Senate Returns to Work on Infrastructure and Democratic Budget Bill

The Senate returns this week from its July Fourth recess to continue work on an infrastructure package supported by President Joe Biden and a bipartisan group of 22 senators, which the White House hopes will garner the needed 60 votes in the Senate needed for passage. At the same time, House and Senate Democrats are working on a parallel track to develop a budget bill that will include Democratic leadership priorities and that can pass the Senate with only Democratic votes.

In preparation for their return, on Friday Senate Majority Leader Chuck Schumer (D-NY) sent a letter to the Senate Democratic caucus expressing his intention to have the Senate “consider both the bipartisan infrastructure legislation and a budget resolution with reconciliation instructions” prior to the August recess. Passing a budget resolution is the first procedural step needed for Congress to move forward in drafting a filibuster-proof reconciliation bill. A vote on the larger budget reconciliation bill would occur in the fall after Congress returns from its August work period. Schumer has advised the Senate that it may stay in session into mid-August if needed to pass the infrastructure bill and advance the budget resolution.

Negotiations over the coming weeks will be complicated. Senate Budget Committee Chair Bernie Sanders (D-VT) wants the budget package to include expansion of Medicare, initiatives to address climate change, universal pre-kindergarten and in-home care for the elderly, among other policy proposals that could increase the cost of the bill to nearly $6 trillion. Proposed tax increases to fund the additional spending include an increase in the capital gains tax on high-income earners, elimination of Section 1031 like-kind exchanges, and taxing real estate carried interests at ordinary income levels instead of lower capital gains rates, among others. Some Democrats, including Sanders and House Speaker Nancy Pelosi, have linked passage of the infrastructure bill to House and Senate passage of the larger budget reconciliation package.

However, Senate Republicans oppose many of the tax increases and policy proposals contemplated for inclusion in the larger budget bill and have warned that linking the two would undermine bipartisan support for the infrastructure package. Meanwhile, centrist senate Democrats, including Joe Manchin (D-WV), Kyrsten Sinema (D-AZ) and Mark Warner (D-VA), have expressed reservations about the higher spending levels and tax increases being discussed for the budget reconciliation measure.