McConnell Issues New Demand on Infrastructure Deal

Plus, Democrats prepare for messy budget battle  [The Fisc](   By Yuval Rosenberg and Michael Rainey Biden Backpedals to Save Infrastructure Deal, but McConnell Could Still Blow It Up President Joe Biden tackled his own infrastructure repair job over the weekend. Biden had thrown the fate of his bipartisan infrastructure deal into doubt shortly after announcing it last Thursday by saying that the nearly $1 trillion package had to arrive on his desk “in tandem” with a larger bill focused on “human infrastructure” that Democrats plan to advance on a partisan basis. “If this is the only thing that comes to me, I'm not signing it,” Biden said about the bipartisan deal. “I'm not just signing the bipartisan bill and forgetting about the rest.” That comment appeared to be part of a Democratic leadership strategy to assuage the concerns of progressives, who want assurances that their priorities — climate change, health care, caregivers — won’t be cast aside. But it rankled a number Republicans, who warned that they might withdraw their support for the hard-fought bipartisan agreement. In a lengthy [statement]( issued Saturday, Biden backtracked in an effort to salvage the bipartisan deal, clarifying that his comments were not meant as a veto threat and he would support the bipartisan plan “without reservation or hesitation” — but still intended to pursue passage of the rest of his agenda as laid out in his American Families Plan. Biden said his comments “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. So to be clear: our bipartisan agreement does not preclude Republicans from attempting to defeat my Families Plan; likewise, they should have no objections to my devoted efforts to pass that Families Plan and other proposals in tandem. We will let the American people—and the Congress—decide.” Republicans involved in the infrastructure negotiations said Sunday that Biden’s statement had eased their concerns. “I do trust the president,” Sen. Mitt Romney (UT) said on CNN’s “State of the Union.” “And he made very clear in the much larger statement that came out over the weekend, carefully crafted and thought through piece by piece, that, if the infrastructure bill reaches his desk, and it comes alone, he will sign it.” Sen Rob Portman similarly told ABC’s “This Week” that he was glad Biden had “delinked” the two bills. Pressure from McConnell: Senate Minority Leader Mitch McConnell, who hasn’t publicly backed the bipartisan deal, sounded less upbeat. On Monday, he welcomed Biden’s statement but called on the president to press House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer (D-NY) to separate the two bills. Pelosi has said that the House will not take up the bipartisan deal until the Senate passes the Democratic package. “The president has appropriately delinked a potential bipartisan infrastructure bill from the massive, unrelated tax-and-spend plans that Democrats want to pursue on a partisan basis,” McConnell said. “Now I am calling on President Biden to engage Leader Schumer and Speaker Pelosi and make sure they follow his lead.” McConnell said that Biden’s statement “would be a hollow gesture” without a similar commitment from Pelosi and Schumer to the bipartisan deal. “The president cannot let congressional Democrats hold a bipartisan bill hostage over a separate and partisan process,” he said. Pelosi won’t allow one bill without the other, analyst Chris Krueger of the Cowen Washington Research Group told clients in a note Monday, “so Biden can play the bipartisan hero as Pelosi plays the partisan heel.” That setup at least raises the prospect that McConnell could still seek to scuttle the bipartisan deal and pressure moderates to withdraw their support if he opposes the Democrats’ approach. Would Biden or wouldn’t he? At the same time, the White House has refused to explicitly say that Biden would sign the bipartisan bill if it landed on his desk alone. “The president looks forward to and expects to sign each piece of legislation into law and he’s going to work his heart out getting both of them across the finish line,” White House Press Secretary Jen Psaki said Monday in response to a question about whether Biden would sign just the bipartisan bill. Psaki said that it’s up to congressional leaders to determine how they’ll proceed on the two bills. The abstruseness is clearly intentional. “The ambiguity helps the White House on two fronts,” The Washington Post’s Olivier Knox [explains](. “First, it keeps progressives on board by promising them Biden will fight for a Democrats-only infrastructure plan. … Second, it diminishes the impression GOP senators are going along with a process designed to get the broader package over the finish line, which might make an otherwise broadly popular spending item intolerable to the Republican base.” What’s next: Negotiators and staffers will be drafting the actual legislation for the bipartisan deal while lawmakers are on their two week July 4 recess. Democrats, meanwhile, will also be debating the appropriate size of their reconciliation package, with Sen. Joe Manchin (D-WV) saying he could back as much as $2 trillion while Sen. Bernie Sanders (I-VT), chair of the