Yahoo Finance Beware the bipartisan infrastructure 'deal'
President Biden sounded triumphant on June 24, after meeting with a group of senators of both parties at the White House on an infrastructure package. “We have a deal,” he said. “None of us got all of what we wanted. But this reminds me of the days we used to get an awful lot done up in the United States Congress. Bipartisan deals mean compromise.”
Biden makes it sound as if an agreement between himself and one-fifth of the Senate makes signed legislation a foregone conclusion. Not even close. There are still factions in both parties that want to scuttle a deal and prevent the other side from claiming victory. And Democrats’ plan to push another, probably bigger bill with no bipartisan support could torpedo the support of a few Republicans who might consider that an affront.
“This strategy feels risky to us and increases chances that nothing happens," Stefanie Miller of FiscalNote Markets advised clients in a recent analysis. Ed Mills of Raymond James wrote that “although a framework agreement has been reached, lawmakers are signaling that there are significant details still left to be settled. We count at least four Democratic senators who have outlined opposition to aspects of policy in the bipartisan framework.”
The Biden White House released a fact sheet revealing how the bipartisan plan would pay for $1.2 trillion in new spending on roads and bridges, electric vehicles, broadband, clean energy and other infrastructure. There are no increases in the gas tax—a Republican proposal Biden objected to. Biden’s proposed higher taxes on businesses and the wealthy—a Republican red line—aren’t in there, either. Instead, the funding will come from tougher IRS enforcement against tax evaders, unspent relief funds from other bills and unspecified “corporate user fees.”
The details could undo the whole thing
If this were the only bill, Republicans would be able to say they stopped the Democrats from raising taxes. But it won’t be the only bill. Biden and other Dems made clear that along with a bipartisan infrastructure bill, they plan to advance another huge spending bill that Republicans expressly object to. That bill would include another trillion dollars, or two, or three, in spending on social-welfare programs, plus tax hikes that are anathema to Republicans.
Biden specifically said he won’t sign the “bipartisan” bill if the partisan bill Republicans hate doesn’t accompany it. “If this is the only thing that comes to me,” he said of the bipartisan bill, “I’m not signing it.”
So the roughly 10 Republicans behind the bipartisan deal would be enabling Democrats to pass a second bill that overturns their cherished tax cuts from 2017, and rams through generous spending programs unlikely to get a single GOP vote. This is why seasoned analysts warn that the pesky details could undo the whole thing.
Both sides are playing politics, of course. Biden probably feels he wins no matter what if he stands at a White House podium with a few Republicans and declares some kind of bipartisan deal, no matter how premature it may be. Biden ran as a conciliator able to reach out to political opponents, so bipartisan is on-brand for him. If the deal falls apart later, Biden can say he tried, and roll the video to prove it.
The Republicans agreeing to the pre-deal are moderates such as Senators Susan Collins of Maine and Mitt Romney of Utah who are hardly upsetting home-state voters who sent them to Washington to be pragmatic problem-solvers rather than bomb-throwing partisans. In the event of failure, they’ll blame Democrats for pushing too far and demanding an outlandish second bill to hold all the giveaways more responsible legislators refused to stuff into the first.
The stock market rose on news of the bipartisan agreement, but traders might be getting ahead of themselves. Infrastructure talks and everything that follows are likely to bog down during the next several weeks, as both sides do the usual and posture for political advantage while trying to deny the other side a win. That’s the reality in Washington and one pragmatic politician won’t change that, not even the president.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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