21 Senators Sign On To $579B Infrastructure Plan
A large bipartisan group of Senators on June 16 announced an agreement on a two-page framework to spend $579 billion above current levels on infrastructure, but the deal has not yet been approved by the White House, and there is growing opposition to any bipartisan deal amongst Senate Democrats.
Who did it? 21 Senators (11 Republicans and 10 Democrats) agreed to the following two-sentence statement:
We support this bipartisan framework that provides an historic investment in our nation’s core infrastructure needs without raising taxes. We look forward to working with our Republican and Democratic colleagues to develop legislation based on this framework to address America’s critical infrastructure challenges.
The 21 Senators are listed below, along with their ranking on the GovTrack 2020 Ideology Score report card, where #1 is the most politically right-wing Senator (Marsha Blackburn, R-TN) and #100 is the most politically left-wing (Bernie Sanders, I-VT):
|Democrats (10)||Republicans (11)|
|Coons (DE) (#61)||Burr (NC) (#50)|
|Hassan (NH) (#60)||Cassidy (LA) (#32)|
|Hickenlooper (CO) (fresh.)||Collins (ME) (#53)|
|Kelly (AZ) (#57)||Graham (SC) (#45)|
|King (ME) (#58)||Moran (KS) (#31)|
|Manchin (WV) (#54)||Murkowski (LA) (#55)|
|Shaheen (NH) (#63)||Portman (OH) (#48)|
|Sinema (AZ) (#47)||Romney (UT) (#38)|
|Tester (MT) (#56)||Rounds (SD) (#16)|
|Warner (VA) (#62)||Tillis (NC) (#9)|
|Young (IN) (#34)|
As one might expect, the 21 Senators are clustered around the 50th, median rank on ideology (11 of the 21 are ranked 40 through 60, and all but Bill Cassidy (R-LA), Jerry Moran (R-KS) and Thom Tillis (R-NC) are ranked 34 through 67, putting them in the middle third of the Senate. And this makes sense, particularly because the GovTrack methodology is based on bill sponsorship and cosponsorship, so people with a history of cosponsoring bipartisan legislation would cluster around the middle of the pack.
Other Senators in the 40-60 ideology cohort who could be considered possible supporters down the road solely based on their bipartisan cosponsorship record include Gary Peters (D-MI, #59), Richard Shelby (R-AL, #52), Dan Sullivan (R-AK, #43) and Chuck Grassley (R-IA, #40).
The whole thing will provide a fascinating field test for political scientists – when trying to get to 60 votes, in an age where ideologically polarized political parties are the norm, do you start in the middle and work outwards in both directions, or do you start at one end of the spectrum and try to work downwards (or upwards, as the case may be) and try to get to 60 that way? While the bipartisan group is trying the first option, Democratic leaders are hard at work on the other option on the budget, with Budget Committee Chairman Bernie Sanders (most left-wing Senator in the GovTrack ranking) trying to push the highest-spending budget possible and then having to water it down, bit by bit, as he gets closer and closer to the 50th vote necessary to pass the filibuster-proof budget, with Vice President Harris’s tiebreaker.
What’s in it? The Senate plan breaks down the $579 billion into two tranches: transportation infrastructure, and other infrastructure. Here is how the above-baseline funding listed in the two-page handout compares with the above-baseline funding originally proposed by President Biden in his American Jobs Plan, in billion dollars. (The list of items at the bottom not reflected in the bipartisan Senate offer is not necessarily complete.)
|Roads (incl. HSIP), Bridges, Major Projects*||167||110||-57||-34%|
|Passenger & Freight Rail||80||66||-14||-18%|
|Ports & Waterways||17||16.3||-0.7||-4%|
|EV Charging & Buses/Transit**||60||15||-45||-75%|
|Safety (Excluding HSIP)*||12||11||-1||-8%|
|Infrastructure Financing Auth.||0||20||20||inf.|
|Orphaned Wells/Abandoned Mines||16||16||0||0%|
|Western Water Storage***||0||5||5||inf.|
|Subtotal, Other Comparable||382||266.2||-115.8||-30%|
|Other Proposed AJP Spending Not In Bipartisan Framework|
|Build/renovate affordable housing||213||0||-213||-100%|
|Build new public schools||100||0||-100||-100%|
|Invest in manufacturing and small biz.||300||0||-300||-100%|
|Expand community caregiving||400||0||-400||-100%|
*The roads-bridges-major projects category for the AJP includes $115 billion originally listed as roads and bridges, $44 billion originally listed as major projects, and $8 billion in Highway Safety Improvement Program funding that was originally listed as Safety but which is part of the Federal-aid Highways budget account and cannot easily be separated out of that budget.