Senate Budget Committee, has proposed as much as $6 trillion. The bottom line: Biden appears to have salvaged the bipartisan deal, but the hubbub created by his unforced error last week shows just how fine a balance he’ll be trying to achieve to get either or both infrastructure packages passed. “In that sense, it’s fellow Democrats that Biden now has to turn his attention to,” [writes]( The Washington Post’s Peter W. Stevenson. “He needs to come up with the framework of a Democrats-only bill that placates liberals, and delivers on big campaign promises, while not being too loud about it, at the risk of upsetting or embarrassing the moderate Republicans he needs to keep onboard for the first bill to pass. Democrats Prepare for Tricky Budget Battle As Democrats walk a political tightrope to pass the infrastructure package they want, the first step in what‘s likely to be a long and difficult process involves agreeing on a budget framework. Writing a budget blueprint, which will unlock the reconciliation process and open the door to passing a potentially massive spending bill, will be particularly challenging given Democrats’ slim majority in the House, with Pelosi feeling pressure from both progressives and centrists over the size of the bill. Progressives are already pushing to include more spending on their priorities, which they say are health care, housing, climate change, child care and immigration. “It’s essential, what we have talked about with the Speaker and within the caucus — the budget resolution has to be crafted in a way that it takes into consideration all of our five priorities,” Congressional Progressive Caucus leader Rep. Pramila Jayapal (D-WA) told [Politico](. Sen. Bernie Sanders (I-VT) has cited a $6 trillion figure for the spending plan, though Democratic leaders say they think it will come in well below that amount. But progressives in the House say that $6 trillion is closer to a floor than a ceiling. “I think the $6 trillion number that Sen. Sanders spoke of is a fine one,” said Rep. Alexandria Ocasio-Cortez (D-NY). “I believe with this moment that we have on climate, if you ask me, I think this should be a $10 trillion package or at least part of a larger $10 trillion climate strategy.” Centrists are expressing concerns about spending too much, with some saying that they could not support a spending package over $4 trillion. Joe Manchin (D-WV), a key centrist in the Senate, says that he won’t go even that high. “If they think in reconciliation I’m going to throw caution to the wind and go to $5 trillion or $6 trillion when we can only afford $1 trillion or $1.5 trillion or maybe $2 trillion and what we can pay for, then I can’t be there,” he [said]( on ABC’s “This Week” Sunday. House Budget Committee Chair John Yarmuth (D-KY) told Politico that Democrats must achieve near-total unity in order to move ahead. “In this case, unity is our only chance.” Chart of the Day: Pandemic Prosperity Fueled by soaring values in real estate and the stock market, the majority of American households saw their wealth increase during the pandemic, The Wall Street Journal [reports](. This extraordinary turn of events, in which a recession resulted in greater wealth, owes much to the federal government’s fiscal response to the crisis. The outlay of trillions of deficit-financed dollars boosted assets of all kinds, with stocks claiming about half of the overall increase. But with stock ownership heavily concentrated among the wealthiest, the increase in household wealth during the pandemic year 2020 flowed largely to the better off. “More than 70% of the increase in household wealth went to the top 20% of income earners,” the Journal says. “About a third went to the top 1%.” 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 - [McConnell Tries to Derail Democratic Infrastructure Strategy]( – Politico - [Headaches Mount for Biden in Spending Fight]( – The Hill - [Bernie Sanders to Biden and Manchin: 'No Reconciliation Bill, No Deal']( – The Hill - [White House Disputes Criticism That Climate Left Out of Bipartisan Infrastructure Deal]( – The Hill - [Green Groups Shift Energy to Reconciliation Package]( – The Hill - [Senators to Watch as Dems Debate Changing Filibuster Rules]( – Associated Press - [Republicans Ramp up Attacks on Biden on … Everything]( – Politico - [Where Jobless Benefits Were Cut, Jobs Are Still Hard to Fill]( – New York Times - [Americans Are Leaving Unemployment Rolls More Quickly in States Cutting Off Benefits]( – Wall Street Journal - [During Covid-19, Most Americans Got Ahead—Especially the Rich]( – Wall Street Journal - [This Could Be Peak Inflation]( – Axios - [Inflation Summer vs. Recovery Summer: Biden Fights to Win the Narrative]( – Politico - [Nearly 1,300 Colleges Owe Over $1 Billion to Dept. of Education, Report Says]( – The Hill - [Nearly 30 Percent Say COVID-19 Pandemic Is Over in US: Poll]( – The Hill - [Supreme Court Declines to Take Up Covid-Related Tax Dispute Over Telework]( – Politico Views and Analysis - [Biden: Americans Can Be Proud of the Infrastructure Deal]( – President Joe Biden, Yahoo News - [The White House Stumbles on Its Delicate Infrastructure Dance]( – Peter W. 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