The US economic recovery might have just peaked. The Biden administration has plans to keep the party alive, but it won’t be cheap.
Data published Thursday showed economic output growing at an annualized rate of 6.5% in the second quarter. It marks a complete recovery from the pandemic-era drop in output, with gross domestic product finally surpassing its end-of-2019 peak.
Yet economists expected growth of 8.5%, making the government report a considerable disappointment. The quarter also benefited from stimulus and the reversal of lockdown measures. It’s highly probable that growth will moderate in the following quarters.
And new obstacles are emerging. The Delta variant of COVID-19 is causing some cities to reinstate mask mandates, possibly discouraging people from dining out, heading back to their offices and hurting consumer spending. Americans are also staring down a so-called fiscal cliff, with support programs like the student-loan moratorium and enhanced unemployment benefits slated to expire in the fall.
Growth is still expected to trend well above its historical average through the rest of the year. But with nearly 10 million Americans still unemployed, the economy remains far from fully healed.
Enter President Joe Biden and his multi-trillion-dollar spending plans. As economic growth is set to slow, the White House is moving full-steam ahead on packages it argues will lead to a stronger expansion and years of permanently higher output. It’s pushing $4 trillion in new infrastructure spending that encompasses physical items like roads and bridges, and upgrading broadband connections.
That’s not all. Biden and Democratic lawmakers are also trying to advance plans for new spending on family care, free education, and clean energy. Senate Democrats struck a deal on a $3.5 trillion budget blueprint, and it will embark on a party-line process known as reconciliation. That may face cuts in the weeks ahead, however.
The two proposals make up what Treasury Secretary Janet Yellen deemed “historic investments” that promise “a big return.” Instead of providing the kind of immediate boost yielded by the March stimulus package, the White House has billed the follow-up plans as drivers of permanently higher growth through the 2020s. Simply put, the Biden administration is looking to buy its way to a stronger rebound.
Yet conservatives argue it could cause a significant rise in inflation and set back the recovery.
“In the short-term, the economy is heading into its potential growth rate,” Brian Riedl, an economist at the right-leaning Manhattan Institute, told Insider. ” Any additional stimulus will likely lead to inflation rather than long-term growth.”
The White House isn’t dissuaded by these arguments.
“We still have work to do to build our economy back better,” White House Press Secretary Jen Psaki said in a statement. “It’s why he’s working with Democrats to deliver on additional support for our middle class that will create a fairer, more sustainable, and stronger economy.”
A group of key Senate Republicans and the White House announced Wednesday that they had reached an agreement on a $1 trillion bipartisan infrastructure package. The bill includes $550 billion in new spending – $30 billion less than the original bipartisan agreement hashed out last month.
While there will likely be more proposals on infrastructure spending from Democrats – although Sen. Kyrsten Sinema has blocked Democrats’ $3.5 trillion in proposed party-line spending – the bipartisan bill would still encompass a major investment. It’s also already passed a test vote in the Senate. Here’s how it breaks down.
Roads, bridges, and transit safety
According to a White House fact sheet, the deal will put $110 billion toward road, bridges, and other projects. Those investments will “focus on climate change mitigation, resilience, equity, and safety for all users, including cyclists and pedestrians.” That includes:
$40 billion for bridges, which would go toward repairs and replacements
$17.5 billion for other “complex,” major projects that aren’t traditionally eligible for funding
In addition, the deal would put $11 billion toward “transportation safety programs,” with an emphasis on pedestrians and cyclists
$39 billion for public transit, which would go toward upgrading and modernizing infrastructure, and increasing accessibility
$66 billion for rail, which includes:
$22 billion in Amtrak grants
$24 billion in grants to help modernize the Northeast Corridor (a politically important route, which even has its own slew of Northeast presidential primaries named after it: the Acela primaries)
$12 billion toward intercity rail
$5 billion in “rail improvement and safety grants”
$3 billion for other safety improvements
$2.5 billion for zero emission buses
$2.5 billion for low emission buses
$2.5 billion for ferries
$7.5 billion to create a network of electric vehicle chargers across the country
Water and air
$17 billion in ports
$25 billion for airports, with an emphasis on addressing backlogs and reducing emission in both types of ports
“Over $50 billion” in water infrastructure, with an emphasis on building resiliency amidst climate change and cyber attacks
$55 billion toward clean drinking water, which includes replacing lead pipes
Internet and power
$65 billion for high-speed broadband
$73 billion for grid modernization, which the White House says is the “single largest investment in clean energy transmission in American history”
Climate change and community
$1 billion toward reconstructing and reconcieving infrastructure that physically divides communities, as seen in the fact that “significant portions of the interstate highway system were built through Black neighborhoods”
$21 billion toward “environmental remediation,” which will address idle energy sites that are, on the whole, disproportionately closer to Americans of color. The funds mark “the largest investment in addressing the legacy pollution,” per the White House
How it’s funded
The White House did not specify how offsets for the bill will break down, saying simply it’ll be financed by utilizing previously unspent relief funding, “targeted corporate user fees,” and increased tax enforcement on cryptocurrencies – a far cry from Biden’s original proposed tax enforcement measures.
