Cracks Already Forming in Biden’s Big Infrastructure Deal

Plus, the IRS is staffing up  [The Fisc](   By Yuval Rosenberg and Michael Rainey Cracks Already Forming in Biden’s Big Infrastructure Deal Well, that didn’t take long. Less than 24 hours after President Joe Biden stood on the White House driveway with a bipartisan group of senators and announced a roughly $1 trillion agreement on an infrastructure package, the deal is teetering amid accusations of treachery and foul play. At issue is Biden’s statement that he won’t sign an infrastructure bill unless it is accompanied by a separate, larger reconciliation package that provides more of the things that he has called for, including substantial federal investments in green energy and “human infrastructure” such as elder and child care. “Extortion!” Some Republicans said the explicit link between the two infrastructure packages violates the spirit of the bipartisan agreement. “If reports are accurate that President Biden is refusing to sign a bipartisan deal unless reconciliation is also passed, that would be the ultimate deal breaker for me,” Sen Lindsey Graham (R-SC) [tweeted](. In an interview with [Politico]( Graham, who was one of 11 Republicans who supported the agreement, was a bit more heated: “If he’s gonna tie them together, he can forget it!” he said. “I’m not doing that. That’s extortion! I’m not going to do that. The Dems are being told you can’t get your bipartisan work product passed unless you sign on to what the left wants, and I’m not playing that game.” Other Republican senators expressing concerns include key moderates Mitt Romney (UT), Susan Collins (ME) and Rob Portman (OH), with the latter reportedly feeling “pissed and disappointed” by Biden’s approach. Sen. Bill Cassidy (LA) said he felt “blindsided,” while Sen. Jerry Moran (KA) is reportedly seeking reassurances from Democratic Sens. Joe Manchin (WV) and Kyrsten Sinema (AZ) that they did not support Biden’s plan. Senate Minority Leader Mitch McConnell (R-KY) also weighed in, accusing Biden of “caving” to progressive Democrats. And House Minority Leader Kevin McCarthy (R-C) said he didn’t think Biden’s plan would work. “I don't think that's going to pass,” he said. “I think they killed any opportunity.” White House pushes back: Press Secretary Jen Psaki told reporters that Republican complaints were “absurd.” “I think the American people are quite focused on how we’re getting work done on their behalf, less focused on the mechanics of the process,” Psaki [said](. “Now it is up to Republicans … to decide if they are going to vote against a historic investment in infrastructure that’s going to rebuild roads and railways and bridges in their communities, simply because they don’t like the mechanics of the process.” Still, not all Democrats are on board with Biden’s approach. Rep. Kurt Schrader (D-OR), a member of the Blue Dog Coalition, told Roll Call that he plans to vote against a reconciliation package due to concerns about its expected size and increase in deficit spending. And Rep. Dean Phillips (D-MN) said that he does not support linking the bipartisan agreement and the reconciliation package. “I think this is important that we demonstrate that this place can operate,” he [told CNN](. “And if we end up getting nothing done because of the objections of either the left or the right, and then shame on all of us.” Trying to have it both ways? The rapid deterioration of the bipartisan agreement highlights tensions in Biden’s approach to governance, [says]( Jim Tankersley of The New York Times. “President Biden’s bipartisan infrastructure agreement contains all of the contradictions and promises of the Biden brand,” he writes. On the one hand, Biden wants to achieve a bipartisan agreement, but as Republican complaints Friday indicate, that won’t be easy and may in fact be impossible in the current political environment. On the other hand, Biden wants to transform that government along the lines of Presidents Franklin Delano Roosevelt or Lyndon Baines Johnson but lacks the overwhelming majorities in Congress to make that happen. One possible outcome, Tankersley says, is a loss on both counts as Republicans abandon the plan and take enough centrist Democrats with them to scuttle a reconciliation package. At the same time, the Republican rejection of the bipartisan plan could backfire on the GOP, giving Biden the cover and support he needs to put his more ambitious plans into play. “Mr. Biden has now achieved the appearance of bipartisanship, whether it ultimately endures or not,” Tankersley writes. “And that appearance, by itself, could give him the political fuel he needs to push a far more aggressive plan into law.” What comes next: Although Republicans who negotiated the bipartisan are reportedly meeting Friday to discuss withdrawing their support, lawmakers are still expected to push ahead on Democrat’s two-track approach. Politico broke the timeline down as follows: 1. The Senate writes a bipartisan infrastructure bill before the August recess, with the House following up with a similar bill. 2. Both the House and the Senate pass budget resolutions before the August recess, unlocking the reconciliation process. 