Infrastructure Investments and a Call for Solidarity
Update on Biden's Build Back Better Agenda
The Biden Administration has been in the White House for over 200 days now. While considerable progress has been made in that time, we still have multiple crises facing the nation and the world, and critical legislation must still overcome obstruction in Congress to even reach Biden’s desk.
However, a faint glimmer of hope shone through the dark veil of obstruction on August 24, 2021, when the House of Representatives advanced a $3.5 trillion budget resolution. The passage of this budget resolution paves the way for Biden’s Build Back Better Agenda, but there is still a long road ahead, and even getting to this point was not easy.
To get a better understanding of where these proposed investments currently stand, we should examine the Biden agenda, how that agenda is slowly but surely becoming a reality through two separate bills, and the potential benefits of enacting such infrastructure investments. Lastly, I want to discuss recent obstruction efforts launched to undermine progress on these bills, and instead encourage solidarity rather than unnecessary compromise with people negotiating in bad faith.
With these factors in mind, let’s examine what Biden’s agenda is trying to accomplish.
Biden’s Build Back Better Agenda
The Build Back Better Agenda is simple in essence, even if nailing down the details will be somewhat complicated. But the agenda boils down to three broad goals:
1 - Lower Costs
In particular, the agenda aims to lower the cost of five essential products and services which have increasingly become prohibitively expensive for far too many people:
Childcare
Higher education
Prescription drugs
Healthcare
Housing
In reducing a different type of cost paid by families across the U.S., Biden wants to give tax cuts to working- and middle-class families with and without children.
2 - Cut Taxes
For those with children, the plan calls for extending the Child Tax Credit expansions made possible by the American Rescue Plan. The Earned Income Tax Credit would also be expanded for families without children.
Front and center in Biden’s agenda are initiatives to create good jobs addressing the many crises we face.
3 - Create Jobs
To do so, Biden calls on Congress to invest in workforce training programs, create clean energy jobs, and to also invest in teachers and schools. This includes the creation of a Civilian Climate Corps inspired by FDR’s Civilian Conservation Corps jobs program created during the Great Depression.
President Biden gave a State of the Union Address roughly four months ago at this point, calling on Congress to send bills to his desk advancing this agenda. What progress has been made since then?
The Bipartisan Bill and the Budget Reconciliation Bill
The legislative process has since bifurcated into two separate bills: one being sold as a “bipartisan” bill, and another which Democrats aim to pass – with or without Republican support – via the budget reconciliation process.
The bipartisan bill includes roughly $1.2 trillion in total spending, somewhere between $500 and $600 billion of which is “new” spending that wasn’t already planned, and focuses on a narrower set of infrastructure investments than the reconciliation bill. The reconciliation bill, on the other hand, would invest $3.5 trillion into a broad range of priorities outlined in the Build Back Better Agenda.
The result is one bill which puts a down payment towards important infrastructure projects, and another which Senator Bernie Sanders called “the most consequential legislation for working people since the New Deal.” You can see the approximate breakdowns in spending categories from this Moody’s Analytics paper to see how they differ in both scope and magnitude, though none of the details are finalized yet.
See, for instance, this first table outlining the bipartisan bill’s proposed infrastructure spending throughout the next decade.
The Bipartisan Bill
The broadest categories are transportation infrastructure and a collection of “other” infrastructure projects, totaling $579.2 billion by Moody’s calculations. Less importantly, for reasons I discussed in a previous article, the table also includes “pay-fors” which are essentially perfunctory accounting protocols acting as props in what economics professor Stephanie Kelton calls the “pay-for game”. She summarized it well in a recent article describing what she saw while advising Senator Bernie Sanders in the Senate Budget Committee:
The votes authorize the spending. The votes are the real pay-fors. Everything else is political theatre masquerading as sound finance.
