The infrastructure package is the first installment of Senate Majority Leader Chuck Schumer and Speaker of the House Nancy Pelosi’s “two-track” legislative strategy to enact much of President Biden’s economic agenda—achieved through the passage of the bipartisan infrastructure bill through regular Senate procedure followed by a $3.5 trillion wide-reaching social policy and spending bill passed through a near-certain partisan budget reconciliation process.

While the infrastructure package primarily includes spending for so called “hard infrastructure,” like roads and bridges upgrades, the budget reconciliation bill is expected to be used to fund domestic social programs, like expanding Medicare coverage, extending child tax credits, providing paid family and medical leave, and mitigating climate change, among numerous other initiatives.

Even though the Senate-passed infrastructure bill has now been sent to the House, the bill is not expected to be voted on in the House immediately. Rather, Speaker Pelosi has said that the House will not vote on the infrastructure bill until the Senate also passes the $3.5 trillion budget reconciliation bill. This move is intended to put pressure on the Senate to also pass the budget reconciliation bill and to ensure the domestic social programs in that bill, which are high priorities for the most progressive Congressional Democrats, are ultimately funded alongside the programs that are part of the infrastructure package.

Immediately after passing the infrastructure bill, the Senate began work on the threshold procedural steps that will allow Congress to finalize the provisions of the budget reconciliation bill. With the specifics of the reconciliation bill a work in progress, and the two bills—reconciliation and infrastructure—effectively tied together, the coming weeks in Washington are expected to be marked by fierce negotiation and tough compromises.

If enacted, the two bills will represent an unprecedented legislative feat, both in terms of historic spending levels and the sheer reach of policy initiatives that will impact industries and communities across the American economy.

Details on what’s in the infrastructure package, next steps on reconciliation, and the other urgent action items—namely, raising the debt ceiling and funding federal government operations for FY2022 via the annual appropriations process—that Congress must also address in the coming weeks follow.

Infrastructure Package

The infrastructure package includes $550 billion in entirely new federal spending, as well as additional funds to renew existing infrastructure and transportation programs that would otherwise expire in September. Major funding provisions include:

• $110 billion for roads, bridges, and other transportation-related programs.
• $66 billion for rail and Amtrak maintenance and upgrades.
• $65 billion to modernize the electric grid, including improvements to the nation’s clean energy infrastructure.
• $65 billion to expand high-speed internet access.
• $55 billion to upgrade water infrastructure, including lead pipe replacement.
• $47 billion for infrastructure “resilience,” to guard against cyber-attacks and severe weather.
• $39 billion for public transit.
• $25 billion for airport upgrades.
• $21 billion for environmental remediation.
• $7.5 billion to install electric vehicle charging stations across the country.

While the size and scale of the infrastructure package is smaller than the Biden Administration’s original proposal, the bill still provides a historic level of funding, much of which is considered to be badly needed by lawmakers on both sides of the aisle.

The spending is partially paid for by redirecting unused pandemic relief funds, more stringent tax enforcement on cryptocurrency brokers, delaying a Medicare rebate rule, and restarting two percent Medicare provider payment cuts, among other measures.

Budget Reconciliation Bill

Budget reconciliation is a special process that makes certain spending legislation easier to pass in the Senate. Specifically, instead of needing 60 votes, a reconciliation bill cannot be filibustered and therefore only needs a simple majority to pass. The first procedural step to passing a bill through budget reconciliation is to pass a congressional budget resolution.

Immediately after passing the infrastructure package on August 10, the Senate began consideration of and passed the budget resolution that will clear the way for a $3.5 trillion budget reconciliation bill that Democrats intend to use to fund priority domestic social programs.

By using the budget reconciliation process, Senate Democrats will be able to pass the major social policy bill through the Senate without any Republican support, assuming that all 50 Democratic Senators support the eventual bill and Vice President Harris breaks a 50-50 tie in favor of passage.

The budget resolution, which the Senate passed on August 11, directs Senate and House committees to write legislative language that change federal spending, revenues, and deficits by specific amounts. The language must be drafted by the different committees by September 15, and it will then be combined into a single social policy bill to be considered by the full House and Senate.

While the budget resolution does not specify the provisions of the resulting reconciliation bill, it does set forth various progressive objectives that the committees are expected to follow as they draft the legislation, including:

• Expanding Medicare coverage and lowering the program’s eligibility age.
• Lowering prescription drug costs.
• Extending child tax credits.
• Providing paid family and medical leave.
• Providing universal pre-K and tuition-free community college.
• Expanding tax incentives for clean energy, manufacturing, and transportation.
• Instituting a Clean Energy Payment Program to incentivize utilities to adopt clean energy.
• Expanding the state and local tax (SALT) breaks.

The measure is contemplated to be paid for largely by raising taxes on corporations and high-income individuals.

The Debt Ceiling and Appropriations

Adding to Congress’s already busy end-of-summer schedule are the urgent matters of the debt ceiling and appropriations measures for Fiscal Year 2022.

In 2019, Congress passed a two-year suspension on the debt limit which expired on July 31. To avert the severe economic consequences of a U.S. default on its debt, Congress will need to address the debt ceiling—by raising or suspending it—soon.

Congress also needs to act on appropriations for FY 2022 by September 30, the end of the federal fiscal year. Congress has two options to avoid a federal government shutdown—it can either pass new spending bills or a continuing resolution, both of which will require at least some Republican support in the Senate.

With Congress working on multiple, highly consequential bills in tandem, Democrats operating with narrow majorities, rapidly approaching deadlines to act on the debt ceiling and fund the federal government past September 30, the political and legislative landscapes are in constant motion. Pillsbury is working with industry leaders, trade and issue groups, and companies—all of whom will be impacted by Congressional action (or inaction)—to monitor the situation and act early to identify opportunities, advance legislative priorities, and guard against unintended consequences.