President Biden this week announced his $2.3 trillion “American Jobs Plan,” to include $571 billion in transportation infrastructure spending. Elsewhere in this issue, we have a detailed summary of that transportation money, and we also have a sampling of Congressional and stakeholder reaction to the plan.

In a speech in Pittsburgh on March 31, Biden called his plan “a once-in-a generation investment in America, unlike anything we’ve seen or done since we built the Interstate Highway System and the Space Race decades ago.” He mentioned several specifics about the plan that were also mentioned, to one degree or another, in the detailed summary document circulated by the White House. Biden said:

• “The American Jobs Plan will modernize 20,000 miles of highways, roads, and main streets that are in difficult, difficult shape right now.”
• “It’ll fix the nation’s 10 most economically significant bridges in America that require replacement…We’ll also repair 10,000 bridges, desperately needed upgrades to unclog traffic, keep people safe, and connect our cities, towns, and Tribes across the country.”
• “The American Jobs Plan will build new rail corridors and transit lines, easing congestion, cutting pollution, slashing commute times, and opening up investment in communities that can be connected to the cities, and cities to the outskirts, where a lot of jobs are these days.”
• “It’ll reduce the bottlenecks of commerce at our ports and our airports.”
• “…building a nationwide network of 500,000 charging stations, creating good-paying jobs by leading the world in the manufacturing and export of clean electric cars and trucks.”

(Unfortunately, Biden also mentioned something that the funding in his plan wouldn’t come close to paying for: “You and your family could travel coast to coast without a single tank of gas onboard a high-speed train.”)

The funding under Biden’s plan would be paid for by a variety of tax increases on corporations, including a hike in the corporate tax rate from 21 percent to 28 percent and elimination of “deductions by corporations for offshoring jobs and shifting assets overseas.” (We’ll wait to see how JCT scores his plans to “level the international playing field,” because this requires other countries, like Ireland, increasing their own corporate tax rates, which is not something that Congress can force just by passing a law.)

Biden made a strong plea for bipartisanship on the spending side of the equation:

Let me close with this: Historically, infrastructure had been a bipartisan undertaking, many times led by Republicans.

It was Abraham Lincoln who built the transcontinental railroad.  Dwight Eisenhower, a Republican — the Interstate Highway System.  I could go on.

And I don’t think you’ll find a Republican today in the House or Senate — maybe I’m wrong, gentlemen — who doesn’t think we have to improve our infrastructure.  They know China and other countries are eating our lunch.  So there’s no reason why it can’t be bipartisan again.

The divisions of the moment shouldn’t stop us from doing the right thing for the future.

I’m going to bring Republicans into the Oval Office; listen to them, what they have to say; and be open to other ideas.  We’ll have a good-faith negotiation with any Republican who wants to help get this done.  But we have to get it done.

But the choice of pay-for means that a more partisan method will probably be necessary to move the plan through Congress, as shown below.

How Will the Plan Move Through Congress?

Let’s take this in reverse order:

• The pay-for is $2+ trillion in tax increases on corporate America. The plan would increase the corporate tax rate from 21 percent to 28 percent and would levy numerous other tax increases on corporate America, which the White House says would be enough to pay for the spending in the plan over a 15-year period.
• The choice of pay-for strongly implies that they are going for a 50-vote Senate strategy, not a 60+ vote Senate strategy. If anyone can identify at least ten Republican Senators who would vote for a $2+ trillion corporate tax increase, please let us know, but we can’t think of ten. (In a press briefing March 30, a “senior administration official” said that they kept hope alive for bipartisan support for the plan, but that doesn’t sound very realistic.)
• 50 Senate votes plus VP Harris means budget reconciliation. Unless the Senate gets rid of the legislative filibuster, a 50-vote Senate strategy means the use of budget reconciliation. This means that Congress has to pass another budget resolution ordering House and Senate committees to come up with new spending and tax changes, which would then be packaged into a reconciliation bill.
• Reconciliation means no HTF reauthorization. For a variety of reasons, most of what normally gets done as part of a surface transportation reauthorization bill (further Highway Trust Fund bailouts, provision of new HTF contract authority subject to limitation, authorizations for future general fund appropriations, amendments to provisions of title 23 or title 49 that would not directly affect mandatory spending outlays, and earmarks) can’t be done in a budget reconciliation bill unless you get 60 votes in the Senate to waive the “Byrd Rule” on a provision-by-provision basis. And if you had 60 votes, you wouldn’t be doing this whole thing via reconciliation.
• Therefore, the most likely option is for the Biden plan to move through Congress separately from the regular surface transportation reauthorization bill.

In order to enact a new budget reconciliation bill, the following things have to happen.