With this in mind, look at the categories under the “Total infrastructure spending” heading to get an idea of where the money is being spent, and move from left to right to see the timeline of these expenditures over the next decade. The column in the far right shows the total expenditures through 2031. Notice the types of investments we would be making in our country: roads, bridges, public transit, rail, electric and low-carbon vehicles, broadband internet, and other investments benefiting everyone.
The White House Fact Sheet on the bipartisan bill summarizes these investments in the excerpt below.
The bipartisan Infrastructure Investment and Jobs Act:
Makes the largest federal investment in public transit ever
Makes the largest federal investment in passenger rail since the creation of Amtrak
Makes the single largest dedicated bridge investment since the construction of the interstate highway system
Makes the largest investment in clean drinking water and waste water infrastructure in American history, delivering clean water to millions of families
Ensures every American has access to reliable high-speed internet
Helps us tackle the climate crisis by making the largest investment in clean energy transmission and EV infrastructure in history; electrifying thousands of school and transit buses across the country; and creating a new Grid Deployment Authority to build a resilient, clean, 21st century electric grid
While this bipartisan bill is a good start, it does not do enough to make up for the decades of government abdicating its Constitutional duty to promote the general welfare. It also does not fully achieve the Build Back Better Agenda. For that, we need to also pass the budget reconciliation bill. Look at the table below to get an idea why we need both.
The Budget Reconciliation Bill
This second table from the Moody’s paper shows a similar breakdown for the bill which Democrats aim to pass through the budget reconciliation process. In addition to investing in physical buildings and structures like the bipartisan bill does, it also invests in the sort of infrastructure necessary to support the people who do this work.
This comes in the form of tax cuts – some of which initially expanded through Coronavirus relief bills – healthcare expansions, broader social safety nets, as well as education and housing investments. The exact dollar figures of these investments are even less certain than the bipartisan bill, because the legislation is still being drafted and negotiated, but the table below provides a good estimate of what we can expect currently.
As with the prior table, the column in the far right shows the total spending over a decade, and moving from left to right through each of the columns gives estimates for what would be spent each year. The Senate website also has a Topline Summary of proposed Fiscal Year 2022 programs such investments would fund. Like the bipartisan bill, the budget reconciliation bill would invest in creating jobs and infrastructure construction projects, but in many ways, it goes beyond the scope of the bipartisan bill to also address systemic deficiencies.
Many of these investments address the needs of the working families who will be doing the work implementing the Build Back Better Agenda, constructing the roads and bridges, retrofitting the buildings, manufacturing the parts, and also training future generations of workers. In addition to many job training programs, this bill would make unprecedented investments in schools and teachers.
The budget reconciliation bill would fund universal pre-kindergarten education for three- and four-year-old children, and fund two years of tuition-free community college. Other investments in higher education include expanding Pell grants and additional funding for Historically Black Colleges and Universities (HBCUs). Beyond creating jobs and investing in training and education, this bill would make significant investments in what many are calling “social infrastructure”.
Many of these “social infrastructure” investments advance the Build Back Better Agenda, working to lower costs and cut taxes for families across the country. Without such provisions, the Child Tax Credit payments that families began receiving monthly this year would end in 2022. Expansions to the Affordable Care Act (“Obamacare”) made under the American Rescue Plan would likewise be extended.
Families also stand to benefit from the first federal paid medical and family leave program in U.S. history, reducing lost income from taking time off. Other healthcare expansions include adding dental, vision, and hearing benefits to Medicare; enabling Medicare to negotiate prescription drug prices, resulting in lower prices for those who rely on these prescriptions; and invest in home and community-based care services. While not as impactful as more universal programs like Medicare for All, these would all be important, long overdue steps towards better health outcomes.
The more “traditional” forms of infrastructure investments also aim to reduce costs borne by families across the nation. Significant investments would be made into housing construction, including public housing, as well as making new and existing housing more ecologically sustainable. My hope is that these green investments will not only benefit the environment, but also reduce utility and other costs for the families inhabiting such structures.
