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A group of Senate Republicans released the outline for a $568 billion infrastructure plan, putting out a GOP alternative to President Biden’s $2.3 trillion plan as lawmakers seek a bipartisan compromise on the issue, the Wall Street Journal reported. The two-page Republican plan — which includes spending on roads, transit systems, and broadband internet over five years — doesn’t provide specifics on how it would cover the cost of the bill, a central issue in the talks. The GOP proposal calls for collecting user fees for electric vehicles and repurposing existing federal spending, while opposing President Biden’s proposed tax increases on companies. Of the $568 billion in the outline, $299 billion would go toward roads and bridges, an increase from the $115 billion the Biden administration’s plan proposes. The GOP plan also dedicates $61 billion to public transit systems, $20 billion to rail and $65 billion for broadband. Overall, though, the GOP offer is a fraction of the size of the Biden administration’s proposal, which will likely limit its support among Democrats. President Biden said at a meeting with a bipartisan group of lawmakers this week that he wanted to see a Republican offer on infrastructure by mid-May. Read more. (Subscription required.) 

The infrastructure package proposed by President Biden and congressional deliberations on it were the focus of the "Politics, the Economy and Insolvency: Updates from D.C." session last week at ABI's Annual Spring Meeting. If registered, you can access replays for 30 days! 

It’s fair to say that $12.3 trillion of stimulus seems to have killed off the U.S. credit default cycle, according to a Bloomberg News commentary. The simplest way to see this is quite basic: The lowest-rated companies are enjoying the cheapest borrowing costs in history. All-in yields on corporate debt rated triple-C and below have fallen to about 8% from as high as 20.2% as recently as March 2020, ICE Bank of America index data show. Investors have raced one another to lend billions of dollars to cruise companies and airlines even as they bleed cash. The amount of U.S. junk-rated debt included in the Bloomberg Barclays U.S. High Yield bond index has surged to a record face value of $1.53 trillion from $1.2 trillion in October 2019. It’s easy to look at these valuations paired with more leveraged balance sheets and say risk is being mispriced, according to the commentary. Some companies will default, perhaps unexpectedly, even if credit seems priced to perfection now. And yet these yields and low perceived risk of default make perfect sense. In fact, there’s a case for some of these bond yields to go lower. Read more. 

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

A bipartisan group of senators yesterday unveiled plans to offer more emergency pandemic relief to the country's tiniest employers, a last-minute revamp of Washington's nearly $1 trillion small business rescue that is close to exhausting its funding, Politico reported. The bill introduced by Senate Small Business Chair Ben Cardin (D-Md.) would allow thousands of self-employed Americans to qualify for more aid under the massive Paycheck Protection Program, which offers government-backed loans that can be forgiven if businesses maintain payroll. Cardin and the bill's co-sponsors — including Sens. James Lankford (R-Okla.) and Susan Collins (R-Maine) — face a narrow window to pass the legislation because PPP funding is expected to run out in the coming weeks. Their bill would not appropriate additional money. As of last week, the program had $44 billion to lend out of the nearly $292 billion made available by Congress since December. It's unclear how many potential borrowers the bill will help without any more money being pumped into the program. And the legislation doesn't extend the May 31 deadline for loan applications either.

Up to now, President Joe Biden has resisted calls from the left of his party to cancel up to $50,000 of student loans for most borrowers. But the pressure from leading progressives such as Senators Elizabeth Warren and Bernie Sanders, and more recently from Senate Majority Leader Chuck Schumer, isn’t letting up, according to a Bloomberg News editorial. The president might be tempted to waver. He shouldn’t, according to the editorial. Debt forgiveness on that scale would be very expensive, even by current standards of fiscal liberality. More important, the cost can’t be justified. This kind of relief would mainly help people who don’t need it, and there are better ways of assisting those who do. By one estimate, the cost of Warren-style debt forgiveness would be roughly $1 trillion — on top of the $5 trillion Congress already provided for pandemic relief and the further $2 trillion and more that Biden wants to spend on “infrastructure” (which he’s defined to encompass almost any kind of public outlay). Read more. 

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Predatory debt collectors would be barred from collecting any more money from the federal government’s Paycheck Protection Program under recently proposed U.S. legislation, the Washington Post reported. Rep. Suzanne Bonamici (D-Ore.) and Rep. Marie Newman (D-Ill.) introduced the measure last week, arguing that during the pandemic, abusive collectors had harassed consumers and that such firms should not be eligible for the federal relief. Their proposal would block firms that have violated federal debt collection laws from receiving the forgivable loans. The $670 billion Paycheck Protection Program offers forgivable loans of up to $10 million to small businesses. From its beginning, disputes have arisen about whether certain businesses should be eligible for the money. Many debt collection firms have thrived during the pandemic and consumer advocates question whether the operations of these firms should be subsidized by the federal government, especially during an economic downturn. According to a Washington Post analysis earlier this year, more than 1,700 debt-collection agencies and related businesses borrowed from the program, totaling more than $520 million in loans. Some of the recipients have been sanctioned previously for harassment or other abusive tactics.

