A restart of Infrastructure Talks Yields an Agreement

14 Jun 2021 · 3rd Party Analysis

A restart of Infrastructure Talks Yields an Agreement on Proposal


In Summary

  • A bipartisan group of negotiators has reached an agreement on the size of the package
  • The most contentious part remains how to fully pay for the sweeping infrastructure plan

A bipartisan group of senators last week gathered in the White House to discuss the restart of infrastructure talks after President Joe Biden decided to call off the previous negotiation rounds due to the inability of both sides to close the gap between their proposals.

A group of 10 senators reached an agreement on an infrastructure proposal that would be fully paid for without tax increases. Raising the corporate tax rate was among the key sticking points between the parties during the previous talks. Now that this issue is settled, the negotiators are expected to meet with other lawmakers and discuss the next steps toward legislation.

The overall proposal has a defined budget of $974bn that would be spent over five years, or $1.2tn if the plan extended its period to a total of eight years. To proceed forward to Congress, the plan would require support from both Democrats and Republicans. Over the last week, however, some Democrats have expressed doubts that a bipartisan agreement could be achieved. They have called for using the reconciliation maneuver that will allow them to pass the legislation without the support of Republicans, similarly to the way they passed the Covid-19 relief bill.

Discussions Expected to Continue This Week

Although the two parties have agreed on the exact size of the package and how not to pay for it, there are still many contentious parts of the negotiations, among them how to fund the package. Some members of the group, including Sen. Mitt Romney, have suggested raising the federal gasoline tax, which hasn’t been changed since 1993. In reply, the White House rejected the proposal for it violated Joe Biden’s campaign promise not to increase taxes on adults earning less than $400,000 a year.

It appears that both sides are willing to compromise on one way to partly cover the cost of the package, by repurposing already approved Covid-aid packages. President Biden signaled he is open to siphon $75bn of Covid aid passed during the Presidency of Donald Trump. However, White House officials said they will not accept any proposal to repurpose any funds from the $1.9tn coronavirus relief bill passed in March this year. Previously, Republicans suggested some $350bn from the American Rescue Plan to be repurposed, a measure that was rejected by Democrats as these funds have been earmarked for state and local governments as a response to the Covid pandemic.

The group of negotiators is expected to continue discussions as the week unfolds. If no bipartisan agreement could be reached, Democrats have indicated they will seek to pass the sweeping package unilaterally. Even if Republicans are pushed outside of the process, internal challenges still thwart the passing of the legislation.

In addition to the infrastructure package that now carries a price tag of at least $974bn, Democrats are also seeking to advance the President’s $1.8tn plan centered on child care, education, paid leave, and anti-poverty efforts.

Venture Through the Realms
With ThorFX

Become an Affiliate