Several other investments center around climate change, including manufacturing more essential components here in America, and charging fees to companies who contribute to more greenhouse gas emissions when they outsource and import products from overseas. Again, while this likely won’t be as impactful as implementing the same degree of investments as the Green New Deal calls for, this will still be a significant step towards addressing our increasingly precarious climate crisis.
Such expenditures would be offset by significant changes to our tax code, making corporations, the wealthy, and businesses that profit from pollution pay their fair share. While I won’t go into the finer details of why “paying for” such investments should be among the least of our concerns – though I do want to cover such details in a future article, and think some of these changes are good ideas independent of what expenditures they may offset – I want to discuss the future economic benefits estimated by the Moody’s paper.
Creating jobs and stimulating the economy – all while combating inflation and the ongoing climate crisis – are easily understood, and their benefits should be self-evident.
Economic Benefits from Infrastructure Investments
It is difficult to overstate the potential benefits from these types of investments – both felt by the individuals directly impacted by such policies, but also by the nation as a whole – because these bills have the potential to deliver such robust support to many historically neglected corners of the economy.
The charts below summarize some of the major, widespread benefits of enacting these infrastructure investments. To help keep these charts accessible to readers of all backgrounds, I’ll also briefly walk through the basics of understanding these projections. A key statistic to keep in mind when considering the economic impact of these policies is, over the next decade, Moody’s Analytics estimates that they could create approximately 20 million jobs.
Using BLS data, Moody’s analyzed the unemployment rate and inflation-adjusted gross domestic product figures – or “real GDP” – and created five different scenarios.
The light blue line represents past results going through mid-2021 and continuing with all possible investment packages enacted, including the American Rescue Plan (ARP), the bipartisan deal, and the budget reconciliation package. This is the scenario we should strive for; all the other lines represent unnecessary compromises.
In dark blue – although this scenario technically can no longer occur – this would play out if there were no additional support bills passed in 2021, even the ARP, which, thankfully, already passed. Still, this dark blue line helps emphasize the impact such investments make, and what the lack of additional support would cause. The red line, therefore, is technically the worst-case scenario that could play out, with only the ARP passed. The other two lines represent potential scenarios involving the ARP and one of the two infrastructure investment packages passing, but not the other.
Given that, all else being equal, we would like to see the unemployment rate decrease as much as possible, and to see GDP increase as much as possible, the light blue line showing all three bills passing is clearly the best possible outcome. The dark blue line, where none passed, would have been the absolute worst-case scenario.
But passing both bills is hardly certain. In my estimation, we run the risk of passing only the bipartisan bill, thereby losing political leverage and momentum to pass the budget reconciliation package, and settling for the green line rather than the light blue line’s scenario. It is also still possible that Congress could unnecessarily refuse to pass either infrastructure investment bill, relegating the economy to the red line’s trajectory. We have every reason to pass both bills and invest in our people and our planet.
Even if you’re someone who somehow neither cares about the people nor the planet, further compromise would only hinder economic recovery. We’re already settling for a compromise with $3.5 trillion worth of investments, considering how Senator Sanders initially sought a $6 trillion package, and I personally think that also would have been money well spent. Still, as we’ve discussed in previous articles, while these may just be numbers and charts, they represent real lives impacted by Congressional decisions.
What’s more, the arguments asserted by detractors like Senator Joe Manchin, who worry about the economy “overheating” due to inflation – without submitting any evidence to support this conclusion, of course – are also addressed by such economic research as the Moody’s paper. Rather than adding to inflationary pressures, these long-term investments will likely decrease inflationary pressures. The paper notes that:
Worries that the plan will ignite undesirably high inflation and an overheating economy are overdone.
The Moody’s paper uses the example of increasing housing supply with these investments, and how that will likely lower the cost of rent as landlords will have to compete with new housing becoming available to rent or buy. It does not dismiss heightened inflation from pandemic-related disruptions entirely, but says that inflation concerns in the context of infrastructure investments are “misplaced”.
