Did Biden cave on infrastructure spending?

AP Photo/Evan Vucci

Sure seems that way, but not on infrastructure financing. CNN reports that Joe Biden agreed to come down to the GOP topline of $1 trillion for a new, bipartisan spending bill aimed at improving America’s roads, bridges, Internet, and rail. However, Biden wants Republicans to commit to new taxes to fund it as a way to buffer Democrats from attacks over those hikes in return:

President Joe Biden offered to bring his price tag on an infrastructure package down to $1 trillion but wants to ensure it amounts to “new money” — not redirected from funding already approved by Congress as Senate Republicans have been demanding, according to a GOP source briefed on the talks.

Biden also reiterated his call for new taxes to pay for much of his plan, the source said. It’s the latest sign of the major gulf between the two parties as they try to cut an infrastructure deal.

The offer made to Republican Sen. Shelley Moore Capito of West Virginia amounts to a reduction of the Biden administration’s $1.7 trillion proposal but a dramatic increase from the latest offer made by Republican senators. Capito and her group of fellow Senate Republicans have proposed a $928 billion infrastructure package, with $257 billion in new spending.

Republicans are considering making another counteroffer on Friday, the source said.

If this report is accurate, it’s quite a comedown for Biden and for the progressives pushing him on this bill. The original proposal was close to two trillion dollars, while Republicans started out at $600 billion. Democrats who already had misgivings about Biden’s fortitude will no doubt scream bloody murder if he cuts their proposal to meet Capito’s offer.

It might be a smarter play for Biden to use that as leverage on tax hikes, however. Republicans want to use that issue as a cudgel in the midterms, especially with the Biden administration spending not like drunken sailors but entire drunken navies. So far they haven’t explained from where the money will come, except to issue gassy bromides about getting it from the wealthy. It’s impossible to raise this much money — plus Biden’s new $6 trillion annual budget proposal — from the wealthy alone. Democrats need new taxes and they need Republicans to agree to them, for political reasons.

And let’s not forget that Democrats now need Republicans to pass the bill, too, in any form. The ruling from the Senate parliamentarian revealed yesterday all but takes reconciliation off the table. That means the GOP can block any infrastructure bill with the filibuster as long as fewer than ten of their caucus doesn’t desert them. For right now, Capito’s colleagues aren’t happy about the tax hikes. Politico reports this morning that they feel Biden has reneged from an earlier agreement:

— Republicans weren’t happy, to say the least. Biden, they have said publicly, told them just a few weeks ago in an Oval Office meeting that baseline spending — i.e., money that would be spent under current policy — could be included in the total. In their latest $928 billion infrastructure proposal, they had put forward only $257 billion in new spending, while the White House’s last number was $1.7 trillion.

— The GOP is considering another counteroffer that could come as soon as Friday, when Capito will be talking to Biden again, this time likely by phone. It’s unclear what that would look like — or even whether Republicans will make a new proposal. On Wednesday night’s call, no final decision was made about another offer, particularly because some Republicans in the group are starting to feel discouraged.

— One person familiar told us: “I have a hard time seeing this go ahead because Republicans’ plans always have baseline included; I don’t think Senate Republicans are interested in $1 trillion in new spending, or changing the tax cuts … or raising other taxes — and that’s been clear from Day 1.”

Well, the situation has changed for both parties after the parliamentarian’s ruling yesterday. Democrats could afford to offer baseline spending to fund the package as long as they didn’t really need Republicans to pass an infrastructure bill. It was a sop intended to be used as a political argument for reconciliation, a way to claim they tried to be bipartisan but the GOP was just too intransigent. Now that they have to actually cut a deal to get an infrastructure bill, Democrats can’t afford sops and PR moves. They have to get back to basics — in this case, the basics of their tax-and-spend philosophy.

At the same time, Republicans have to decide what their governing philosophy really is, too. Do they want to be a party of fiscal discipline and economic reality? If so, then they need to start finding funding sources for their own spending sprees, including this trillion-dollar exercise in pork-barrel politics. The “baseline” money is a mirage; both parties threw six trillion dollars of helicopter money into the air over the past fourteen months in COVID-19 relief. It has no basis in fiscal reality. If we want to spend money like this, we have to start getting it from somewhere other than than Fed’s virtual printing press.

Besides, if the Senate GOP isn’t interested in a trillion dollars in new spending, then why is Capito offering it to Biden? That will make the Republican counter-offer an interesting development … if it comes at all.