On August 10, the U.S. Senate passed the Infrastructure Investment and Jobs Act, H.R. 3684, by a 69-30 vote. This is the bipartisan infrastructure framework (or BIF) that would spend $1.2 trillion over ten years on what’s generally considered to be infrastructure, using a combination of $550 billion in new spending and spending offsets including repurposing $200 billion of unused COVID-relief funds.
The Senate quickly followed this bill with a $3.5 trillion budget resolution that was passed on a party-line vote with reconciliation instructions for committees to fulfill President Biden’s “Build Back Better” human infrastructure agenda. Reconciliation will allow Democrats to pass a final bill without Republican votes if they can stay united, but on August 12, nine House Democrats told Speaker Pelosi (D-CA) they would not vote for the $3.5 trillion resolution unless the BIF is voted on first. And with only an eight-seat House majority, losing just four Democrats would result in a tie vote and deny passage.
Thus, on August 23, Speaker Pelosi agreed that the House would consider the BIF by Sept. 27 in return for “deeming” the $3.5 trillion budget resolution as being adopted to avoid a separate vote. The House passed this rule allowing the process to move forward, but prospects for a final Build Back Better Act and its implications for the BIF have been so murky that the Sept. 27 deadline was delayed.
Moderate Democrats in both the House and Senate have stated that $3.5 trillion is too much, and a 50-50 Senate means just one Democrat can stop the entire package until his or her concerns are satisfied. As such, Sen. Joe Manchin’s (D-WV) warning that he’ll only support a $1-1.5 trillion package will have to be accommodated. But doing so could cause progressive Democrats to abandon the bill.
This is true for the $2-3 trillion tax increase in the Build Back Better Act reconciliation bill, too. The House Ways and Means Committee approved increasing the corporate rate to 26.5% and limiting the IRC Sec. 199A (20%) deduction for S Corporations, LLCs, and other pass-through entities, as well as raising the top rate for individuals to 39.6% and capital gains rate to 25%. But Democrats from farming areas are opposed to raising estate taxes and other Democrats are split on repealing the $10,000 state and local tax (SALT) cap for federal tax deductions. And Democrats are divided on whether to negotiate prescription drug prices for the Medicare program to ostensibly save funds for other programs.
By the final week of September, Speaker Pelosi had pivoted from her position that the BIF would only pass in tandem with the Build Back Better reconciliation bill, effectively decoupling its fate from the Democrats’ unfinished reconciliation package. This was reportedly motivated by her realization that the reconciliation package’s $3.5 trillion price tag would have to come down in order to have a chance of making it through both chambers of Congress. Other factors in Pelosi’s shift may also include the time it will take to pare down the Build Back Better reconciliation bill’s spending and tax increases, as well as keeping the government open past the Sept. 30 end of its fiscal year and raising the federal debt limit by the end of October.
