With Great Difficulty

Nothing is easy. It’s even worse in government. There’s little reason anything gets done in Washington. The political incentives are all wrong. No one would vote to pass any legislation that makes the other side look successful. Such legislation might be just what the nation needs, but if the other side proposed it, they’d get the credit for making everything better for everyone. So, at the moment, Republicans will slow or stop all of the Biden administration’s proposed legislation on infrastructure or anything else that’s obviously good for the country, because that would be good for Biden. Where does that leave them? That leaves them nodding in agreement. Biden did something really good for the country. That admission would end everything for them. Their base would vote them out of office as soon as possible. They might have to worry about their safety, and their kids’ safety. People do get angry on that side of things. Liberals whine. The new Trump conservatives shoot. And nothing will get done in Washington. Politicians will dance around the issues and then shrug and walk away. Democrats do this too. No one will admit the other guy has a point. They can’t.

Joe Biden doesn’t seem to believe that. Jim Tankersley is the New York Times White House correspondent who covers economic policy. He has written a book or two on the decline of opportunity for American workers so he should cover this story, and with Emily Cochrane he does:

President Biden offered a series of concessions to try to secure a $1 trillion infrastructure deal with Senate Republicans in an Oval Office meeting this week, narrowing both his spending and tax proposals as negotiations barreled into the final days of what could be an improbable agreement or a blame game that escalates quickly.

Expect the blame game that escalates quickly. This is Washington:

A deal still appears to be a long shot, with potential tax increases the biggest hurdle to winning the kind of Republican support that Mr. Biden has said he is seeking. But the continued movement underscored his hopes for a revival of bipartisanship.

The talks are being sustained by a desire among lawmakers in both parties to reach agreement over what has been a longstanding but elusive goal in Congress: repairing and enhancing the country’s network of roads, bridges, water pipes and other physical infrastructure. Both sides are trying to win favor with the moderate congressional Democrats, particularly in the Senate, who will ultimately decide the fate of the president’s $4 trillion economic agenda.

There are a few votes that could move around but potential tax increases always are the biggest hurdle. That, and the whole idea of spending a whole lot of money:

Republicans said on Thursday that Mr. Biden was seeking more spending than they were likely to support. They privately panned his continued attempt to fund the bill with increased tax revenue from corporations and high earners even if those plans do not cross the Republicans’ red line of reversing parts of President Donald J. Trump’s signature tax cuts in 2017. Mr. Biden has also insisted on including some spending provisions, like building 500,000 new charging stations for electric vehicles, that have little Republican support in Congress.

They will protect corporations and high earners, and protect the oil industry from all those damned electric cars everywhere these days, even if Joe seemed to be caving in:

The president has now cut more than $1 trillion from his initial $2.3 trillion infrastructure proposal, while Republicans have added less than $100 billion in new spending to their first offer, which contained about $200 billion in new spending by many estimates.

That’s okay. Offer them even more:

Mr. Biden said this week that for now he would exclude several of his proposed tax increases, including raising the corporate income tax rate to 28 percent.

But that was not enough:

Senator Shelley Moore Capito of West Virginia, the lead Republican negotiator, visited the White House on Wednesday. Mr. Biden outlined a potential package of $1 trillion financed largely by cracking down on tax evasion by corporations and the rich, closing a small number of business tax loopholes and imposing a new minimum tax on large companies like Amazon that pay little or no federal income taxes, according to people familiar with the discussions.

Republicans said on Thursday that it did not amount to a large concession because he was still seeking to raise taxes on businesses…

Republicans and Democrats alike expect Mr. Biden to revive his more sweeping corporate tax plans even if a deal is reached.

In short, no one trusted anyone, and of course this was going nowhere. Everyone knew that:

The discussions have unsettled some progressive Democrats, who are pushing Mr. Biden to abandon talks and move his economic plan through the budget reconciliation process, which would allow it to pass with only Democratic votes. They questioned whether a compromise struck with Ms. Capito could secure the 10 Republican votes needed to pass a bill through normal Senate procedures and argued that Republicans had done little to move closer to the White House on the amount of new spending or how to finance it.

It was time to end this nonsense:

“No Republican vote in favor of an infrastructure package should supersede our mission: to build an America that works for the people, not for massive corporations,” Representative Jamaal Bowman, Democrat of New York, said in a statement. “Getting Republicans on board is not necessary. Getting the American people back on their feet is.”

Bu there is a response to that:

Republicans have complained that Mr. Biden is not willing to reduce his spending demands to a degree they could support, and they have been surprised at his continued resistance to raising gas taxes and other fees that have traditionally supported some infrastructure programs. As of Thursday afternoon, it was unclear whether Republicans would compile another counterproposal.

