Image for Bipartisan Deal Buoys Optimism for Infrastructure Investment Success

Senate negotiators have reached a bipartisan agreement on a $550 billion physical infrastructure bill, which has won White House approval, passed a key procedural vote on Wednesday and should come to floor next week. Once it passes, the measure will head to the House and less certain path forward.

The Senate compromise is less than the $715 billion bill backed by House Democratic leaders, including Oregon Congressman Peter DeFazio, who chairs House Transportation and Infrastructure, who according to one report privately called the Senate compromise “crap”. That points to a contentious House-Senate conference committee to work out differences that retains Republican support in the Senate and Democratic support in the House. A total of 67 senators, including 17 Republicans, voted to advance the compromise measure. The House passed its version of a physical infrastructure measure by a 221-201 vote early this month.

Senator Chris Coons, D-Delaware, acknowledged the agreement falls short of President Biden’s original $1 trillion proposal and is $29 billion less than the original Senate bipartisan agreement reached in June. However, Coons said the bill still represents a huge and historic infrastructure investment that will pay dividends over the next five years and beyond.

The Senate compromise would authorize $284 billion in transportation infrastructure, compared to $343 billion in the House bill. The Senate compromise would give $110 billion in new spending for roads, bridges and major projects, $66 billion to passenger and freight rail, $39.2 billion to public transit, $17.3 billion to ports and waterways, $25 billion to airports and $11 billion for highway and pedestrian safety. Another $15 billion is allocated to expand the number of electric vehicle charging stations, fund production of electric and low-carbon school buses and ferries and promote fueling infrastructure for hydrogen, propane and natural gas. Roughly a third of the $110 billion allocation is for new bridges.

Senator Chris Coons (left) praised the bipartisan compromise as “huge and historic” while Oregon Congressman Peter DeFazio, who chairs the House Transportation and Infrastructure Committee, privately called it “crap”.

Around $55 billion of the overall $284 billion would go for water infrastructure, $73 billion for power and electric grid upgrades and $46 billion for resiliency such as funding for cybersecurity to protect critical infrastructure, flood mitigation, ecosystem restoration, weatherization and programs to deal with wildfire, drought and coastal erosion. A total of $5 million is reserved for Western water infrastructure.

The 55-page Senate compromise is in the form of a one-time supplemental appropriation spent over five years. The compromise is funded through a combination of redirecting $205 billion in unspent COVID-19 emergency relief funds, $49 billion from delaying the Medicare Part D rebate rule, $53 billion from unused federal jobless benefits and $28 billion from strengthened tax enforcement of crypto-currencies. The rest will come from corporate user fees, $6 billion from sales from the Strategic Petroleum Reserve and $3 billion from reduced Medicare spending on single-use drug vials.

As with most major federal spending legislation, there are programs inserted to satisfy individual lawmakers and state delegations. For example, an advanced energy manufacturing and recycling grant would be established to assist small- and medium-sized manufacturers build or retrofit facilities that produce or recycle advanced energy projects in communities “where coal mines or coal power plants have shut down”. Another program would allocate $3.5 billion to establish four regional hubs to capture carbon emissions. There also are sections on hydrogen, nuclear and hydropower energy sources, rare earth element research and battery processing and manufacturing.

The emergence of a viable bipartisan physical infrastructure deal is encouraging, but not a slam dunk. There may be Senate floor amendments from both conservatives and progressives that, if approved, potentially could peel off votes. The House-Senate conference committee will certainly test the bipartisan agreement as House members may press for a larger investment, more favorable labor provisions and additional revenue sources.

Perhaps the most significant obstacle is the $3.5 trillion budget reconciliation measure Democrats hope to pass that includes Biden’s human infrastructure proposals. Budget reconciliation resolutions aren’t subject to the Senate filibuster, so theoretically could pass with just Democratic votes in the House and Senate. However, at least two Democratic senators have voiced concern or opposition to the $3.5 trillion spending level and some of its provisions.

The House-Senate conference committee will certainly test the bipartisan agreement as House members may press for a larger investment, more favorable labor provisions and additional revenue sources.

Then there is a voice from the sidelines. Former President Donald Trump, who failed to gain traction for his transportation infrastructure proposal, has urged congressional Republicans, including Senate Minority Leader Mitch McConnell, to oppose a bipartisan compromise, calling it bad for America and threatening “lots of primaries” for cooperating GOP members.

Senator Rob Portman, R-Ohio, who led the negotiations for Senate Republicans, said he talked with Trump and encouraged him to support the deal because it mirrors what he proposed as President and because Republicans blocked Democratic proposals to undo parts of the Trump tax cut for corporations and wealthy individuals. It didn’t persuade Trump who released a statement saying, “Who are these RINO Republicans that are so dedicated to giving the Radical Left Democrats a big and beautiful win on Infrastructure? Republican voters will never forget their names, nor will the people of our Country!”