3. The budget resolution contains instructions that allow Democrats to write a reconciliation bill during the recess that contains everything left out of the bipartisan infrastructure bill. 4. In September, lawmakers vote on both bills, with the goals of getting them to the White House before the end of the month. The plan has plenty of weak points, including the potential collapse of bipartisanship, Democrats’ miniscule majority and the issue of offsetting all the new spending in the bills. If Republicans withdraw their support, Democrats say they will attempt to pass everything in a single reconciliation bill, which could come with a $4 trillion price tag (with Sen. Bernie Sanders (I-VT) pushing for $6 trillion) over eight years. And if Democrats do move ahead with a massive reconciliation package, expect to see plenty of fireworks over its size and scope this fall, with centrist lawmakers like Manchin and Sinema playing a key role in the debate and the outcome. IRS Adding Thousands of Auditors The Internal Revenue Service is already staffing up, hiring thousands of new auditors in preparation for a tax-enforcement push that’s a key financing element of President Biden’s infrastructure plan. IRS officials said at a tax conference Friday that they are adding about 2,000 new employees, including 1,300 auditors, to the agency’s small business division and more than 500 workers to the criminal investigations divisions, Bloomberg’s Laura Davison and Genevieve Douglas [report](. “The figures represent a significant hiring increase from recent years, when the agency has struggled to replace auditors who retired or left the federal government,” they write. “The additional staff could put the IRS in position to greatly expand audit capacity quickly if Congress is able to pass a bipartisan infrastructure investment plan, which includes $40 billion for the agency over a decade and is expected to generate $100 billion in net new tax revenue.” Even without the infrastructure package, the IRS appears to be poised for a funding boost, as 2022 spending plans being considered by Congress call for a $1.7 billion budget increase to $13.6 billion. House Panels Launch Investigation Into Controversial Alzheimer’s Drug Pricing and Approval Two House committees announced Friday that they are launching an investigation into the controversial approval and pricing of Biogen’s new $56,000-a-year Alzheimer’s drug. “We have serious concerns about the steep price of Biogen’s new Alzheimer’s drug Aduhelm and the process that led to its approval despite questions about the drug’s clinical benefit,” Reps. Frank Pallone, Jr. (D-NJ) and Carolyn Maloney (D-NY) said in a [statement](. Pallone chairs the Energy and Commerce Committee while Maloney leads the Oversight and Reform Committee. The Food and Drug Administration’s approval of the drug earlier this month, despite a lack of evidence that Aduhelm slows the progression of dementia, raised a storm of controversy, as did the drug’s pricing, which could lead to [billions of dollars a year]( in additional costs for Medicare. The [Kaiser Family Foundation]( estimates that if 1 million Medicare beneficiaries take the drug, the cost to Medicare could be higher than $57 billion a year, or some $20 billion more than Medicare spent on all physician-administered drugs in 2019. “Our Committees will be investigating this matter so Congress and the American people can better understand why this drug was approved, how Biogen set its price and what impact this will have on research for future Alzheimer’s treatments and federal health care programs,” Pallone and Malone said. Number of the Day: 9 Million At least 9 million Americans who lost their jobs since the start of the Covid-19 pandemic didn’t receive any unemployment benefits, according to an estimate by [Bloomberg Businessweek]( based on more than a year’s worth of Labor Department data. “That’s a hole in the safety net as big as the population of Virginia,” Bloomberg’s Shawn Donnan and Reade Pickert write. Millions of workers were denied payments by their state systems, and the emergency federal programs, while generous, did not reach everyone. Much depends on the states themselves. While California paid more than 70% of the unemployment claims during the crisis, Montana paid just 11%. Have a great weekend! Send your feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Republican Resistance Grows Over Biden's Infrastructure and Policing Plans]( – CNN - [GOP Senators Warn They Could Pull Support for Biden Deal]( – The Hill - [McCarthy Pans Deal: Biden Gave GOP 'Whiplash']( – The Hill - [White House: 'Absurd' for GOP to Take Issue With Dual-Track Infrastructure Approach]( – The Hill - [Biden Infrastructure Win Ramps Up Fight Over Economic Agenda]( – Bloomberg - [Infrastructure Timeline: What Congress Will Do Next]( – CNN - [Bipartisan Infrastructure Deal Omits Big Climate Measures]( – New York Times - [The Complex 50-Year Collapse of U.S. Public Transit]( – Bloomberg CityLab - [Nine Months After Lockdowns, U.S. Births Plummeted by 8%]( – Bloomberg Views and Analysis - [On Infrastructure, Biden Tests the Limits of Having It Both Ways]( – Jim Tankersley, New York Times - [The Pathetic New GOP Tantrum Over Biden’s Plans Is Full of Empty Threats]( – Greg Sargent, Washington Post - [Five Big Things to Come Out of a Bipartisan Infrastructure Deal]( – Jennifer Rubin, Washington Post - [The Bipartisan Breakthrough on Infrastructure Is Just the Refresher U.S. Democracy Needs]( – Washington Post Editorial Board - [The Bipartisan Infrastructure Deal Is Probably Doomed, Alas]( – Jonathan Chait, New York - [Getting an Infrastructure Deal Wasn’t Simple]( – Jonathan Bernstein, Bloomberg - [Taxing Just the Super-Rich Won't Fund America's Future]( – Brendan McDermott, The Hill - [Why Washington Can’t Quit Listening to Larry Summers]( – Jeanna Smialek, New York Times - [Keeping the Monthly Child Tax Credit Coming, Limiting Risk of Overpayments]( – Elaine Maag, Tax Policy Center - [The Biggest Threat to America Is America Itself]( – Nicholas Kristof, New York Times - [Economics in a Post-Truth Nation]( – Paul Krugman, New York Times - [Doubling Pell Grants Would Be a Modern GI Bill to Boost the Economy]( – Tania Tetlow, The Hill - [FAQ: What You Need to Know About the Child Tax Credit Payments Starting in July]( – Michelle Singletary, Washington Post - [Doctors and Nurses Are the Key to the Final Vaccine Push]( – Saad B. Omer, New York Times - [Where Did the Coronavirus Come From? What We Already Know Is Troubling.]( – Zeynep Tufekci, New York Times Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, [thefiscaltimes.com]( or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](