Some Democratic policy goals in President Biden’s wide-ranging $2.3 trillion infrastructure plan could soon face a familiar obstacle: arcane Senate rules that limit what type of legislation lawmakers can approve along party lines, the Wall Street Journal reported. While Mr. Biden and top Democrats have said they are hoping to approve the legislation with bipartisan support, many Republicans have sharply criticized the plan’s proposed tax increases on companies. The Republican opposition to the plan has left Democrats preparing to advance the package through reconciliation, a process that allows lawmakers to skirt the 60-vote threshold required for most legislation. Democratic aspirations for approving legislation along party lines received a boost on Monday when the chamber’s parliamentarian indicated that lawmakers could use the procedure multiple times in one fiscal year. But even if Democrats can employ the process more frequently, measures passed through reconciliation will still need to comply with a number of Senate rules, including that they have a direct impact on the budget. Those rules could mean that several provisions in the plan, including labor rules and a clean electricity standard, may have to be removed from or amended in the final legislation, according to lawmakers and aides. Rep. Peter DeFazio (D., Ore.), the chairman of the House Transportation and Infrastructure Committee, said he expected several favored measures to be disallowed under the Senate rules. In particular, a push to bring back earmarks — which allow lawmakers to designate specific projects for funding — may be ruled out of bounds, he said.

President Joe Biden on Monday defended his proposal to raise corporate taxes to help pay for his infrastructure spending plans, saying he was not worried the hike would harm the economy and that there was no evidence it would drive business abroad, Reuters reported. Speaking to reporters in Washington after spending Easter weekend at the Camp David presidential retreat in Maryland, Biden again took aim at the 50 or 51 corporations on the Fortune 500 list that paid no taxes at all for three years, saying it was time for them to pay their share. Asked if raising the corporate tax rate to 28% from 21% would drive away corporations, Biden said: “Not at all ... there’s no evidence of that.” Biden’s predecessor, Donald Trump, and Republican lawmakers cut the corporate rate to 21% in 2017 from 35%. Trump repeatedly promised to tackle the nation’s crumbling infrastructure during his presidency but never delivered on that. Biden’s plans have drawn criticism from both Republicans and Democrats, including Democratic Senator Joe Manchin, whose support could be critical to ensuring passage in a Senate split evenly between the two parties. White House press secretary Jen Psaki told reporters the Democratic president was open to discussions with Republicans and Democrats about how to fund the proposed investments. Asked if the administration had analyzed the cost of agreeing to a lower corporate tax rate of 25%, the highest Manchin says he would accept, Psaki noted the 28% rate would be lower than it was at any time since World War II.

The Senate’s nonpartisan parliamentarian yesterday ruled in favor of a Democratic effort to pass additional legislation through a process called reconciliation, according to a spokesman for Senate Majority Leader Chuck Schumer (D., N.Y.), opening the door for Democrats to approve more fiscal measures along party lines in the Senate this year, the Wall Street Journal reported. Democrats have used reconciliation once this year to pass the $1.9 trillion coronavirus relief package, and lawmakers had expected to be limited to using it only one more time this year. With the parliamentarian’s new advice to lawmakers, Democrats could now possibly use it a third time to skirt the 60-vote threshold necessary for most legislation to pass in the Senate. The ruling will give Democrats more room to maneuver to pass President Biden’s agenda, including his recently announced $2.3 trillion infrastructure plan. The White House is expected to roll out another large package in the coming weeks, this time focused on child-care and antipoverty efforts. Republicans have widely criticized the $2.3 trillion plan, attacking its wide scope and proposed tax increases on corporations. The hardening GOP opposition had left Democrats already preparing to use reconciliation to pass the infrastructure plan, possibly combining it with the coming antipoverty legislation to muscle a huge package through Congress along party lines. Under the reconciliation process, lawmakers pass a budget resolution that then provides committees with instructions to craft legislation meeting the budget’s target. Because budget resolutions are tied to the fiscal year, lawmakers had been limited to using reconciliation once per fiscal year. But the parliamentarian advised lawmakers that they can edit the underlying budget resolution, giving committees additional instructions for meeting the new target. It is unclear if there will be a limit on the number of times lawmakers can edit a budget resolution each fiscal year.