Leverage is king for Democrats in infrastructure spending compromise

Every Democrat in Washington has become Joe Manchin.

Manchin, the senior senator from West Virginia who is crucial to the Democrats holding their ultra-slim majority in the Senate, is no longer the only one in the nation’s capital with leverage.

It is a crucial time for Democrats. That’s because every vote is key as they try to satisfy their rival moderate and progressive wings to finance President Joe Biden’s multi-trillion dollar infrastructure packages.

In the meantime, shippers and carriers’ efficiencies hang in the balance as the nation grapples with aging infrastructure badly in need of a facelift.

With no votes to spare in a 50-50 Senate, every single Democrat is critical as the president champions his infrastructure deal – both his $1 trillion traditional roads and bridges proposal and “human infrastructure” proposal that could eat up another $1 trillion or so.

Progressives want Biden to go big. Traditionalists want to go less bold. And then there’s the group of 10 bipartisan senators who already have approved a $1.2 trillion more modest compromise. Yet nothing is set in stone.

“We’re all Joe Manchin right now,” House Budget Committee Chairman John Yarmuth, D-Ky., told the Associated Press.

Shippers and manufacturers are getting antsy for a deal.

“This is that urgent—infrastructure, physical infrastructure, technological infrastructure—it is that urgent,” Beth Ford, president and CEO of Land O’Lakes, said in a video released by the Business Roundtable, a lobbying group.

“It leaves us less competitive on the world stage,” Ford added. “And if we want to continue to have the best country in the world, the best economy in the world, the safest location in the world where people want to go, this is the time to come together. Now I’m encouraged because when I’m in conversations with both sides of the aisle, they’re ready to get it done. This is the time to show that bipartisanship and to invest appropriately for the future.”

To do that under the budget process called reconciliation, Democrats can lose no votes in the Senate and then need Vice President Kamala Harris' tie-breaking vote—presuming no Republican support.

It’s only slightly better for Democrats in the House. Democrats control the House 220-211 with four vacancies and can lose no more than four of their votes to pass bills. That number will shrink to just three after a Texas runoff this month in which both candidates are Republicans.

Assuming Republicans will not approve anything, Democrats are facing an intraparty fight that pits two ideologies against each other — progressives want to help needy families while moderates want fiscal constraints.

Meanwhile, Senate Budget Committee Chairman Bernie Sanders, I-Vt., recently floated an enormous $6 trillion proposal for infrastructure, climate change, health care and other programs progressives love.

Insiders say Sanders is running into resistance from moderates and will be lucky to approach Biden’s $4 trillion proposal. To maintain leverage, progressives are withholding support from the bipartisan Senate compromise of $1.2 trillion in traditional infrastructure projects until there's also a second bill providing additional money for health care, housing and other programs.

Biden and House Speaker Nancy Pelosi, D-Calif., are favoring this two-track approach. But moderates want to pass the bipartisan infrastructure bill as soon as this month.

That may not happen. Rep. Pramila Jayapal, D-Wash., chair of the Congressional Progressive Caucus, says “dozens” of her group's nearly 100 members say they won't vote for the bipartisan infrastructure bill unless a separate package of health care and other family-oriented programs also passes at the same time.

That bipartisan infrastructure deal reached by President Biden and a group of senators would not only add to economic growth, but also lower the national debt, according to a new study from the University of Pennsylvania’s Wharton School.

Researchers at the Wharton School said the additional $579 billion in new infrastructure spending would increase domestic output by 0.1% and decrease the U.S. debt by 0.9% by 2050.

“Over time, as the new spending declines, IRS enforcement continues, and revenue grows from higher output, the government debt declines relative to baseline by 0.4 percent and 0.9 percent in 2040 and 2050 respectively,” the Wharton team wrote.

The entire package endorsed by the bipartisan group of senators and the Biden administration authorizes $1.2 trillion of spending over the next five years. The incremental $579 billion includes more than $300 billion for transportation projects, while $266 billion would be allocated to digital, disaster, environmental and energy infrastructure investments.

Biden recently hit the road to tout the plan. He told a group in Wisconsin that it’s “going to make a world of difference for families” in the Badger State.

The entire infrastructure package is “a double-edged sword for logistics companies,” according to the 32nd annual State of Logistics report recently released.

That’s because the Biden administration seeks to secure funding through corporate tax increases.

“To prepare, logistics companies should seek to offset tax increases through bolstering efficiency and adopting smarter solutions, while also cutting costs where possible,” the State of Logistics report concluded.