Five months ago, if I told you 10 Senate Republicans would support sending the soon-to-be President Joe Biden an infrastructure bill worth at least $600 billion, chances are you would think I was delusional. Now that a group of 10 Republicans are crafting such a proposal, Democrats are unimpressed. Senate Budget Committee Chair Bernie Sanders said in response, “That is nowhere near what we need.”
Of course, five months ago, Democrats hadn’t yet passed a $1.9 trillion relief package without Republicans. As New York’s Eric Levitz noted in his analysis of the infrastructure debate, “Democrats just learned that they can pass a large, popular bill on a party-line vote without incurring a backlash.” That backlash was avoided even though Democrats snubbed a $600 billion alternative offered by Republican Sen. Susan Collins’ “Group of 10.” Most voters preferred more cash and no Senate Republican votes than less cash and 10 Senate Republican votes.
So, with Biden proposing an infrastructure package comparable to his relief bill, Democrats are inclined to scoff at a more modest Republican alternative. As Levitz concludes, “there is just a vast chasm between the Democratic Party’s vision of good government and that of the tenth-most moderate Republican in the U.S. Senate. And there is no reason why Democrats should privilege [Kansas Republican] Jerry Moran’s wants and needs over those of the majority coalition that brought them to power.”
But there may be one reason: if Democrats don’t have the votes to ignore Jerry Moran’s wants and needs.
A principle of negotiation theory, developed decades ago by the leaders of the Harvard Negotiation Project, is that before entering into a negotiation, you should know your “BATNA”—Best Alternative To a Negotiated Agreement. As explained in the book “Getting to Yes,” what you can do without a compromise is “the only standard that can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.” Sometimes, the best you can do on your own is so good that you have enormous leverage in a negotiation. Other times, your ability to act unilaterally is limited, heightening the incentive to make concessions. But if at all possible, you should begin a negotiation knowing what you can do on your own and how that compares with what you can do with your negotiating partners.
With his American Rescue Plan that passed in March, Joe Biden had an extremely good BATNA: his initial $1.9 trillion proposal. Whether it was because he had assurances from the most moderate members of the Democratic caucus, or because he wisely surmised that those members wouldn’t abandon him, Biden could confidently skip substantive negotiations with the Group of 10, comfortable in the knowledge that he’d soon be getting all he wants just on the strength of Democratic votes.
As we begin the infrastructure process, Biden and congressional Democratic leaders can only have a foggy sense of what their BATNA is. We don’t know exactly what pieces of Biden’s plan would pass the muster of the Senate parliamentarian and survive the filibuster-proof budget reconciliation process. We don’t know how Senators Joe Manchin and Kyrsten Sinema—the two Democrats who have spoken most favorably of bipartisanship and skeptically of the reconciliation process—will react to a formal Republican infrastructure proposal. Manchin has said bipartisan “regular order” must be tried before pursuing reconciliation, but we don’t know if or when he will decree attempts at regular order to have been exhausted. And we don’t know if individual or small groups of Democrats will make demands that will strain their narrow majority, such as the push by some northeastern House members to eliminate the cap on state and local tax deductions.
Underneath his calm bravado, Biden seems a bit unsure how firm the political ground is on which he stands which is smart when the ground is shifting. “Debate is welcome. Compromise is inevitable. Changes are certain,” Biden said last week in remarks about his proposal. The only line in the sand he drew was, “We will not be open to doing nothing. Inaction simply is not an option.” We can’t know if Biden is actually prepared to offer Republicans significant concessions, but his rhetoric does not preclude it. If he had a better sense of his own BATNA, he might have been more specific about what is negotiable and what isn’t.
Granted, Biden did say, “I’m open to ideas about how to pay for this plan, with one exception: I will not impose any tax increases on people making less than $400,000 a year. If others have ideas out there on how to pay for this investment without violating that rule, they should come forward.”
In addition to closing several corporate tax loopholes, Biden would partially undo Donald Trump’s tax reform legacy by raising the corporate income tax rate from 21 percent to 28 percent, This is not a proposal designed to attract bipartisan support; Republicans are not likely to accept any changes to the one piece of legislation from the Trump presidency of which they are most proud.
Instead, the coming Republican “G-10” proposal will apparently pay for their projects with increases in user fees. While the Democratic principle is that corporations should pay their fair share to build the infrastructure they profit from, Senator Mitt Romney said their proposal is based on a different principle: “The pay-for ought to come from the people who are using it.” This is not unprecedented; federal highway spending has long been funded in part by a gas tax, so drivers effectively pay for the wear and tear they put on the road. (Romney expressed interest in adopting a “vehicle miles traveled” tax, which would better capture road use by hybrid car and electric car drivers—a group that is most likely disproportionately Democratic.)
But adhering to the user-pays principle will spread the financial burden across the class spectrum. Would that violate Biden’s red line of no tax increases for those making under $400,000? Only if we call them “tax” increases and not “user fee” increases, and we don’t know if Biden is willing to take the political risk of making middle- and low-income voters pay more and defending it with semantics. The White House press secretary has said that a gas tax is not under consideration, and Transportation Secretary Pete Buttigieg has said the same about a mileage tax, but their language doesn’t completely rule out such provisions ending up in a final compromise.