1. Congress would have to pass another budget resolution. Last year, the divided Congress under President Trump never passed a budget blueprint for fiscal year 2021. Then, once Democrats held the trifecta this year, the House and Senate approved a budget resolution for 2021 that ordered committees to report changes in laws to provide for budget reconciliation. We are currently waiting for the Senate Parliamentarian to tell Majority Leader Schumer whether or not she interprets a gray area in the Budget Act as allowing Congress to pass more than one budget resolution per fiscal year that then would order more than one budget reconciliation process per fiscal year. (The law seams clear on the first part, unclear on the second part.) If the Parl rules Schumer’s way, then the House and Senate could quickly move a second FY 2021 budget resolution later this month. If the Parl rules against Schumer, reconciliation would have to wait on a FY 2022 budget resolution, which might have to wait on President Biden submitting a 2022 budget, and which also would mean that a subsequent reconciliation bill dealing with entitlement programs and paid for by tax increases on rich individuals would have to wait until the fiscal 2023 budget cycle.
2. Committees would have to draft legislation. A new budget resolution would order committees to produce legislation increasing the deficit by up to x amount over ten years, and would order the tax committees to produce legislation to reduce deficits by up to y amount as a pay-for. Two questions here:
   1. Would the Senate mark up this time? In the just-finished procedure for COVID-justified aid, most House committees held markups of legislation, but Senate committees did not. Instead, Schumer just took up the House-passed bill and offered a big substitute amendment consisting of text recommended by Senate chairmen which was largely identical to the House text (it all having been pre-arranged by the chairmen in conjunction with party leaders). Democratic Senators did not get elected just to sit around in the shadows while their committees are bypassed on the major legislation moving through Congress. (If something makes it into the final bill that disadvantages their state, can you imagine how unhappy a Democratic Senator would be when he or she had to say, “well, even though I earned a seat on the Finance Committee, we decided not to let Finance have a vote on these issues, so I couldn’t stand up for you, my constituents.”) But, those committees are currently divided evenly between Democrats and Republicans, and markups of major legislation like this might produce unexpected results.
   2. Would Appropriations get back involved? Even a casual reader of the COVID reconciliation bill would have noticed that committees like Transportation and Infrastructure got to provide a lot of money, in sections that started out “There is hereby appropriated $x,xxx,xxx,xxx for y and z.” Normally, making appropriations is the exclusive purview of the Appropriations Committees, who guard that jurisdiction jealously. But they couldn’t get drawn into the first reconciliation bill, and one reason was that if the had appropriated the money in the reconciliation bill, it might have been classified as discretionary, and if that had happened, then a massive round of across-the-board budget sequestration in all non-defense programs would have been triggered two weeks after enactment, because the money would have exceeded the Budget Control Act spending caps. But there are no caps for fiscal 2022, and there is a loophole that means that appropriations for 2021 enacted after June 30 of this year would not trigger a sequester, either. So, if this process gets delayed, the appropriators might be champing at the bit to reassert their authority and take back the spending process.
3. The Budget Committees would have to package the committee recommendations together into one bill, without change.
4. The House and Senate would debate and pass the bills. The House could do this under a closed rule, if Democrats had the votes to do so, or allow a minimum of floor amendments. In the Senate, there is a hard 20-hour debate cap, but the “vote-a-rama” with a theoretically number of amendments that can be offered and then voted on, without debate, comes at the end.
5. A House-Senate conference committee (or not). The recent COVID reconciliation bill did not have a House-Senate conference committee, because Senate committees were not given an opportunity to change the plan, and because Democrats, in a remarkable display of party unity, were able to defeat almost all amendments to the bill, and the few amendments that were adopted were ones that House Democratic leaders could live with. In lieu of a conference committee, the House just accepted the Senate amendments and sent the bill to President Biden. But there are only so many times that you will be able to get Democratic Senators to give up their right to a full voice in the process, and since the new proposal doesn’t have that sense of immediate urgency that the COVID bill had, the Senate may well have a different enough plan from the House that it requires a conference committee.
6. Pass a final bill and send it to the President. Sounds simple, but with a 219-211 margin in the House and a 50-50 Senate, nothing is that simple.

The process does not normally go as fast as the recent COVID reconciliation bill did. Here were the enactment dates of all previous reconciliation bills enacted in odd-numbered years (where the legislative process has to be started over in a new Congress and cant be carried over from the last Congress).

What Does this Mean for the Surface Transportation Reauthorization Bill? 

If the $2.3 trillion Biden plan goes through reconciliation, then Congress would have to move a separate bill that does the following:

• Bails out the Highway Trust Fund again, with at least $15 billion per year for the life of the bill. (This Administration has issued a big “no” to a motor fuels tax increase, and to a VMT fee at least in the short term, and we can’t see Congressional Democrats walking the plank and forcing a gas tax increase or VMT on a hesitant White House, so bailout it is, then.)
• Provide new contract authority from the Highway Trust Fund for fiscal years 2022 and beyond.
• Extend the duration of the current excise taxes, and the expenditure authority, of the Trust Fund.
• Set authorized funding levels for future appropriations for surface transportation programs in fiscal year 2022 and beyond.
• Make changes in title 23 and title 49 statutes that govern surface transportation.
• And (possibly) earmark some of the money provided above for specific projects requested by members.

If the reconciliation bill is enacted well in advance of the surface bill, the surface bill could, theoretically, amend the reconciliation bill to redirect some of the reconciliation bill’s funding, or clarify the uses or distribution of that funding. This does not work so easily the other way around – reconciliation bills generally can’t redistribute or rearrange funding that has already been provided by some other bill and was going to be spent anyway.

If the reconciliation bill moves in such a way that rank-and-file Democrats on committees of jurisdiction feel left out of the process (again), you can expect them to exert themselves to a much greater degree in the surface bill.