06/25/2021

Four Burning Questions about the Bipartisan $1 Trillion Infrastructure Agreement

The infrastructure sectors in the package are markedly traditional

1. Show me the pay-fors!!!

The table (below) provided by the White House gives only the topline funding for various infrastructure sectors. Only brief mention is made of how the president and the group of 21 bipartisan senators plan to pay for the new funding – closing the "tax gap," redirecting "unspent emergency relief funds," and "other offsets." Reports are that user fees, such as indexing the current gas tax to inflation or a new tax on average vehicular miles traveled, are off the table. Republicans had discussed specific clawbacks, such as unspent unemployment funds or unobligated state and local COVID-19 relief funds, but Democrats have previously been cool to this type of offset.

Similarly, Republicans have said that raising the corporate or personal marginal rates is an unacceptable offset. However the parties decide to pay for the spending (spectrum proceeds, extending the sequester, sales from the petroleum reserve, etc.), the Congressional Budget Office will provide a scorecard to judge the comparative effectiveness of the identified pay-for.

2. It ain't easy being green, is it?

The administration and Congress have spent the last six months discussing how to harness a massive infrastructure package to address climate change. While there are areas the administration can prioritize and greener initiatives toward which it can direct funding, the infrastructure sectors addressed in the bipartisan package are markedly traditional. While the package provides funding for electric vehicles ($7.5 billion), the spending is comparatively modest compared with the administration's stated aspirations for EV infrastructure. Perhaps the power infrastructure sector will fund electric grid modernization to enhance climate resilience, and funding for the water infrastructure sector could be for coastal and floodplain adaptation projects intended to counteract the effects of climate change. It now seems likely that any significant increase in spending to address climate change will have to come in another package, such as reconciliation.

Please select this link to read the complete blog post from Venable LLP.