The Congressional process known as reconciliation – a way for Congress to enact legislation on taxes, spending, and the debt limit with only a majority in the Senate – was successfully used to pass the American Rescue Plan. And now leading Democrats say an infrastructure bill could play out the same way.
Sen. Ben Cardin (D., Md.), who is involved in infrastructure negotiations, was overheard during an event Monday saying Democrats will “most likely have to use reconciliation” to get the deal done. “The Republicans will be with you to a point, and then..," Cardin said before trailing off.
Jared Bernstein, one of President Biden's economic advisers, told Yahoo Finance the president wants a bipartisan deal, but if Republicans won’t work with him to fulfill his campaign promises, “he will push ahead.”
“He is absolutely devoted to making sure the American people get the kind of investments that he believes they put him there for,” Bernstein said.
How a reconciliation bill could be different
Republican lawmakers have already painted the just-enacted economic relief plan as a "liberal wish list" and would surely do the same about an infrastructure bill passed solely by Democrats.
But an infrastructure deal via reconciliation won’t just impact the politics surrounding it, it would likely change the makeup of any legislation.
During an event on Monday former Republican Congressman Bill Shuster – who once chaired the House Transportation and Infrastructure Committee – predicted a bipartisan deal could end up in the $1 trillion range. But he noted that if Democrats go for reconciliation, “I think you’ll see a package bigger than that,” in the range of $1.5 trillion to $1.7 trillion.
Reconciliation is a process that has been used more than 20 times in recent decades as a way to speed up consideration of certain types of legislation. Lawmakers could attempt to use the process for a second time this year to get an infrastructure bill done, but they'd be barred from including certain provisions that would otherwise be included in a bipartisan bill.
A Democratic effort to raise the minimum wage was stripped out of the economic relief package because of reconciliation rules, and Shuster says similar “policy changes” could fall by the wayside in an infrastructure bill. He said he hopes Republicans and Democrats would be able to work together, which might lead to a deal that includes far-reaching changes in areas like rural broadband, pandemic preparation, or the electrical grid.
In a Yahoo Finance interview last month, Cardin also said he was hopeful for bipartisan support in order to “deal not only with transportation, but to deal with water infrastructure, to deal with broadband, to deal with our schools, deal with our energy issues.”
‘We'll come back and give you details’
Bernstein, who currently serves on the President’s Council of Economic Advisors and previously was the Chief Economist to then Vice President Biden, is also focused on making any infrastructure bill long-lasting.
“I can tell you, not just from an economic standpoint but from a political economy standpoint, that if you want to sustain a lasting program in this country, paying for it is often an important way to help that occur,” he said.
What Bernstein didn’t give additional details on were tax increases the White House might pursue to pay for the bill. Bernstein pointed to Biden’s promises on the campaign trail – tax increases on the highest earners, as well as on corporations – but beyond that promised “when the time is right, we'll come back and give you details.”
Additional tax provisions could be on the table in a Democrats-only bill, including a financial transaction tax. During the campaign, Biden didn’t promise such a tax but when asked about it, he said, “I think we should have a financial transactions tax” without offering further details like an appropriate rate level.
Brian Gardner, chief Washington policy strategist for brokerage and investment banking firm Stifel, told Yahoo Finance interview on Monday a financial transaction tax could be on the table.
“It's one of those things that I don't think has gotten enough attention,” said Gardner. “It's going to get a very close look from Congress.” Democrats have been pushing for such a tax for years and have renewed their calls around the GameStop saga.
Over the weekend, Treasury Secretary Janet Yellen also refused to rule out administration support for a wealth tax, which progressive Democrats like Sen. Elizabeth Warren (D., Mass.) have been pushing.
Sen. Joe Manchin (D., W.V.), a moderate Democrat, might be an obstacle to the Democrats' reconciliation push. His vote would be crucial and, in a recent Axios interview, said he believed it was possible to get the 10 Republicans on board who would be needed. "I am not going to get on a bill that cuts them out completely before we start trying," he said.
Bernstein also said Biden is hoping for a bipartisan bill: “That is where he will start.” But like the administration’s approach to the economic relief package, he underscored that the White House is keeping other options on the table to get it done.
“There's no reason to get ahead of ourselves,” he said.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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