The paper also asserts that this type of infrastructure investment:
…lowers business costs and thus improves competitiveness and productivity, allows workers to live closer to where they work and thus reduces commute times, improves labor participation, and reduces carbon emissions.
They’re not the only ones saying this, either. Even neoliberal economists like Larry Summers – who once served in the Clinton and Obama administrations, but (thankfully) was not asked to serve in the Biden administration – who spent the last year decrying the horrors of “overheating” the economy by sending $2,000 relief checks to working- and middle-class families, or as he called it, “overdoing overinsurance” – still think that infrastructure investment is a good idea. Even Summers understands that:
…it is essential to make long-term public investments to increase productivity and enable more people to work. It would be a grave error to cut back excessively on public-investment ambitions out of inflation concerns.
I don’t often agree with Summers, if hardly ever, but in this particular case, I do not disagree with his support for infrastructure investments.
With all these clear benefits these investments could deliver, and all the unnecessary suffering we could avoid, you might be wondering why we have two infrastructure bills at all, and why Congress is not simply focusing its efforts on a single piece of comprehensive legislation instead. I don’t claim to have all the answers to these questions, but I have some observations worth bearing in mind as the final push to pass these bills unfolds.
Divided Legislation in a Divided Congress
There are undoubtedly several factors surrounding this two-bill structure, some of which I will discuss in future articles, but I want to focus on one issue pertaining to the infrastructure debate.
The divide ostensibly began when lawmakers started debating what exactly the Build Back Better Agenda should look like legislatively. A clear split became increasingly clear when attention coalesced around the term “infrastructure” and detractors began to quibble with what exactly should be considered “infrastructure”.
Personally, I think when you take a prefix like “infra” – which essentially means “below” – and combine it with “structure” in this context, it should mean any type of structure underlying a functioning society. However, the people splitting hairs over the definition of “infrastructure” probably realize this, and are merely using this as a talking point, or a negotiating tactic, to further their own goals.
In fact, there is concrete evidence suggesting that some of these detractors may have been intentionally obtuse in an effort to obstruct meaningful progress. I mentioned such evidence in my article outlining the conflicts of interest caused by our campaign finance system, but did not go into detail about how this ExxonMobil executive appeared to be specifically discussing these infrastructure packages. For instance, during this recording, he said:
“So that’s a completely different conversation. When you start to stick to roads and bridges – and instead of a $2 trillion bill it’s a $800 billion bill – if you lower that threshold, you stick to highways and bridges, then a lot of the negative stuff starts to come out.”
From ExxonMobil’s perspective, what might this “negative stuff” be? Given how that same executive spoke about his priority being to look out for Exxon’s investments and shareholders, I would bet that it might have something to do with provisions aiming to, as the Topline Summary described them, “[put] US on track to meet President Biden’s 80% electricity and 50% economy-wide carbon reductions”. Perhaps Exxon lobbyists also played a role in Manchin’s obstruction, since that same executive would apparently speak with Manchin’s office every week.
Despite a divided Congress, these provisions are overwhelmingly popular with voters, according to a recent Data for Progress poll. As you can see below, each of these policy priorities have widespread support, which makes you wonder why members of Congress are once again trying to defy the will of the people.
This dissonance brings to mind a quote from Senator Whitehouse that I cited when discussing the For the People Act:
There is a lot of hard-to-explain hypocrisy and rush taking place right now, and my experience around politics is that when you find hypocrisy in the daylight, look for power in the shadows.
To prevent obstructionists from undermining the Build Back Better Agenda, and achieving a sort of “divide and conquer” strategy to pick apart these investment packages, progressive Democrats had a strategy of solidarity. Unless both packages pass Congress at the same time, neither will; “no reconciliation bill, no deal”.