**This total for the AJP includes the $15 billion for a network of charging stations, the $25 billion for transitioning diesel mass transit buses to electric buses, and the $20 billion for transitioning diesel yellow school buses to electric buses.
**There was some western water storage money included in the AJP, buried somewhere in the resilience budget, but it was not readily identifiable as a line-item.
A cursory glance at the list of funding priorities in the bipartisan plan leads to some quick conclusions:
- Man, Senators really do love airports, don’t they?
- Ditto for ports and inland waterways.
- If the intercity rail number were broken down into Amtrak NEC vs Amtrak National Network vs non-Amtrak, it would be both more useful and also really interesting, because the Senate historically likes the National Network more than the House does.
- There doesn’t seem to be a lot of enthusiasm clustered around the 50th Senate vote for using federal dollars to tear down existing highways (the “reconnecting communities” bit).
- An Infrastructure Bank won’t do any harm, and it might do some good in some modes and aspect classes, but by and large, the problem today is not that states, localities and private industry can’t borrow money at low rates to build or repair infrastructure, it’s that they have constraints on how much debt they can carry, or that they would have trouble paying back the loan.
How does that compare to the pending transportation bills? The following table takes the pending House and Senate surface transportation reauthorization bills and measures them against a flat-line, five-year baseline (actual contract authority provided and general fund appropriations made in fiscal 2021 (excluding COVID aid), times five), since that is the baseline the Biden Administration used for the AJP. The “Roads, Bridges, Major Projects” total for the Senate bills is all FHWA authorizations in the EPW Committee bill plus all of the multimodal authorizations in title I of the Commerce Committee bill. And we don’t have a Senate mass transit bill yet.
|Roads, Bridges, Major Projects||167||83.8||89.7||110|
|Passenger & Freight Rail||80||80.3||21.9||66|
|Public Transit||85||43.8||no bill||48.5|
Part of the reason that the House bill looks anemic in the Roads/Bridges/MP category is that the House bill does not authorize things like the TIGER/BUILD/RAISE grant program or add a general fund plus-up for INFRA grants (both which the Senate Commerce bill does), and the EPW bill is over $7 billion higher on general fund authorizations for FHWA (in particular, GF matches for a new bridge program).
It’s also interesting to see how the bipartisan group came most of the way to the Democratic side on intercity rail – the midpoint between the House/Biden number and the Senate Commerce bill would be about $51 billion, and the framework calls for $66 billion.
How’s it paid for? Here we have the problem. The framework two-pager lists 11 “Proposed Financing Sources for New Spending.” Many of these are not traditional “pay-fors” in that they can’t offset federal spending. Others are problematic for different reasons.
- Infrastructure Financing Authority. As mentioned earlier, it might do some good, but the problem isn’t a lack of private money in infrastructure, it’s a lack of projects that can generate annual debt service payments to pay back the private money.
- Public Private Partnerships, Private Activity Bonds, and Asset Recycling. For PPPs, see item 1, above. For PABs, there is widespread agreement that the ceiling on private activity bonds should be increased, so that DOT can assign a lot more of those allocations to projects. A PAB increase was always going to be a part of the final surface transportation reauthorization.
- Direct-Pay Municipal Bonds for Infrastructure Investment. The chairman of the House Ways and Means Committee already supports bringing back something like the Build America Bonds that were available in 2009-2010, where state and local governments would issue bonds to build infrastructure where the interest was paid by the federal government. See this writeup from the Bipartisan Policy Center. Something like this was always likely to be in the final surface reauthorization bill, but again, it only works if municipalities really want to borrow more money.
- Reduce the IRS Tax Gap. This is something real, and it is already in President Biden’s budget. The budget (see p. 60 of Analytical Perspectives) proposes spending $7 billion on increased IRS enforcement, which would then raise an estimated $50 billion in otherwise-uncollected taxes, with the net result being that federal taxpayers would be $54 billion to the good.
- Redirect Unused UI Relief Funds. No one is quite sure how this would work. Red states that are opting to end their supplemental COVID unemployment insurance programs early don’t get to keep any extra federal dollars because no dollars were ever created. UI is an as-needed entitlement, and federal dollars just pop into existence when a valid claim is filed. No claim = no federal dollars created.
