Washington Weekly: Infrastructure

U.S. Office of Public Policy, 02 July 2020

This Week:

The Senate began debate on the fiscal year 2021 defense authorization bill. The House approved a comprehensive infrastructure bill (see below), the Senate-passed Land and Water Conservation Fund reauthorization bill, a bill invoking sanctions on Chinese officials and financial institutions for human rights violations in Hong Kong and a measure to strengthen the Affordable Care Act ("Obamacare" - see below). Both the Senate and the House approved a bill to extend the Paycheck Protection Program (see below).

Next Week:

Both the Senate and House will be out of session.

Infrastructure-Related Issues


Infrastructure has been a hot topic over the last three weeks as lawmakers focus on beating a September 30 expiration of the federal program that funds highway and other transportation infrastructure. This deadline explains the flurry of activity on the issue in the House, and combined with President Trump’s recent comments about the need for a big infrastructure bill, you may conclude that a final infrastructure bill is nearing the finish line. With various proposals being considered and discussed, we outline below what is really happening and why it will be a lot more difficult for Congress to advance a major infrastructure package this year than the headlines suggest.

  • The House: House Democrats this week passed the "Moving Forward Act,” a $1.5 trillion infrastructure package. This bill is dead on arrival in the Senate. It contains $500 billion for highway projects, which would bolster and extend the federal highway program that expires on September 30. But, the bill also contains $1 trillion of spending on green energy, public housing, education, healthcare and other areas outside the scope of traditional transportation infrastructure. These items are essentially political messages and are notable as being representative of what the Democrats would pass again if they fully control Washington in 2021. This extra $1 trillion will be ignored by the Senate, but the $500 billion has a chance to be relevant later this year as Congress must still somehow address the September 30 deadline. 
  • The Senate: Republicans have their sights set on a much more measured plan of roughly $300 billion in highway/transportation spending. The Senate bill does not fund projects outside of the more traditional transportation space. This plan passed a Senate committee last year with a unanimous 21-0 vote. While the bipartisan support is notable, we get the sense that Democrats are cooling to this measure in favor of a larger package that they would try to advance next year if they win back control of the Senate in November.
  • Stimulus: There is a small chance that infrastructure spending will be included in the next stimulus bill, which we still expect to be passed into law before August. However, the stimulus bill is unlikely to include significant infrastructure spending outside of certain target areas, such as broadband investment. While lawmakers almost uniformly believe that an investment in infrastructure would be good for the economy, Republicans are looking for a stimulus bill more focused on items likely to have a more immediate impact than infrastructure spending, which could take years to actually make its way into the economy in an impactful way.
  • September 30: As noted, the existing Congressional authorization for highway spending expires on September 30. The bills that must be reconciled by then are the $300 Senate bill and the $500 portion of the House bill dedicated to highways/transportation. Frankly, we don’t see a big bipartisan deal emerging by September 30 due to the bitter political environment and the inability of an agreement over how to pay for the bill.If one doesn’t, both the House and Senate will simply extend the current program for another six months or so without making improvements.

Other Issues

More PPP Changes.

The Paycheck Protection Program (PPP), the popular small business lending program originally established in the third stimulus bill (the CARES Act), continues to be a major focus for Congress. In response to growing bipartisan calls for greater transparency regarding the $650 billion program, the Treasury and the SBA recently announced that they would disclose business names, loan amounts and other key data on loans over $150,000. Congress recently passed legislation to give borrowers under the program greater flexibility in having their loans forgiven, and there is growing interest in going further. With the deadline for PPP applications having expired on June 30 (and with over $130 billion of lending capacity still available), the Senate and the House this week passed a bill to extend the program to August 8. Congress also is considering proposals to grant forgiveness to loans under $150,000 and to direct additional loans to small businesses in particularly hard-hit sectors. As Congress focuses its attention towards negotiations on another stimulus package, further changes to PPP will feature prominently in that conversation.

What is Next on Racial Justice?

Now that police reform proposals have been offered by a majority of lawmakers from both parties, what other racial justice issues will be tackled by Washington policymakers? We expect a number of committee hearings in both chambers, but no specific legislation is ready at this point to move forward. The House will hold various hearings on education reform, healthcare and economic development. Its focus will be on federal resources needed to address these challenges. The Senate will focus more on inner city economic development, and Black and African-American entrepreneurship and education. The focus here will be more on what the private sector can do to address these challenges. These issues aren't ripe for quick legislative proposals like police reform, but these issues will be dealt with individually and emerge throughout the year once they are examined a bit more and proposals developed. 

House Healthcare Focus.

The House this week approved a bill to strengthen the Affordable Care Act of 2010 ("Obamacare"). Pushed by House Democrats, the bill would provide additional funds to states to set up reinsurance exchanges to offer health insurance to their residents. Only 13 states presently have full state-run exchanges. The bill also increases federal subsidy levels for eligible residents to buy their insurance over the exchanges. The bill, which is consistent with the views of Democratic presidential nominee Joe Biden, allows House Democrats to remind voters that they are focused on the key issue of healthcare in an election year. While the House bill was approved, the Senate won't act on it though it may address other healthcare legislation.

The Final Word

Four Months.

Presidential Election Day 2020 is November 3rd, exactly four months from tomorrow. While four months may not seem like a long time, it is a lifetime in a political campaign. The campaigns, experts and pollsters will all do their best to try and adjust their strategies based on the constantly-evolving environment from now through the fall. Look at where we were as a country four months ago and what has changed since then. At that time, COVID-19 was not yet a serious worry for most people in the US. George Floyd wasn't a household name four months ago, and a major national debate over racial justice was not the top issue as reported by the media. The economy was riding high. In politics, Super Tuesday voting was about to begin with Bernie Sanders, not Joe Biden, as the perceived front runner. And, they weren’t the only changes from then and now. The bottom line is that we don’t know what the environment will look like in four months when the presidential election will be held. What we know is that there are new issues and developments lurking out there that we haven't thought about today but that might play a big role in the election.