Senate Republicans unveiled a new infrastructure package on Thursday that is slightly bigger than their previous offer, but only just over half of the Democrats’ latest Biden-backed proposal of $1.7 trillion.
The newest Republican plan offers $506 billion for roads, bridges and major projects and $98 billion for public transit systems, but leaves out hundreds of billions Democrats wanted for electric cars and other Green New Deal provisions that didn’t fit the traditional definition of infrastructure.
In April, Republicans had offered a $568 billion plan to counter Democrats’ $1.9 trillion proposal, but it was rejected as being too small and not including enough necessary spending to be seriously considered. The Democrats’ proposal included $400 billion for home and facility care for the elderly and disabled, $213 billion for housing initiatives, and $137 billion for public education, none of which really fits under infrastructure either.
The Republican counteroffer includes $46 billion for passenger and freight rail, $21 billion for safety, $22 billion for ports and waterways, $56 billion for airports and $72 billion for water infrastructure. Also included are $22 billion for Western water storage, $65 billion for broadband infrastructure and $20 billion for infrastructure financing.
Is the bill paid for?
Some of these priorities could be included in the $300 billion transportation reauthorization coming up for a vote after passing unanimously out of committee this week, Republicans have said.
One possible sticking point could be that the bill offers no tax increase to “pay for” it, as the Democrats’ bill has in raising the Capital Gains rate from 21% to 28%. In the run-up to the bill’s release, it was suggested that nearly a trillion in unspent COVID relief funds could pay for it.
Furthermore, a range of economic experts on both sides of the aisle have agreed that infrastructure bills pay for themselves by creating jobs and growing the economy. Business roundtable claims that $3.70 will be added to the economy for every $1 spent on infrastructure, and the taxes paid on that $3.70 should more than cover the outlay by the government.
If the infrastructure bill will pay for itself one way or another, why do taxes need to be raised?
Will either side end up happy?
It isn’t likely that Democrats are going to go for this Republican bill. Like all significant compromises, neither side is likely to be too happy with the end result.
If Democrats really want to go it alone with $1.9 trillion, they have been okayed to do so through budget reconciliation without a single Republican vote. But Joe Manchin seems to like the recent Republican proposals more than his own party’s, so maybe budget reconciliation in a 50-50 Senate won’t get the job done either.
And after spending $1.9 trillion on coronavirus relief without any Republican votes, do Democrats really want to risk more massive solo spending that could lead to inflation?
It only gives Republicans a huge campaign boost if all this spending puts us in a recession or inflationary period, or both, by 2022 or 2024.