- Repurpose Unused COVID Relief Funds for Infrastructure. This is probably a deal-breaker with the Biden Administration, but a lot of state and local governments and their subsidiary entities wound up receiving a lot more federal money under the guise of COVID relief than is justified by actual COVID-related expenses and revenue losses. This is true for a lot of airports and (smaller) mass transit providers. But clawing money back from a municipality once you have promised it to them, even if they didn’t actually need it, is extraordinarily politically difficult.
- Expand Eligible Uses of COVID State/Local Funds. This is related to the above item. In the final act of the COVID trilogy (the American Rescue Plan Act, enacted earlier this year), Congress as much as admitted that the amount of state and local general-purpose financial assistance being provided exceeded the needs that could be justified by COVID. How do we know? Because in sections 9901 and 9902 of the law, which provide $350 billion in aid for states and localities, those states and localities are required to spend the money on COVID-related activities, or “to make necessary investments in water, sewer, or broadband infrastructure.” The Senate bipartisan framework has a total of $120 billion for water, sewer and broadband. Should any of the $350 billion in ARPA money spent by munis on water, sewer, or broadband be deducted from their shares of the $120 billion in such funding to be provided by the Senate framework? Why or why not? And why not just amend the American Rescue Plan Act to allow states and localities to spend their windfalls on highways and mass transit and ports and airports, as well as on water, sewer and broadband? Why were water, sewer and broadband the only privileged modes in the first place?
- Allow Use of Toll Credit Balances for Infrastructure. What are toll credits, you ask? A FHWA fact sheet says that “States and metropolitan planning organizations are eligible to earn credits based on the amount of toll revenue used by the toll authority for building, improving, or maintaining highways, bridges, or tunnels that serve interstate commerce. FHWA estimates that 28 states, the District of Columbia, and Puerto Rico collectively hold $29 billion in toll credit balances. But the fact sheet also says, plain as day, “Toll credits do not generate new money! Instead, they can be used as a “soft match” substitute for the non-federal share of most highway and public transportation projects, reducing the burden on states and freeing funding for other transportation projects.” If states are already allowed to use their toll credit balances for the non-federal share of infrastructure, we’re not sure exactly what this proposal means, unless they are trying to allow toll credits to be used as a soft match in other modes.
- Annual Surcharge on Electric Vehicles. CBO has been very clear that any kind of federal EV tax or fee won’t raise a significant amount of money anytime soon. But supporters of the Highway Trust Fund are so desperate to re-establish the old user-pay, user-benefit principle that refusal to force EVs to pay at least something de minimis into the Highway Trust Fund every year is considered a prerequisite for getting any kind of funding out of the Highway Trust Fund for electric vehicle charging stations or other kinds of EV support.
- Index Gas Tax to Inflation. In the original framework, this one came with an asterisk, and behind that asterisk it said “placeholder pending alternative non-tax offset from the Biden Administration.” Since then, news reports have indicated that the bipartisan group will not pursue any gas tax increase further.
- Adjust Customs User Fees. The extension of Customs user fees that are scheduled to expire in the distant future is a frequently used pay-for in budget deals. Section 401 of the Bipartisan Budget Act of 2019 extended these fees from a scheduled expiration in October 2028 to October 2029. At the time, CBO scored that two-year extension as raising $15.6 billion in real money, so there is every reason to believe that another two-year extension would be a legitimate pay-for for federal infrastructure dollars in around that amount. Except that section 9912 of the American Rescue Plan Act just did a one-year extension of the fees, to October 2030, so cut that $15.6 billion in half.
What next? President Biden returned from his European trip yesterday and is expected to shift his attention back to domestic matters, including this one. But it has been a discouraging sign that, as the number of Republicans signing on to the bipartisan infrastructure framework grew, the number of Democrats (led by Bernie Sanders) publicly saying they would not support the plan also grew. Democratic leaders probably won’t allow any kind of bipartisan infrastructure deal to move forward until they get an ironclad commitment from Manchin, Sinema, and other moderate Democrats on just how large a budget reconciliation bill they would be willing to support.
(This all just goes to show why Congress has, in recent years, been reduced to just passing one big omnibus fiscal policy bill each year – it’s easier to wrangle the votes for one big bill than it is to get separate sets of vote promises on an interlocking set of not-quite-as-big bills. Elizabeth Warren (D-MA) said as much to POLITICO: “it has to be one deal not two.”)