Biden could raise the federal per-gallon gas tax sky high and force the poor losers who have to drive to work every single day to pay for this. Why punish the rich? But he will. He was just giving them one last chance:

Mr. Biden is seeking to achieve bipartisanship or exhaust its possibilities, in part to secure votes from Democratic senators like Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, who have insisted on including Republicans in the infrastructure effort.

“At any moment, it’s very possible the Republicans say, ‘Wait a minute, either we’re going do it our way or we’re not going do it at all,’” said Senator Benjamin L. Cardin, Democrat of Maryland.

Fine. Let them say they will never compromise and that will be that. The Republicans will work with us for the good of the nation? No they won’t. They just said so. Joe Manchin and Kyrsten Sinema will have nowhere to hide and then this happens:

Leading Democrats say a compromise that falls short of Mr. Biden’s ambitions could pave the way for a reconciliation bill that includes many of the spending proposals and tax increases in his broad agenda, like affordable child care, universal prekindergarten and additional efforts to fight climate change.

If talks break down and moderate Democrats blame Republicans, a reconciliation bill would most likely be easier for Mr. Biden to push through. Advancing an infrastructure package through reconciliation and its strict budgetary requirements will be far more difficult than when Democrats passed a $1.9 trillion economic aid bill this year. It would be impossible without the support of all 50 Democratic senators and nearly every Democratic representative.

But at that point they may finally have all those fifty votes, leaving the Republicans out in the cold, sputtering and whining:

Republicans are trying to stop the president from reversing the tax cuts for high earners and corporations in Mr. Trump’s tax law, including Mr. Biden’s plans to raise the corporate income tax rate to 28 percent from 21 percent and to increase a variety of taxes on income that multinational companies earn outside the United States.

But the resistance extends beyond the 2017 tax cuts. Republicans immediately opposed the president’s narrowing of his proposal this week, criticizing his plan to raise funding for the IRS by $80 billion.

What? Tax the rich and then fully fund the IRS to make sure they finally pay those taxes? Something must be done about this:

Business leaders have told Republican lawmakers that their best chance to block corporate tax increases is to cut a spending deal of $1 trillion or more with Mr. Biden that is financed by something other than business tax increases, such as raising gas taxes or federal borrowing. Their hope is that passage of such a deal could allow moderate Democrats to oppose a reconciliation bill that includes corporate tax increases as an offset.

Don’t count on it, and there’s that other issue:

Even if Republicans agreed to Mr. Biden’s plans for how to pay for the bill, a wide gulf remains in terms of how much new money should go toward an infrastructure package.

The figure that Mr. Biden gave Ms. Capito at their meeting is nearly four times the $257 billion in new spending that Republicans included in their latest counteroffer. That totaled $928 billion, but two-thirds came from what amounted to an expected continuation of existing federal spending patterns.

Can we do this with spending new money? Nope, not now:

The president started the discussions by proposing a $2.3 trillion American Jobs Plan, which includes spending on roads, bridges and broadband, and replacing lead water pipes, overhauling the electric grid, supporting emerging industries like advanced batteries, and providing home health care for older and disabled Americans – a measure Republicans have targeted in particular, complaining that Mr. Biden was abusing the definition of infrastructure.

So what? That may not matter much longer:

It was unclear if Ms. Capito and the five Republican senators who have been involved in the talks would assemble another counterproposal before she is scheduled to speak to Mr. Biden on Friday. Administration officials and Democratic congressional leaders have suggested that they would decide as early as next week on whether there would be a bipartisan compromise or if they must proceed on their own.

Things are moving fast. From the Washington Post:

President Biden signaled at a private meeting on Wednesday that he would be open to significant revisions on the size of his infrastructure package and how it would be paid for in order win Republican backing, outlining a plan for about $1 trillion in new spending financed through tax changes that do not appear to raise the top corporate rate…

At issue is the component of Biden’s original infrastructure plan that would raise the corporate tax rate from 21 percent to 28 percent… In its place, Biden emphasized a different part of his proposal, which would amount to a new, minimum corporate tax of 15 percent.

But every corporation should pay at least that and a now fully-funded IRS will make sure they do, and Kevin Drum adds this:

Biden has cut the total amount of his proposal by more than half, and plans to finance it solely with a minimum tax rate on large corporations. He is, basically, calling Republicans’ bluff. This is about as big a compromise as any minority party could reasonably expect.

