Pelosi Claps Back on Infrastructure

Participation awards are not just for Millennials and Gen Zers. President Biden and a group of 10 bipartisan senators (average age 67 between them all) yesterday at the White House touted their participation in coming to an agreement on an infrastructure framework that would provide $579 billion in new spending that combined with baseline spending would be either $973 billion over five years or $1.2 trillion over eight years. It’s “offset” with a host of non-tax pay-fors, including “dynamic scoring.”

In response, House Speaker Nancy Pelosi (D-CA) sarcastically clapped, applauding their participation but rejecting the adage “a bird in the hand is worth two in the bush.” Instead, she put that bird in the hand right back in the bush. At her weekly presser, Pelosi said, “We will not take up a bill in the House until the Senate passes a bipartisan bill and a reconciliation bill. If there is no bipartisan bill, then we’ll just go when the Senate passes a reconciliation bill.” Pelosi’s position was soon supported by Senate Majority Leader Chuck Schumer (D-NY) and even Biden. The president said, “If this [bipartisan bill] is the only thing that comes to me, I’m not signing it. It’s in tandem.” Pelosi made clear what has been fairly evident all along: this two-track approach to infrastructure is only about one policy goal for Democratic leadership — passing the American Jobs Plan (AJP), American Families Plan (AFP), and any other Democratic spending priorities. This strategic move by Pelosi is two fold: 1) it helps get progressives who are lukewarm to the bipartisan bill to support it and 2) it forces moderates to come to the table in a reconciliation bill that they may have otherwise been less open to doing if Congress already passed a bipartisan infrastructure bill.

The $579 billion in the bipartisan infrastructure framework overlaps with just $833 billion worth of provisions in the approximately $2.3 trillion AJP. That means about $1.5 trillion of provisions from the original AJP were completely omitted. The White House reportedly is intent on including that $1.5 trillion of omitted provisions in a reconciliation bill. They will not include the $833 billion worth of provisions that were included in the bipartisan framework, essentially accepting a lower funding level of about $254 billion. Combining the $1.5 trillion with the $1.8 trillion in the AFP as well as $100+ billion in state and local tax (SALT) relief and some possible healthcare provisions puts a reconciliation bill in the $3–4 trillion range. Now whether Democrats can pass a $3–4 trillion reconciliation bill along with the relevant pay-fors is another story, although I wouldn’t underestimate the ability of Democratic leadership delivering in that spending range.

This is a key takeaway — the base case is that Congress will spend $3–4 trillion in the end on a combination of “hard” and “human” infrastructure regardless of whether the process involves passing just a reconciliation bill or one paired with a bipartisan package. This is one of the rare times in Washington where the process isn’t really relevant to the ultimate outcome.

But Republicans are none too keen on Pelosi’s timing. Senate Minority Leader Mitch McConnell (R-KY), who has been largely silent throughout the negotiations, took to the Senate floor yesterday to excoriate Democratic leadership in their two-track positioning. McConnell said, “Less than two hours after publicly commending our colleagues and endorsing the bipartisan agreement, the President took the extraordinary step of threatening to veto it. It was a tale of two press conferences — endorse the agreement in one breath and threaten to veto it in the next.” Senator Lindsey Graham (R-SC), who was one of the 11 Senate Republicans to endorse the bipartisan infrastructure framework, tweeted, “If reports are accurate that President Biden is refusing to sign a bipartisan deal unless reconciliation is also passed, that would be the ultimate deal breaker for me.” Even Rep. Brian Fitzpatrick (R-PA), the co-chair of the House Problem Solvers Caucus and one of two Republicans to support the Democrats’ INVEST in America Act, said moving the reconciliation bill and bipartisan bill together was “troubling” and “kinda defeats the whole purpose” of the bipartisan bill. If McConnell down to Fitzpatrick oppose Pelosi’s timing of the infrastructure votes, then the requisite Republican votes will not be there for the bipartisan bill to pass.

So the question is what’s going to happen? House Democrats still plan on voting on their own surface transportation bill next week. It will pass largely along party lines. The Senate is now on its two-week July 4th recess and the goal is to work out the legislative language and any unfinished details in the bipartisan infrastructure framework. For Democrats, they are also working on establishing the spending and tax parameters for an FY22 budget resolution. Schumer said his goal is to have a vote on the bipartisan bill (perhaps amending the House surface transportation bill) and the budget resolution by the end of July. As this week has shown from bipartisan deal optimism to skepticism, there will be plenty of twists and turns over the next few weeks.

But only party leadership can deliver the votes on a bipartisan bill and a budget resolution. If McConnell does sign off, then the Senate could pass the bipartisan bill with 60+ votes where it would await action in the House. If he doesn’t sign off, then the bipartisan bill won’t pass. McConnell’s decision will be based on whether he sees the bipartisan bill as helpful, hurtful, or indifferent for his chances of becoming majority leader again. At least from his comments yesterday, he seems to think that a bipartisan bill that’s connected to a reconciliation bill only helps the Democratic agenda and muddies the GOP midterm message that they opposed Democratic big spending and taxation. But it’s still early in the process and it’s possible the positioning can change. Pelosi is also probably okay with the bipartisan deal falling apart. She knows that this reconciliation bill is a legacy marker for her and several other high-ranking Democrats and there are very limited political points scored in appeasing the mythical centrist voter in cutting a bipartisan deal. Democrats could just take what was in the bipartisan bill (and that doesn’t violate the Senate Byrd Rule) and include it in the reconciliation bill. They could point to Republicans reneging on the bipartisan agreement to get moderate Democrats on board. For Pelosi to change her position, it will be incumbent on Biden to work with moderate Democrats in pushing her to hold a vote on the bipartisan bill before a reconciliation bill is done. But Biden isn’t a vote counter and he would need to find a way to get the weary progressives on board. That’s just not Biden’s MO. He may be the party leader but he falls in line with the rest of party leadership as was the case today after Pelosi announced her position on infrastructure.