However, the New York Times reports that those unspent relief funds will make up $205 billion, and $53 billion could come from unspent funds in states that ended their participation in federal unemployment benefits. Cryptocurrency enforcement is expected to net $28 billion. The proposal also reportedly assumes that the investments will bring in $56 billion through economic growth alone.
Trump, who tried throughout his presidency to pass his own infrastructure bill, has railed against negotiations in recent days, telling Republican lawmakers to skip the talks – not, it seems, because of any specific issues with the content of the bill, but because passage of the bill would be “a victory for the Biden administration and Democrats and…heavily used in the 2022 election.”
Wednesday’s vote to advance the bill in the Senate precedes a final vote on the legislation coming sometime in the next week or two. Democrats are also preparing a reconciliation package that would pass the Senate without Republican support.
On July 20, President Joe Biden will have been in office for six months.
Since their January inauguration, Biden and Vice President Kamala Harris have been met with a host of challenges, most notably the coronavirus pandemic, which, since last year, has upended life as we know it.
However, on a range of issues, from steering a largely-reopened economy and facing immigration challenges at the US-Mexico border to reshaping the country’s standing on the world stage and putting an imprint on the federal judiciary, Biden has made a clear pivot from the administration of former President Donald Trump.
Biden, who represented Delaware in the US Senate for 36 years before serving as vice president for eight years, is certainly not new to Washington, DC. But that familiarity has so far helped Biden navigate a city that he’s intimately familiar with, despite being a place that has also become much more partisan in recent decades.
Here are five key figures that currently defining the trajectory of Biden’s young presidency:
In April 2020, during the height of the coronavirus pandemic, the US unemployment rate sat at 14.8%, a dizzying number that reflected the economic pain caused by businesses forced to shut down because of the deadly virus.
The unemployment rate rose by 0.1% from May to June, but it was a reflection of an expanding job workforce.
Earlier in the spring, there were some concerns about job growth and the effectiveness of the $1.9 trillion COVID-19 relief package championed by Biden and congressional Democrats.
However, as COVID-related restrictions eased and vaccination rates increased since the beginning of the year, the economy has clearly benefited.
After nearly six months in office, FiveThirtyEight’s polling average has Biden’s overall approval rating at 52.4%, with 42.5% disapproving of his performance, reflective of his relatively stable numbers over the past few months.
While many people were fighting to find appointments earlier this year, many sites offer now walk-in appointments as vaccination rates lag in many parts of the country.
Vaccine hesitancy is a real thing, and Biden, who pledged to prioritize fighting the virus during his presidential campaign last year, is trying to find new ways to encourage people to get their shots, especially as the highly infectious Delta variant of the coronavirus takes hold across the country.
The administration missed its goal of 70% of the population having received at least one vaccine shot by July 4, but Biden recently outlined a strategy of a door-to-door effort to help protect the unvaccinated against the virus, along with getting vaccines to primary-care physicians and physicians.
Earlier this year, Democrats were thrilled to win back control of the Senate after sweeping the dual Georgia runoff elections, which gave them 50 Senate seats. However, with Republicans also possessing 50 seats, Democratic control is only a reality due to Harris’s ability to break ties in the evenly-divided chamber.
While Democrats have been able to get virtually all of their major Cabinet and administration nominees through the Senate, along with their ability to push through judicial nominees, they still have to contend with the legislative filibuster, which can be used when major legislation fails to meet the 60-vote threshold to cut off debate.
Party leaders desperately want to pass their marquee For the People Act, or S.1, the sweeping voting-rights bill that would end partisan gerrymandering, expand early and absentee voting, and establish national standards for voter registration, among other measures.