Will ten or a dozen Republicans sign up, so that this can pass via regular order? Or will Mitch McConnell, as yet another “personal favor,” lobby his fellow Republicans to deny Biden anything that might be interpreted as a bipartisan victory?

I’d guess the latter, of course, but I’m a cynic.

No, that’s fine. That’s being realistic. And then there’s reality. Matt Egan of CNN Business covers the analytic world of business:

Since Covid-19 erupted last spring, Washington came to the rescue with more than $5 trillion of fiscal stimulus. That unprecedented rescue effort helped prevent the economy from plunging into a depression.

Now, even though inflation is surging and unemployment is shrinking, President Joe Biden is calling for spending another $4.5 trillion on infrastructure, education and childcare. That bold agenda is raising concerns that Democrats are about to overheat an already-booming economy.

Republicans are making just that case. Senate Minority Leader Mitch McConnell warned that Biden’s recent budget announcement “would drown American families in debt, deficits and inflation.”

No, not really:

The White House isn’t calling for borrowing heavily for another rescue plan like the stimulus-check driven $1.9 trillion package enacted in March. That type of short-term support simply isn’t needed right now.

Instead, Biden’s American Jobs Plan and American Families Plan are long-term investments aimed at combating the worker shortage, boosting productivity and easing inequality. And unlike the stimulus package, this Build Back Better agenda would be paid for mostly by raising taxes on corporations and the wealthy.

That’s why it’s not fair to paint Biden’s proposals as the inflation bogeyman the GOP is pushing.

That’s just nonsense:

“Build Back Better is about long-term growth, not near-term stimulus,” Mark Zandi, chief economist at Moody’s Analytics, told CNN Business. “I’m not concerned the economy will overheat because of that support.”

In fact, a Moody’s analysis published last month found that the near-term impact of Biden’s plan is “small,” even as it provides “meaningful longer-term economic benefits” by raising labor force participation and education attainment.

But wait, there’s more:

Joe Brusuelas, chief economist at RSM, said the inflationary impact of the Biden agenda will be limited by the long-term nature of the investment, low borrowing costs and America’s aging demographics.

“I do not expect Build Back Better to cause a return to 1970s-style inflation,” Brusuelas said. “And the modernization of aging infrastructure will likely increase productivity, which will tend to offset inflationary impulses.”

And there’s this:

To fight a worker shortage that is “getting worse by the day,” the US Chamber of Commerce this week called on the government to ramp up legal immigration and support parents struggling with the high cost of childcare.

The pandemic has shined a bright light on how reliant the US economy is on affordable and accessible childcare. Millions of women dropped out of the workforce during the health crisis that shut down schools and daycare centers.

But even before the pandemic, childcare costs were a major headache for families.

That’s what makes Biden’s plans important:

Over the past two decades, the cost of daycare has doubled compared with a 50% rise in prices of all goods and services, according to Moody’s Analytics. The average cost of putting a child younger than 5 into full-time formal care is nearly $10,000 nationally, but could be as high as $20,000 in certain areas, Moody’s said.

For many parents, it simply made more financial sense to stay home rather than pay exorbitant childcare costs. Labor force participation by women in their 20s, 30s and early 40s peaked in the late 1990s, according to Moody’s.

“Families are in desperate need of high-quality, affordable childcare,” Moody’s said.

And many companies are desperately in need of workers.

That’s why childcare support receives the most funds in Biden’s American Families Plan, which calls for families earning less than 150% of their state’s median income to spend no more than 7% of their income on childcare. Some working families would have their childcare costs fully covered.

“Increasing the labor supply would allow the economy to grow faster in the longer run,” said PNC chief economist Gus Faucher.

Cool, but that’s too arcane for politics:

Washington is infamous for only being able to focus on the here and now. And clearly, inflation is an issue right now – and no one can say for certain how it will play out given the unique nature of this recession and recovery.

“The reality is that in DC, everything is an immediate, short-term political decision. Long-term thinking is as common as bipartisanship,” said Ed Mills, Washington policy analyst at Raymond James. “Inflation concerns make it more likely that most, if not all, of the infrastructure package will be done on a partisan basis.”

And perhaps that’s best:

Greg Valliere, chief US policy strategist at AGF Investments, said Republicans sense an opening to use worries about rising prices to block the Biden agenda.

“Republicans can say the more money this president spends, the greater the inflation threat may be,” Valliere said. “I’m not sure there is a clear connection. It’s a stretch to say it’s Biden’s fault. But politics isn’t fair.”

It isn’t. This will be done by Democrats. Republicans will scream bloody murder, but it will be done. That’s how things get done in Washington now. With great difficulty. But sometimes they do get done.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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