TAX TAKE: Failed Senate Cloture Vote on the Bipartisan Infrastructure Framework: What's the Rush?

Tax Alert
07.26.2021

Last week, Senate Majority Leader Chuck Schumer scheduled a highly anticipated cloture vote on the bipartisan infrastructure framework (BIF). We offer a few observations on the likelihood and pathway of any tax modifications being legislated in light of the failure of the cloture vote:

  • It's unclear why Leader Schumer forced a cloture vote that was destined to fail. While it arguably was scheduled in an attempt to force an agreement on the contents of the BIF, the vote was also likely a reaction to pressure from progressive Democrats as well as scheduling concerns in light of the upcoming Congressional recess in August. Still, the forced vote is curious given that the House has not given any indication that it will take up the BIF in the short term, particularly if there is no corollary action on the reconciliation bill.
  • The failure of the cloture vote does not mean that the BIF is dead. Republican negotiators of the deal insist that agreement on the details is close and could be hammered out shortly, even if actual legislative text hasn't been developed yet. The success of a cloture vote a week after the original effort is certainly not guaranteed, but its passage would at least get the debate on the contents started. Whether an ultimate cloture vote would garner the support of 50 Democrats and 10 Republicans also remains to be seen, but without the details of at least the first shot across the bow, it's impossible to speculate on the BIF's success.
  • What is really holding up the BIF negotiations is what the pay-fors will be. Republicans are holding firm on their demand that the bill be deficit neutral and now that increased IRS funding is off the table, the funds that increased enforcement was expected to raise will have to found elsewhere.
  • Whatever happens with the BIF, reconciliation is still in play… if Democrats can agree on the budget resolution. As with the BIF, the contours of the budget resolution are still murky and many Democrats are loath to consider the BIF without a clear path forward for reconciliation. Speaker Pelosi has made it clear that she will not move the BIF in the House without an actual reconciliation bill also passing the Senate.
  • And what about that budget resolution? Just as Leader Schumer is walking a tightrope, so too is Speaker Pelosi, who has to manage moderate Democrats who want a less ambitious spending plan, and progressive Democrats, who will want to see larger expenditures for their "social infrastructure" priorities.

There is much to watch in the next two weeks, as both of the moving parts to the two-track approach will either coalesce or disintegrate. In the case that the BIF fails, even more pressure will be on Democrats and the reconciliation process to achieve significant spending priorities on both traditional and social infrastructure, with a finite amount of revenue available from tax increases to fund them. Any plans for a restful August might go out the window as events play out. #TaxTake


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