Crucially – although I have criticized Representative Nancy Pelosi for her questionable investments and her stance on student loan debt cancellation, and I’ll criticize her again before this article is finished – she has been an important proponent of this strategy, and I applaud Speaker Pelosi’s efforts to protect the reconciliation bill. She has not caved to pressure yet, but conservative Democrats tried to undermine that strategy and decouple the bills last week.
Political Obstruction Slowing Progress
A coalition of conservative Democrats – led by Rep. Josh Gottheimer (D-NJ) – united briefly to urge the Speaker to ignore the budget reconciliation bill and instead pass the bipartisan bill immediately. While their initial letter made it sound like they were simply interested in getting people to work as soon as possible, other groups who also favored passing the bipartisan bill alone, like the U.S. Chamber of Commerce, later revealed their true agenda: decoupling the two bills. I suspect that, if they did successfully decouple these bills, conservatives would use that leverage to start removing provisions their financiers and lobbyists find “unnecessary”.
While the political maneuverings have evolved from day to day, I thought Ryan Grim summarized the situation well during this segment on Rising. Grim described how the Democratic party establishment made alliances with conservative Democrats – likely in an effort to shield themselves from the party’s progressive movement, who are trying to unseat more conservative incumbents – but now that President Biden needs a unified Congress to put bills on his desk, the conservatives are obstructing progress.
All three of them are now Democrats in Congress, but they’re paying the party back by joining with Josh Gottheimer [and] threatening to blow up the party’s agenda. They’re refusing to start legislative work on the party’s $3.5 trillion budget resolution until progressives give up all their leverage and pass the bipartisan infrastructure deal.
The problem was predictable. If you build your majority not with progressives, but with Republicans willing to call themselves Democrats for election purposes only, then when you actually try to pass a Democratic agenda, they’re going to stand in the way.
When Pelosi is looking for an excuse not to do something, that can be a convenient thing to have lying around. But now that Pelosi, Schumer, and Biden are actually trying to pass something big, the creatures they’ve nurtured have gone rogue.
Perhaps if the Democratic party spent more time listening to its progressive base, rather than trying to stifle it, we would be in a better position to pass the president’s agenda. Whether it’s Manchin in the Senate or Gottheimer in the House, conservative Democrats are unnecessarily sowing division. Unfortunately, because you don’t get to legislate with the Congress you want, but instead with the one you’ve got, let’s look at where things stand currently and the path from here.
The Current Situation and the Path Forward
Some progress has been made, but we still aren’t even approaching the finish line yet, so we have to stay focused to make sure we stick the landing. As mentioned at the beginning of the article, House Democrats passed the $3.5 trillion budget resolution despite the conservative obstructionists.
The vote won on a party-line split, with all 220 Democrats voting in favor, and not a single Republican doing so. Predictably, the GOP is not offering any salient arguments against it, but is instead simply deriding it as a “socialist spending spree”. This is nothing new, and I hope you’re noticing a pattern now if you hadn’t already.
In addition to advancing the budget resolution, this came with a condition of holding a vote on September 27, 2021, in consideration of the bipartisan bill. This does not appear to change anything yet, because progressives can simply vote no on it until the budget reconciliation package passes first, but some are understandably concerned about Democratic party solidarity.
Rather than discuss certain hypothetical situations that could play out, I will simply leave you with an old union adage:
United we bargain, divided we beg.
The economic benefits are clear. The voters support the Build Back Better Agenda. Please urge your members of Congress to act in solidarity with the people by passing both bills.
And remember: no reconciliation bill, no deal.
Thank you for reading my newsletter and taking the effort to learn about making the world a better place. I look forward to hearing your thoughts on how we can make progress towards a more just economy.
-JJ
Updated 9/19/2021 - Removed update text from beginning of article; added a word.
Updated 8/31/2021 - Added subscribe, share, and other buttons throughout. Added a sign-off. Added captions and a few links which had to be cut to fit email size limits.