Three Road Signs Explain Why The Infrastructure Bill Won’t Be Attached To Tax Reform

There is renewed buzz on Capitol Hill about the prospects of an infrastructure package making its way through the legislative process. Although there has been some discussion of attaching the infrastructure package to the impending tax reform bill, and the President himself has suggested that the two bills may be combined, it is an unlikely scenario. Here’s why:

  1. Construction Ahead – Expect Delays: The infrastructure package is still relatively undeveloped. There is no framework for what kinds of projects will be included (only roads and bridges? broadband? schools and hospitals?) or how the package will be structured (grants? loan guarantees? public-private partnerships? tax credits? regulatory relief?). While the Administration has said it will release its infrastructure outline “soon,” Hill leaders aren’t waiting and are now starting to work on their own plan. But on both ends of Pennsylvania Avenue, the policy development is just beginning. Tax reform is a long way from final form, but it is much farther along than the infrastructure bill – and when the tax bill is ready to go, Congressional leaders will move ahead.
  2. Yield: Any infrastructure package will need a funding source. Attaching the infrastructure bill to the tax reform package would provide that funding source but it would also draw dollars away from the efforts to lower the overall corporate tax rate. Therefore, Republicans would prefer to push the higher priority of tax reform by disconnecting the two bills.
  3. One Way: Tax reform is a primary legislative focal point for Republican leaders. They plan to use arcane budget process rules to move the tax reform bill through the Senate on a simple majority vote, instead of requiring 60 votes needed for most bills. This allows Republicans to pass a tax bill on a party line vote. But, it is important to note that these same rules can’t be employed if the infrastructure bill is attached. Republican leaders won’t risk failure of the tax bill by attaching something else to it. This is a major reason why these two bills will move separately.

Tax reform is the highest economic policy priority for most Republicans – and it benefits from special budget rules. In addition, there is little consensus about what an infrastructure bill would look like. Therefore, these two bills – infrastructure and tax reform -- will take separate roads, which means infrastructure will probably wait until 2018.

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