Lawmakers Set Stage for Infrastructure Push

Bloomberg

May 3, 2021 4:39 am

Democrats are beginning to lay the legislative groundwork for President Joe Biden’s infrastructure priorities, flagging their must-haves as the final package is hashed out.

The bills Democrats have introduced in recent weeks would expand the low-income housing credit and streamline clean energy incentives. The proposals are seen as negotiating tools, as Biden and his administration work to fine tune his sweeping infrastructure proposal. What makes it into the final package will require careful maneuvering given competing priorities between Congress and the White House, and the narrow majority held by Democrats.

Former Congressman Charles Boustany (R-La.) said that when the president and the administration make a major push, members look to jump on board and act as “policy entrepreneurs” using work they have already done on a particular issue.

“In some cases, they’ve worked on legislation for years, to no avail,” said Boustany, now with Capitol Counsel. At other times, they want to be part of a “legislative victory” that they can talk about back home, he said.

Biden’s plan includes a 21% global minimum tax and a corporate rate of 28% as part of a $2.25 trillion effort to invest in roads and bridges. He has also offered a sweeping plan aimed at American families that would be funded in part by tax hikes on the wealthy. Some Democrats have already objected to the plan’s lack of a fix for the $10,000 limit on federal deductions for state and local taxes paid—a sign that what the administration is seeking is far from final.

Energy Plans

Senate Finance Chairman Ron Wyden (D-Ore.) built on Biden’s energy plan with his own proposal that would replace a few dozen tax breaks with a technology-neutral tax incentive.

“It would both put us on the path to achieving our emissions reductions goals and create good-paying jobs, and should be the linchpin of our clean energy efforts as we consider President Biden’s jobs package,” Wyden said in a statement at the time.

Biden’s plan would extend existing tax credits for wind and solar power and energy storage.

Wyden’s bill is an example of something Marc Gerson, a member at Miller & Chevalier Chartered, said is common when presidents offer policy proposals: A White House proposal is often very high-level, and members will either flesh it out or offer their own version.

Another piece of clean-energy legislation building out Biden’s plan comes from Rep. Earl Blumenauer (D-Ore.). His bill would require companies to pay an excise tax for producing products that generate hazardous waste. It would restore taxes that expired in 1995.

Helping Families

The Biden administration wants to expand the low income housing tax credit because of a housing crunch that has become worse during the pandemic, calling on Congress to produce and preserve more than 1 million affordable, energy-efficient units. A bipartisan group of lawmakers have expanded on that idea.

A bill ( H.R. 2573S.1136) from Rep. Suzan Delbene (D-Wash) and Sen. Todd Young (R-Ind.) would expand the credit. The measure would increase the credits to each state by 50% for the next two years and make permanent a temporary 12.5% increase in the credit.

“Our nation’s need for more affordable housing is at an all-time high because of the Covid-19 pandemic,” DelBene said while introducing the bill earlier this month. “Congress should leverage the proven success of the Housing Credit to build more affordable housing units.”

Bond Option

With Biden’s tax hikes still up for debate in Congress, financing infrastructure with government debt may be an option—an approach that was part of former President Barack Obama’s stimulus package early in his presidency.

A bipartisan bill introduced this month by Sens. Michael Bennet (D-Colo.) and Roger Wicker (R-Miss.) would create American Infrastructure Bonds to pay for projects.

Interest on the bonds would be paid, in part, by the federal government. The Treasury Department would pay a percentage of the interest to the issuing entity, according to a news release from Wicker’s office.

Wyden has consistently pushed for debt financing to fund infrastructure, and the next few weeks could show how much force Democrats want to put behind the policy.