However, moderate Sens. Joe Manchin of Arizona and Kyrsten Sinema of Arizona have not relented from their longstanding pledges to keep the filibuster intact, which will continue to limit how much the administration can actually sign into law.
Senate Democrats last Wednesday reached a deal on a $3.5 trillion infrastructure bill that would feature infrastructure priorities focused on childcare, clean energy, and education. This legislation would be separate from the bipartisan $1 trillion infrastructure framework crafted by a small group of senators and the White House.
However, the bill will have to be passed through reconciliation, which Republicans have already rejected on the grounds of its cost and its reach into areas that they deem as unrelated to infrastructure.
By using the budget reconciliation process, Democrats can pass the bill with a simple majority and avoid a filibuster.
Democrats are determined to pass a larger party-line package, though, and with the filibuster still intact, now will likely be the party’s best chance to enact such a massive piece of legislation before the 2022 midterm elections.
Sen. Lindsey Graham on Sunday suggested that Senate Republicans could grind the upper chamber to halt to by denying Democrats a quorum to pass a possible $3.5 trillion infrastructure package through the budget reconciliation process.
During an interview with host Maria Bartiromo on the Fox News program “Sunday Morning Futures,” the South Carolina Republican floated the idea of skipping town to block a Democratic bill, making a reference to Texas House Democrats, who left the state to deny Republicans a quorum on a restrictive voting bill that they fervently oppose.
A bipartisan group of senators last month struck a tentative deal with the White House for a roughly $1 trillion infrastructure package that focuses on roads and bridges.
However, Democrats are also seeking to pass a separate infrastructure package, which would feature other infrastructure priorities focused on childcare, clean energy, and education.
Last Wednesday, Senate Democrats reached an agreement on a $3.5 trillion reconciliation package, which, if passed and signed into law, would be a heralding achievement for Sen. Bernie Sanders of Vermont, the chairman of the Budget Committee.
“This is the most significant piece of legislation passed since the Great Depression, and I’m delighted to be part of having helped to put it together,” he said at the time.
Passing a bill through the reconciliation process only requires a simple majority, and with Democrats holding 50 Senate seats, Vice President Kamala Harris would be the pivotal tiebreaking vote.
Graham scoffed at the Democratic party-line bill and vowed to block its passage.
“As for the $3.5 trillion reconciliation package, designed to pass without a single Republican vote, [Sen.] Joe Manchin [of West Virginia] says that has to be paid for,” he said. “The only way you can do that is through a massive tax increase. The reconciliation package is not infrastructure. It’s big government. All kinds of new social programs unrelated to infrastructure. We’ll see if they can get Democratic support.”
He added: “If for some reason, they pass the budget resolution to bring that [$3.5 trillion] bill to the floor of the United States Senate … You gotta have a quorum to pass a bill in the Senate. I would leave before I’d let that happen. So, to my Republican colleagues, we may learn something from our Democratic friends in Texas when it comes to avoiding a $3.5 trillion tax-and-spend package. Leave town.”
“Hey Vice President Harris, if you think these people are heroes, well I expect you to come and pat us on the back,” he said. “Hell yeah, I would leave. I will use everything lawfully in my toolbox to prevent rampant inflation. If it takes me not showing up to stop that, I will do it because if we pass that bill, you’re going to have inflation through the roof.”
The Constitution mandates a a quorum of 51 senators to be present for the Senate to conduct official business. Since the chamber is split 50-50, all Republican senators would have to sign on to Graham’s proposal for the plan to work.
So far, no other Republicans have taken such a stance.
Earlier this week, Senate Democrats agreed on a $3.5 trillion reconciliation package to expand Medicare and strengthen social-safety-net programs, skirting GOP opposition to using more federal spending.
The New York congresswoman said she would have liked a larger package but billed the agreement as an “enormous victory,” according to NY1 reporter Kevin Frey.
“This bill is absolutely a progressive victory,” she said. “If it wasn’t for progressives in the House, we probably would be stuck with that tiny, pathetic bipartisan bill alone.”
“This is the most significant piece of legislation since the Great Depression, and I’m delighted to be part of having helped to put it together,” Sen. Bernie Sanders, the chair of the Senate Budget Committee, told reporters on Tuesday evening.
