Deal, No Deal?

So, here’s an interesting political strategy question: Would Joe Biden and Democrats be better off striking an infrastructure deal with Senate Republicans or pushing through their own bill?

Here’s the basic lay of the land. The Dems can get anything through the House, but in the Senate they’ve got two options. The first is to pass a bill in regular order, but that means that they need 10 Republicans to break any possible filibuster. The second option is to use budget reconciliation, which is available to them on spending bills and that process only requires 51 votes for passage.

But here’s the catch. Reconciliation still means that they can’t afford to lose a single Democratic vote and Sen. Joe Manchin (D-WV) is insisting that Biden at least try to make it a bipartisan bill. That’s almost certainly why the administration is trying as hard as they are to cut a deal.

There’s been some movement on both sides. Biden cut his proposal from $2.3 trillion to $1.7 trillion while the Republican’s came up from over $500 billion to almost $1 trillion.

But the real sticking point is how to pay for it. Biden would raise the corporate tax to 28% from the current 21%. But that’s still half of what it was before the Trump tax cut took it down from 35%. Republicans are dug in against that. Instead, they suggest using untapped COVID relief dollars and/or increasing user fees. Both are non-starters for Democrats.

In my own view, the $1.9 trillion COVID package was too big and now it risks fueling inflation. But the political problem is that that pie is already divided up, so if you take some of it for infrastructure you’re taking a piece that already belongs to somebody. They won’t like it.

User fees actually make good public policy sense. In fact, the best way to do it is through a vehicle miles travelled tax, so that drivers pay based on how much they drive. It’s the most fair way to do raise money for roads and it might actually discourage too much driving. But that’s a political trap that the GOP is laying for the Dems and they see it pretty clearly. A VMT or a gas tax increase would be unpopular. Even if 10 Republicans voted for it, it would still become the “Democrat’s gas tax on American families!” in every GOP ad come next election.

And there’s the rub. Even if Biden and 10 Senate Republicans can agree on the spending side, they’ll never come to terms on how to pay for it. So, it’s likely that this will all amount to just what was necessary to appease Manchin’s demand for bipartisanship. As soon as the Senator from West Virginia is satisfied that everything has been done to try to make a deal work, he’ll be on board and it will all be over. Then it just comes down to a question of what Manchin can support.

Is that good politics for the Democrats? I think so. I wish it were different, but I just don’t think they get as much juice from a bipartisan agreement as they will for all the benefits packed into the “infrastructure” bill — which, by the way, is about a lot more than roads and bridges.

Joe Manchin has made this a long and winding road, but it’s a good guess that the Democrats will get to their destination all on their own.