Bipartisan US Senate Lawmakers Reach Sudden Agreement on Infrastructure Development Plan

Agreement on Stimulus Plan Without Tax Increase
Must Obtain Approval from Both Party Leaderships
Possibility of Hardliner Opposition in Each Party... Difficult to Predict Congressional Passage

Bipartisan U.S. Senator Mitt Romney, a Republican [Photo by Reuters]

[Asia Economy Reporter Kim Suhwan] Bipartisan U.S. senators have reached a sudden agreement on President Joe Biden's infrastructure development plan. With approval from the White House and the leadership of both parties, a congressional vote is expected to proceed, but there are concerns that opposition from each party could make final congressional approval uncertain.

According to the Washington Post (WP) on the 10th (local time), a meeting of a bipartisan group of five Democratic and five Republican senators resulted in a settlement of negotiations on the Biden administration's infrastructure development plan.

The agreed stimulus plan includes investing $974 billion (approximately 1,100 trillion KRW) over the next five years and $1.2 trillion over eight years in infrastructure development, including $579 billion in new spending. This figure is close to the minimum new spending amount of $600 billion requested by President Biden.

In a joint statement released after the agreement, the senators said, "We were able to agree on a realistic development plan that can modernize our nation's infrastructure and energy technology," and "We expect to gain support from both parties."

Notably, the bipartisan senators made it clear that there would be no tax increases to fund the infrastructure plan in this agreement.

This marks a retreat from the Biden administration's earlier proposal to raise taxes on corporations and the wealthy, including increasing the corporate tax rate, as a means to secure funding for the large-scale infrastructure development plan.

President Joe Biden [Photo by Yonhap News]

Earlier, President Biden proposed a $2.3 trillion (approximately 2,600 trillion KRW) infrastructure development plan and suggested reversing the corporate tax cuts implemented by former President Donald Trump in 2017. At that time, Trump had lowered the corporate tax rate from 28% to 21%.

This sparked fierce opposition from Republicans, who countered with a smaller $928 billion stimulus plan without any tax increases.

In response, President Biden proposed a reduced $1.7 trillion infrastructure plan and postponed the corporate tax increase, attempting to reach a final agreement with Republicans. However, negotiations broke down on the 8th due to failure to agree on the budget size.

Subsequently, negotiations were handed over to the bipartisan group of senators, and although an agreement was reached on this day, the final congressional approval remains uncertain.

The bipartisan senators' agreed stimulus plan is smaller than the original proposal and does not include a corporate tax increase, which may provoke opposition from the Democratic hardliners. Additionally, since the stimulus plan exceeds the Republican-proposed new spending cap of $378 billion by a large margin, opposition from Republicans is also possible.

Accordingly, the Democrats plan to focus on securing a bipartisan agreement while also considering a 'two-track' strategy that includes the possibility of passing the plan unilaterally.

Typically, the U.S. Senate requires 60 votes to pass legislation, but budget bills can pass with a simple majority through a special reconciliation process.

Thus, with 50 seats held by the Democrats and the Vice President's casting vote, the Democrats can pass the budget bill alone with 51 votes.

Senate Majority Leader Chuck Schumer said on the day, "We are continuing to pursue a two-track strategy," suggesting that if a bipartisan agreement is not reached, the Democrats might pass the bill unilaterally.

Senator Joe Manchin of the Democratic Party
[Photo by Reuters]

However, Senator Joe Manchin, a prominent moderate Democrat, has stated that he will only support a bipartisan agreement, leading to speculation that unilateral Democratic passage may be difficult.

Therefore, the White House is expected to prioritize securing a bipartisan agreement.

On the day, White House Communications Director Kate Bedingfield told CNN in an interview ahead of the bipartisan agreement, "We view the ongoing bipartisan negotiations positively," and "We believe progress is being made on various fronts," indicating that the White House may support a bipartisan agreement.