How Many Trillions is the Next Democratic Spending Package?

Joe Biden Infrastructure

How Many Trillions is the Next Democratic Spending Package?

Congressional Republicans are unlikely to support a widespread spending measure as it calls for additional spending and major tax increases.

 

President Joe Biden and his administration are preparing a sweeping $3 trillion infrastructure and jobs package that also includes domestic policy needs, just after Congress freshly passed a massive and largely partisan coronavirus relief bill that was funded entirely by debt.

Biden met with Senate Democrats late Monday as White House officials have already started piecing together a framework for legislation that advances roads, hospitals, and green energy systems for the administration’s next massive legislative push.

 

Although the plans are still preliminary, it is expected to be separated into two parts—one focused on American infrastructure and the other on family-friendly policies, like extending the relief bill’s child tax credit for several years.

“President Biden and his team are considering a range of potential options for how to invest in working families and reform our tax code so it rewards work, not wealth,” White House Press Secretary Jen Psaki said in a statement. “Those conversations are ongoing, so any speculation about future economic proposals is premature and not a reflection of the White House’s thinking.” 

Several reports, however, received information from sources close to the White House about how the administration expects to allocate spending in the upcoming legislation. Biden administration officials are aiming to include roughly $1 trillion for roads, bridges, rail lines and electrical vehicle charging stations and the cellular network. It also includes funding for retrofitting buildings, safety improvements, the infrastructure of schools, and low-income and tribal groups. And in addition to leading the transition to cleaner energy use, the package would offer universal pre-kindergarten and free community college tuition, as well as an expansion in spending on child care, and extend the child tax credit that’s featured in the rescue package for several years.

“There’s a consensus that they have other items that deal with education and child care, etc., which are not normally part of an infrastructure bill, and it would be helpful, I think, for the administration and Congress to focus on the traditional ways that we think about infrastructure,” R. Richard Geddes, a professor and founding director at Cornell University’s infrastructure policy program and a visiting scholar at the American Enterprise Institute, said. 

Geddes added, “It’s probably a bad idea to conflate a bill that deals with education and child care, etc., with an infrastructure bill.”

Patricia Anderson, an economics professor at Dartmouth College, noted that while “the second component seems more focused on addressing childhood poverty today, than on jobs per se,” there are “studies [that] have shown very long-term benefits of investing in early childhood education in the form of higher adult earnings, and universal pre-K seems to have better short-term returns than more targeted programs. Additionally, one could perhaps see free community college as just expanding the public education system to better match an increasingly knowledge-based economy.”

House Speaker Nancy Pelosi asked Democratic committee leaders earlier this month to start working with Republicans to begin “to craft a big, bold and transformational infrastructure package.” 

While Democrats have expressed somewhat of a commitment to achieving a bipartisan package, party members have signaled openness to jam through the legislation through budget reconciliation if Republicans reject the effort, similar to the passage of the relief bill.

“We need to get it done,” Sen. Richard Blumenthal (D-Conn.) said Monday.

The $3 trillion package is expected to include tax hikes to offset its spending, a move that will likely see pushback from Republicans, paving the way for another party-line battle. Options for tax increases include boosting the corporate rate from 21 to 28 percent and raising taxes on wealthy Americans, reversing former President Donald Trump’s 2017 tax cuts. Biden has repeatedly said that those making less than $400,000 would not see a tax increase, though that claim is being analyzed, as it’s unclear whether that income threshold pertains to individuals or families.

“Without the details, it is hard to comment [on] sectors or whether this huge outlay would fit the nation’s needs and so have a chance of justifying the effort,” Milton Ezrati, chief economist for Vested, the New York-based communications firm and a contributing editor at the National Interest, said. “From a more macro perspective, this spending, on top of the almost $2 trillion in ‘COVID relief’ and the clear signs that the economy is poised to rebound with a complete economic re-opening, runs a huge risk of overheating the economy and perhaps promoting inflation.”

Ezrati added, “The huge budget deficits to which this bill will add will have their own ill effects, not to mention the tax hikes contemplated to moderate but not stem the tide of red ink.”

Congressional Republicans are unlikely to support the widespread spending measure as it calls for additional spending and major tax increases.

“We’re hearing the next few months might bring a so-called infrastructure proposal that may actually be a Trojan horse for massive tax hikes and other job-killing, left-wing policies,” Senate Minority Leader Mitch McConnell (R-Ky.) said in his opening remarks on Monday in the upper chamber.

But it’s also unclear whether Democrats would even back the measure if party leaders try to use reconciliation to pass the package, as every Democrat would need to unify to vote on the initiative due to the razor-thin margins in the Senate.

Geddes, however, surfaced several suggestions that could make the package see more bipartisan cooperation, including finding a “[balance] between urban and rural” projects, and “if a bill encouraged state and local infrastructure owners to adopt proven technologies.”

“If you look at the big, expensive projects . . .  they’re urban,” Geddes said. “There are a lot of swaths of the country that don’t view themselves as benefitting from that.” 

If the infrastructure bill targets both urban and rural communities, then more constituents would benefit from a big-spending initiative, which would likely rally some Republican support.

Geddes also noted that state and local infrastructure owners are “slow to adopt new technologies” due to potential risks imposed by advancements in technologies. But if the federal government took the lead on incentivizing and encouraging state and local-level operatives to transition to cleaner energy methods, lawmakers from both sides of the aisle may consider standing behind the effort.

“If there’s anything that could be a solid bipartisan piece of legislation, it’s a bill coming out of Congress on civil infrastructure to address these set of problems that I think everybody agrees on,” Geddes said.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.

Image: Reuters