President Biden and a bipartisan group of Senators on July 28 announced an infrastructure agreement that calls for $550 billion in new spending together with revenue offsets that include new cryptocurrency information reporting requirements and reinstating a Superfund tax on chemicals. Other offsets include redirecting unspent pandemic emergency relief funds, various user fees, Medicare savings, an extension of interest rate smoothing options for defined benefit plans, and projected revenue gains generated from the expected economic growth effects of infrastructure improvements.
Following the announcement, the Senate voted 67 to 32 to begin debate on the legislation while bill text and official revenue scores are still being finalized. While debate has begun, Senate passage of the infrastructure legislation will require securing at least 60 votes for ending debate on amendments and clearing the legislation for House action.
Senate debate on the bipartisan infrastructure package is expected to continue into next week while Senate Democrats also seek to pass a $3.5 trillion budget resolution that would be used to advance later this year other spending and tax relief proposals to be offset in part by corporate and individual tax increases. Senate Majority Leader Chuck Schumer (D-NY) has stated that the Senate could delay the start of a scheduled recess beyond August 6 if necessary to complete action on both the bipartisan infrastructure legislation and a budget resolution providing instructions for the later reconciliation bill.
Senate Budget Committee Chairman Bernie Sanders (I-VT) on July 28 announced that he had secured commitments from all 50 Democratic Senators to advance a $3.5 trillion budget reconciliation resolution. Senator Krysten Sinema (D-AZ), a key Senate moderate Democrat, reportedly has indicated that she will support advancing the budget resolution but at the same time will seek to reduce the cost of the final legislation. Adoption of the budget resolution in the Senate does not ensure passage of the later substantive reconciliation legislation.
House Speaker Nancy Pelosi (D-CA) has stated that House action on the bipartisan Senate package will depend on Senate Democrats also approving a budget resolution with reconciliation instructions. In order for these instructions to be operative, both chambers must pass identical versions, requiring agreement on a host of issues including the size of the net tax increase.
Observation: President Biden is continuing to advance his policy proposals along two tracks -- bipartisan infrastructure legislation and a major expansion of federal spending and targeted tax relief that would be offset in part by corporate and individual tax increases. There are many steps ahead in the legislative process for action on both tracks of the President’s proposals. While final enactment of either package of proposals is not guaranteed, Congress before the end of this year could complete action on both a major increase in infrastructure spending and a significant budget reconciliation package that includes corporate and individual tax increases.
Action item: Corporations and individuals should assess the potential effects of increased federal support for US infrastructure while also continuing to communicate with policy makers on the potential effects of President Biden’s tax increase proposals on their employees, job creation, and investments in the United States.