the New Deal in the 1930s. Passing the Senate isn’t the same as passing the whole Congress. The House of Representatives will insist on changes to the Senate bill and won’t just rubber-stamp it. Even within the Democratic party, which controls both chambers of Congress, there will be pitched battles between moderates content to settle for good enough and liberals who want guarantees of far more spending on social programs.
But if the narrowly split Senate can pass a bill 69-30—including 19 Republican votes—it would be an abject failure if the House can’t get the bill across the finish line and send it to President Biden by fall. Passage isn’t assured, but it’s likely. So what will this bill—now known as the Infrastructure Investment and Jobs Act, but please call it the IIJA—actually do?
First, what it won’t do: There are none of the controversial Biden tax hikes in the bill, one reason it got some Republican support. Biden’s plan to raise taxes on business and the wealthy will have to come later, if at all. There are some “payfors” in the IIJA, but they’re mostly arcane user fees or budget gimmickry that hardly anybody will notice. The Congressional Budget Office estimates the IIJA will add $256 billion to the national debt during the next decade, which made some Republicans squishy. But that’s disingenuous. Every Republican in Congress voted for the 2017 Trump tax cuts, which is on track to add $1.5 trillion to the national debt. Any Republican who was fine with that can’t credibly object to an amount of debt financing one-sixth as large.
The relative lack of controversy has shortened the news cycle around the IIJA, while the Washington press corps girds for the big fight coming over the Democratic “reconciliation” bill meant to contain Biden’s biggest agenda items. But the IIJA deserves more attention, because if passed, it will accomplish something many prior presidents couldn’t pull off. “It’s easily the biggest infrastructure package in decades,” writes Adie Tomer of the Brookings Institution. “This bill invests at a scale the country needs.”
Total spending would hit around $1 trillion, an amount President Trump tried to get Congress to pass, but couldn’t. For the first two years of his presidency, Trump’s Republican party controlled both houses of Congress by margins larger than Biden’s Democrats. That helped pass the 2017 tax cuts, which no Democrats supported. But Trump could never figure out how to turn bipartisan support for infrastructure spending into an actual bill able to pass.
The IIJA includes about $550 billion in new spending, with the rest coming from unspent money Congress has already appropriated in prior Covid relief bills. In the context of the $6 trillion Congress has approved in Covid relief spending, $550 billion or even $1 trillion may not sound like a lot. But it is a lot. Brookings estimates total spending, adjusted for inflation, could match the all-time peak in U.S. infrastructure spending, which came at the tail end of the federal highway program in the 1970s and early 1980s. It’s also close to infrastructure spending levels during the New Deal.
Much of the spending is on priorities that are broadly popular with voters. There’s $110 billion for roads, bridges and traditional transportation projects. Add to that $65 billion for power grid upgrades, $65 billion for universal broadband, $39 billion for public transit, $17 billion to upgrade ports and waterways and $7.5 billion to subsidize electric vehicles. In most cases, those amounts are less than Biden and his fellow Democrats want. But that doesn’t make this spending inconsequential. The money is a giant windfall for states and cities that can’t fund these projects on their own, or can’t go the distance with the funding they’re able to tap.
Congress already passed $1 trillion worth of Biden-backed relief programs in March, in the American Rescue Plan. If Congress fully passes the IIJA, that will be at least $2 trillion in spending Biden has pushed for. Reasonable people can disagree about the merits of Biden’s plans, but Biden is nonetheless racking up a notable string of wins.
Many Democrats don’t want to admit that, because they’re still pushing for the extra $3.5 trillion in social-welfare spending and economic transformation they hope will be in the partisan reconciliation bill. Biden won’t get all that, and liberal Democrats will label the inevitable compromises as a sellout. But Biden has already won more for his party than most presidents at the same point in their first term. Biden’s Democratic allies doth protest too much.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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