President Biden and Democrats want to ram a $2 trillion infrastructure and jobs plan through Congress. The plan has been touted by the White House as a way to rebuild American infrastructure and to reshape the economy. However, this plan is bad politics and is unlikely to pass in its current form. The American Jobs Plan contains items that have not been evaluated and are not likely to be considered in a bipartisan manner, which was the case with the American Rescue Plan, which had passed the Senate through the reconciliation process with no support from Republicans.
The pitfalls of the plan and approach are clear. Given the likelihood that the bill is passed by way of budget reconciliation, as there is staunch and seemingly unwavering opposition from Republicans all across the board, Biden is continuing to do away with his inaugural promise to reach across the aisle. Biden pledged to include Republicans in these negotiations. But Senate Minority Leader Mitch McConnell has already called the proposal a “trojan horse for massive tax increases and a whole lot of more debt and a whole lot of spending” that is “unrelated to infrastructure.”
Republicans have focused much of their criticism on how Biden seeks to pay for the package by raising corporate tax rates from 21 percent up to 28 percent, partly reversing the tax cut that President Trump signed into law. The package would also significantly raise tax rates for multinational corporations, which critics have said will harm our economy by driving these firms to take business outside of the United States.
Most of the plan is unrelated to infrastructure, even when infrastructure is defined in the loosest terms. Republicans have also cited that traditional infrastructure, like building or fixing roads, bridges, tunnels, and airports, comprises under 7 percent, or less than $160 billion, of the total cost of the package. The largest spending areas are liberal priorities, like home care, affordable housing, and electrical vehicle incentives.
The White House and Democrats could break up the massive package and work first on achieving a bipartisan compromise on the true infrastructure components, such as the repair of roads and bridges. Then the rest of the plan should be passed on an issue by issue basis, rather than the blanket label of infrastructure which is misleading. The American Jobs Plan may not even make it through the reconciliation process, as it faces potential opposition from both moderates and liberals in Congress.
Senator Joe Manchin, one of the only Democrats in Congress blocking the party from a wholesale move to the left, indicated that he opposes using the budget reconciliation process as a means of governing. Moreover, he does not support raising the corporate tax rate to 28 percent as Biden has proposed to pay for the plan. However, Manchin also said he would be in favor of closing tax loopholes that benefit the wealthy and could support the possible increase of the corporate rate to 25 percent.
The plan is also likely to face hurdles passing the House, where Democrats hold a narrow majority. Moderates, including Representative Bill Pascrell, Representative Josh Gottheimer, and Representative Tom Suozzi said they oppose any efforts to alter the tax code, unless there will be a restoration of the state and local tax deduction. Biden and Democrats have to provide some tax relief. To not get rid of limits on the state and local tax deduction and then raise tax rates may spell disaster for the success of Democrats in the midterms given their current slim majority in the House.
We cannot overlook the possibility that progressives will want more, as Representative Alexandria Ocasio Cortez said the package was too small and called for an egregious sum of $10 trillion to be spent over the next decade to achieve the goals of the package. This tactic of pushing liberal wish list bills through Congress by way of the reconciliation process will be damaging to Democrats ahead of the midterms next year.
Even if Biden can even conjure up the votes to pass this plan through the reconciliation process, doing so is bad politics and will hurt the chances of Democrats in 2022. I implore them to work in a bipartisan fashion for the sake of the party and indeed for the sake of the country.
Douglas Schoen is a political consultant who has served as adviser to Bill Clinton and to the campaign of Michael Bloomberg. His new book is “The End of Democracy? Russia and China on the Rise and America in Retreat.”