Senate Democrats expressed confidence that the package would be turned into a bill in the coming weeks, which would make it one of the largest spending bills ever taken up by Congress.
“We are very proud of this plan,” Schumer told reporters Tuesday following the negotiations. “We know we have a long road to go.”
Former President Donald Trump cautioned Senate Republicans against signing off on a bipartisan infrastructure bill and told GOP legislators to maintain the tax cuts that the party enacted during his tenure.
In a statement on Friday, Trump derided Republican members who are working with President Joe Biden and Senate Democrats as RINOs, or Republicans in name only, a pejorative generally reserved for members of the party who aren’t considered to be true conservatives.
“Very important that Senate Republicans not allow our hard-earned tax reductions to be terminated or amended in an upward trajectory in any way, shape, or form,” the former president said. “They should not be making deals on increasing taxes for the fake infrastructure proposals being put forward by Democrats, almost all of which goes to the ridiculous Green New Deal Marxist agenda.”
He added: “Keep the Trump Administrations [sic] tax cuts just where they are. Do not allow tax increases. Thinking about it, I have never seen anything so easy to win politically. Also, RINO Republicans should stop negotiating the infrastructure bill – you are just being played by the Radical Left Democrats – they will give you nothing!”
Last month, the White House and a bipartisan group of senators came to an agreement on a $1 trillion infrastructure framework that included funding for physical projects such as roads and bridges.
Republicans overwhelmingly oppose any infrastructure bill that raises corporate taxes, a key element of Biden’s earlier infrastructure proposal that would have struck at the heart of Trump’s 2017 tax overhaul. That law cut the corporate tax rate from 35% to 21% through the Tax Cuts and Jobs Act.
Democrats also hope to pass a separate infrastructure bill through the reconciliation process, which would allow them to enact legislation without the threat of a filibuster.
Democratic Sen. Joe Manchin of West Virginia, a leading moderate, said last month that he would consider changes to the Trump-era tax cuts, which were also passed through the reconciliation process on a party-line vote.
“Republicans have drawn a line in the sand on not changing anything, and I thought the 2017 tax bill was a very unfair bill and weighted to a side that basically did not benefit the average American. So I voted against it,” he told NBC News. “I think there are some adjustments that need to be made.”
Sen. Bernie Sanders of Vermont, the chairman of the Senate Budget Committee, wants to pursue a more robust Democratic-led $6 trillion reconciliation bill.
“The president has given us a framework, I think it’s a comprehensive and serious framework,” he said last month. “It is the function of the Congress now to take that framework and go with it. I think it is absolutely imperative that we deal with the existential threat of climate change, that we lower the cost of prescription drugs, that we make sure elderly people can chew their food because we expand Medicare to dental care, hearing aids and eyeglasses.”
The editor of the conservative National Review Online on Friday called Sen. Lindsey Graham “an idiot” for thinking that President Joe Biden would approve bipartisan infrastructure legislation in the absence of a Democratic-led reconciliation bill.
In an op-ed column, Philip Klein gave a harsh assessment of the South Carolina Republican’s political acumen.
“Sen. Lindsey Graham is an idiot,” he wrote. “Don’t take it from me. Take it from Graham himself.”
Late last month, following weeks of bipartisan efforts to craft an infrastructure deal, Biden lauded the roughly $1 trillion legislative compromise. However, when the president linked signing the legislation to a separate reconciliation bill, Republicans in the group balked.
Biden quickly walked back his comments, which many perceived to be a veto threat, reassuring Republicans that he was committed to the bipartisan bill.
“The bottom line is this: I gave my word to support the Infrastructure Plan, and that’s what I intend to do,” Biden said in a statement last month. “I intend to pursue the passage of that plan, which Democrats and Republicans agreed to … with vigor. It would be good for the economy, good for our country, good for our people. I fully stand behind it without reservation or hesitation.”
Graham, enraged over Biden’s earlier statement, accused the president of making the GOP “look like a f—ing idiot” for attempting to tie the two bills together.
However, Klein noted that “yet a week later, Graham is back on board with the bipartisan deal citing a statement Biden made to reassure Republicans.”
On Wednesday, House Speaker Nancy Pelosi of California said that the Democratic-controlled chamber wouldn’t take up the bipartisan infrastructure bill until she saw a Senate bill passed through reconciliation.