Should Biden let Republicans sucker him into passing the costs on to average voters, when polls indicate raising corporate taxes is popular? A Morning Consult poll found support for Biden’s infrastructure bill, without mention of new revenues, at 57 percent, but when the plan is described as paid for with higher corporate taxes, support increases to 62 percent. A Quinnipiac poll showed Biden’s infrastructure bill starting off with a lower plurality of 44 percent then, after corporate tax increases are mentioned, jumping to 53 percent. If Biden has a good BATNA, he shouldn’t and probably wouldn’t abandon corporate tax hikes. But if he doesn’t have a good BATNA, because Democrats are not uniformly prepared to go it alone, then he has to start taking the Republican counteroffer more seriously
On CNN Thursday morning, close Biden confidant Senator Chris Coons of Delaware did take the Republican offer seriously, while trying to nudge them upward on the final price tag: “The path forward that I’m seeing, and that I’m working for, is one where we take up and pass a bipartisan infrastructure bill, one that focuses on areas where the parties really agree about the need to invest in rural broadband, in safe drinking water, in roads and bridges, tunnels, highways airports … That could end up being an 800 billion to a trillion-dollar bipartisan bill.”
But Coons, not wanting to prematurely surrender Biden’s other physical and human infrastructure priorities—including long-term care, child care, school construction, housing and paid family leave—also proposed a second “broader and bigger” bill passed by reconciliation without any Republican votes.
Republicans have previously indicated they would not let Democrats have their cake and eat it too, by letting pass both a bipartisan bill through regular order then followed by a partisan reconciliation bill filled with long-coveted Democratic wants. And after Coons’ comment, an anonymous Republican Senate aide told Politico, “It’s a pretty big gaffe [to say] they’ll jam through all the parts we hate with reconciliation right after.” Presumably, Republican cooperation on a smaller infrastructure bill would be contingent on Democrats abandoning a second one.
Conversely, Democrats don’t want to be force-fed dry, mealy cake. NBC News’ Benjy Sarlin is skeptical Democrats would eventually accept the Republican approach because “Republicans are (potentially) offering Biden less money, a less popular tax, and the opportunity to get deluged with negative ads citing their own ideas courtesy of their colleagues in exchange for a (possible) sheen of bipartisanship.”
But Manchin has been an advocate for bipartisanship for its own sake. In his recent Washington Post oped, Manchin argued “If the filibuster is eliminated or budget reconciliation becomes the norm, a new and dangerous precedent will be set to pass sweeping, partisan legislation that changes the direction of our nation every time there is a change in political control. The consequences will be profound — our nation may never see stable governing again.”
Manchin has also said he would support an infrastructure bill as big as $4 trillion. What’s more important to him? 60 votes or $4 trillion? We don’t know. If it’s the former, the nascent Republican counteroffer looms much larger, even though it has politically dicey elements. Bipartisanship doesn’t exist solely to craft the most popular legislation; often its function is to allow unpopular legislation to pass, spreading the burden to both parties and minimizing political risk.
And a roughly $800 billion infrastructure bill with a user-pays funding principle does not violate fundamental Democratic principles. Setting aside electoral concerns and a general desire to tax the wealthy, Democrats are perfectly fine with government spending on physical infrastructure paid for by (broadly defined) user fees (again that’s what we have now with highways). The main Democratic complaint with what the Republican G-10 is formulating is not what it does, but what it doesn’t do.
Today, a $600-800 billion counteroffer looks like chump change compared to Biden’s $2.3 trillion plan. But months from now, if Democrats find themselves unable to pass a partisan reconciliation bill, then the choice may be between $600-800 billion and $0. And $0 for infrastructure may be politically harder to explain to the voters than a vehicle mileage tax.
To avoid getting stuck in that vise, Democrats need to take the Republican offer seriously enough to get more serious about establishing a BATNA position.
With pandemic relief, Biden’s BATNA was simple. An American Rescue Plan featuring government checks addressing an urgent crisis was overwhelmingly popular. Support in polls was stratospheric. Even Democratic moderates who love bipartisanship and hate deficit spending didn’t want to get in the way. Biden knew what he could get without a bipartisan deal.
Biden’s infrastructure plan is polling well, but not quite as well as pandemic relief. CNN’s Harry Enten found that the average level of support in polls is 54 percent—decent but not overwhelming. And of course, we are very early in this process. Once a specific, sprawling, multi-faceted bill is drafted, some elements will poll better than others. A Biden address to the nation and a joint session of Congress on April 28 could help fortify his position. But will the strongest elements drive overall popularity—as direct checks did for pandemic relief—or will Republicans find a weak spot and weaponize it?
The challenge for Democrats is to identify elements that go beyond what Republicans are touting and make them so popular that they become sacrosanct. Perhaps that’s money for school construction and repairs, or long-term care. If Republicans get hung up defining what’s infrastructure, and Democrats are simply selling what people want, Democrats will have the better argument.
Still, Democrats promising money for nice things isn’t enough. A CNBC poll released Thursday found, “The bigger worry for 55 percent of the public is that the government will spend too much and drive up deficits, compared with 32 percent who worry more that the government will spend too little to support the economy.” If that sentiment is widespread, Democratic moderates may become amenable to a smaller Republican bill.
And there is a potential upside for Democrats if they can only pass a smaller bipartisan infrastructure bill in 2021: a campaign issue for 2022. What they don’t get now, they can run on then. If the economy is as hot as is being predicted, Democrats could reverse the tradition of off year midterm losses with a bevy of good news and a clear plan for what’s next.
The Overton Window on infrastructure has moved. Congress is not debating whether or not to have an infrastructure bill. We are debating whether it should be $600 billion or $2 trillion (or, in the eyes of some progressives, like AOC, $10 trillion.) We are debating whether infrastructure should be narrowly defined to traditional physical structures, or broadly defined to include services that help families and businesses thrive. We are debating what kinds of taxes and fees should pay for it.
All that is happening because progressives made big demands, which is great, and some Republicans have begun to engage, which ought to be seen as good. Democrats are in no way obligated to accept the first counteroffer. But in all likelihood, they will have to take it seriously.