“Our caucus is very, very pleased with the bipartisan agreement that the President was able to achieve working with Democrats and Republicans in the Senate,” Pelosi said at the time. “What I said last week and I reiterate now is that in the House of Representatives that particular version as it is is something that we would take up once we see what the budget parameters are of the budget bill that the Senate will pass.”
Democrats want to pursue a larger bill through the Senate, using the reconciliation budget process that could survive in the 50-50 Senate with unanimous party support and a tiebreaking vote from Vice President Kamala Harris.
The second bill would focus on longstanding Democratic priorities including childcare, healthcare, and climate change, among other issues.
Klein argued that Pelosi’s comments show that “both Congressional Democrats and the White House view the two bills as linked. The only ones who don’t seem to understand that are Graham and the rest of the Republicans participating in the charade.”
He concluded: “Any Republican who signs on to this pile of hot garbage should be laughed at for getting duped by Biden. As Graham himself put it, ‘You look like a f—ing idiot now.'”
President Joe Biden toiled for months on bipartisan negotiations before saying “we have a deal” on a $1 trillion infrastructure package last week. But when the president explicitly linked that deal to a separate Democratic-only spending package, it looked in danger just a day later.
Biden walked back his comments over the weekend, reassuring many Republicans and saving the deal. But Mitch McConnell had a fresh demand on Monday.
On Monday morning, the Senate Minority Leader called on Biden to ensure Congressional Democrats follow his lead.
The Kentucky Republican released a statement saying Biden had “appropriately” reversed course from his comments on Thursday linking the two bills.
McConnell demanded Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi should also “walk-back their threats” to only move the bipartisan agreement and a Democrat-only package side-by-side.
He added that Biden’s attempt to reassure the GOP “would be a hollow gesture” if Pelosi and Schumer didn’t adopt the same approach. “The President cannot let congressional Democrats hold a bipartisan bill hostage over a separate and partisan process,” he said.
The remarks are the latest salvo hitting the $1 trillion infrastructure deal only four days after it was tentatively forged between Biden and a centrist faction of Democratic and GOP senators. McConnell hasn’t explicitly said he either favors or opposes the plan, and he’s largely attacked it on procedural grounds so far.
But he’s attempting to ward off a separate plan that Democrats are poised to muscle through reconciliation, a strenuous legislative procedure allowing the Senate to clear budgetary bills on a simple majority vote. It will likely include tax hikes on wealthy Americans and corporations, along with spending on childcare, education, and healthcare.
McConnell’s opposition may potentially derail the package, as it could dampen support among Republicans for the deal.
On Saturday, Biden backed down from his threat to reject the package and said he had never meant to give that impression. “I gave my word to support the infrastructure plan, and that’s what I intend to do,” Biden said in a statement.
Still, Schumer and Pelosi have long said they are operating on two tracks: approving the bipartisan deal and the follow-up party-line package. Progressives like Rep. Alexandria Ocasio-Cortez are pressing Democrats to not scale down their political and economic ambitions to secure GOP votes.
Pelosi on Thursday said “There ain’t gonna be no bipartisan bill, unless we are going to have the reconciliation bill.”
President Joe Biden said Saturday that he hadn’t meant to threaten a veto on a $1.2 trillion bipartisan infrastructure bill.
On Thursday, Biden triggered Republican backlash when he said the infrastructure bill would need to move in “tandem” with his American Families Plan, a bill brimming with Democratic priorities like childcare and healthcare.
“If this is the only thing that comes to me, I’m not signing it,” Biden said Thursday, referring to the sole infrastructure bill. In response, a number of Republican senators called Biden’s remarks “extortion” and threatened to withdraw their support.
“It was never suggested to me during these negotiations that President Biden was holding hostage the bipartisan infrastructure proposal unless a liberal reconciliation package was also passed,” Sen. Lindsey Graham of South Carolina tweeted Friday.
On Saturday, Biden acknowledged that his comments “understandably upset some Republicans, who do not see the two plans as linked” and confirmed he would support the bipartisan infrastructure bill independently of any others.
“My comments also created the impression that I was issuing a veto threat on the very plan I had just agreed to, which was certainly not my intent,” Biden said in a statement released by the White House.
“The bottom line is this: I gave my word to support the Infrastructure Plan, and that’s what I intend to do,” Biden added. “I intend to pursue the passage of that plan, which Democrats and Republicans agreed to on Thursday, with vigor. It would be good for the economy, good for our country, good for our people.”