Could cooperation between Joe Biden and Mitchell McConnell enable a $2trn post-Trump infrastructure programme?

Although neither Joe Biden nor Mitch McConnell asked for the job, America’s system of diversifying political power has cast them together as the transition team odd couple of 2020. Senate Majority Leader McConnell must manage the transition of the Republican party into a new era shaped largely by Trump – significant support from working-class voters, augmented by surprising new pockets of support in minority communities that helped Republicans pick up seats across the nation even as voters opted for a new occupant of the White House. Those voters are looking to McConnell to check the Democrats’ progressive policies while spurring US economic recovery and job creation.

As President-elect, former Vice President Biden faces two transitions. The standard one is the transition of his campaign planks into a policy agenda – one likely to face stiff opposition in the Senate. The other could define Biden’s legacy – the transition from fossil fuels to clean energy.

There is a chance that Biden and McConnell could successfully manage their transitions by negotiating a comprehensive infrastructure bill that could pass both houses of Congress with bi-partisan support and be signed by the President. Both sides could use a legislative win early in 2021, and a traditional infrastructure bill amped up with energy production and technology measures offers a rare opportunity for compromise in a divided Washington DC.

For starters, the Biden infrastructure-energy programme rests on two pillars: create union jobs and bolster union-based worker protections and wage agreements; advance the Green Energy agenda by developing and deploying a host of new technologies – some of which are only at the stage of being tested, in early development or being conceptualised.

It is a tall order. Biden is calling for “a transformational investment” in US infrastructure, of up to $2trn (€1.67trn) over 10 years, to pursue national objectives that have not previously been so explicitly linked: equip the American middle class to compete in the global economy, while moving the US to net-zero greenhouse gas emissions, and to ensure that cities, towns, and rural areas across the country share in that growth. He promises that “every federal dollar spent on rebuilding our infrastructure during the Biden Administration will be used to prevent, reduce, and withstand the impacts of this climate crisis”.

Biden has melded his energy and infrastructure plans into a single programme, premised on the rapid development and implementation of new technologies. It is a unique approach and it remains to be seen whether the Biden team can pull it off without becoming mired in federal subsidy favouritism, which too often undoes good plans from either party.

The Biden plan is full of the old-school Democratic approach to creating union jobs, setting up lots of new federal worker protection laws, and diversity-based certifications. But at the core of the Biden plan is a range of new technology: driverless cars, charging stations, roads that recharge batteries as you drive, and light rail mass transit for cities as small as 100,000 people. Most of it is the sort of stuff that comes from the Silicon Valley crew, reliant on gig workers.

Biden also plans to use infrastructure spending to create union jobs; American workers should build American infrastructure and manufacture all the materials that go into it, his plan asserts, “and all of these workers must have the option to join a union and collectively bargain”.

In effect, Biden is using energy policy as an industrial policy tool. But, in reality, fracking will resume as the economy recovers and people start driving more; firmer oil and gas prices are already evident, and the good news from the vaccine has fueled optimism in the fossil energy sector.

The bottom line is that energy independence is a national security tool. Biden knows that, so anything he does will be done through that lens; keeping US energy production high and flexible is a way to gain leverage over oil-producing giants Russia and Saudi Arabia, and Biden is promising to get tough on Vladimir Putin and has not been very warmly disposed towards the Saudis. Biden may reduce or ban fracking and other fossil fuel activity on federal land, but much fracking and other energy exploration work is regulated by states, and much of the energy infrastructure in the US, both internal transportation and storage and export facilities, is owned and operated by private equity investment firms on behalf of state and local pension funds that are strong Biden backers.

Another strategic reality is that American state governors have become empowered by Trump’s approach to the pandemic – and while they are already projecting that Biden will steer funds to their states, governors are unlikely to cede any of their newfound power to a Biden administration they know was elected on weak policy grounds – especially those Democrat governors facing redder state legislatures. Every governor will welcome their state’s share of the $1bn in new annual spending for green-tech related transportation infrastructure proposed in the Biden plan, but – as the plan recognises – states and municipalities own and operate most of the infrastructure in the US, and it may be an uphill battle for Biden’s team to direct the application of those funds if they are disbursed.

A third strategic issue is that the pledge to reach net-zero emissions by 2050 hinges on massive reductions in greenhouse gas emissions from the replacement of vehicles that burn fossil-fuel with electrically-powered cars and trucks. But supplying all that power, along with meeting ongoing electricity needs, requires electrical generation and distribution on a scale that cannot be met by on-again, off-again solar and wind sources.

Much of the progress towards net-zero pledges is supposed to have already been taking place by changes in the fuel mix and emission-reduction technology of power generation plants. Even these initial goals have proven ambitious: the US electric grid still relies on carbon-emitting fossil fuels for 63% of its generation, according to Deloitte, which sees “significant gaps” between decarbonisation targets and scheduled steps to reach them, with many utilities planning new natural gas plants even as they expand clean generation capacity.

Governors are unlikely to go along with overly-aggressive emission-reduction rules if it means they will need to import California-style rolling blackouts to their states; the value of natural gas power generation as a transition tool may become an attractive policy option for state leaders struggling to bring their economies back from the pandemic, an option likely to be supported by power companies lobbying for any restrictions to be lower, and the effective dates to be longer in the future.

In a late-October analysis of Biden’s plans, Moody’s noted that “evaluating Biden’s policies is complicated by the wide range of his proposals”, singling out the clean energy infrastructure plan as one of the “more novel” policy offerings. The upshot of Moody’s assessment was that a Biden presidency under a divided government scenario in which the Republicans retained control of the Senate was the most likely outcome of the 2020 election – and also the outcome most likely to produce the strongest growth in jobs and GDP, albeit under the unrealistic pro forma assumptions that all of the winner’s policies are enacted and remain in force for a decade.

By proposing to invest in everything, Biden risks getting nothing done, a pitfall for a national governance agenda whether offered from the left or the right. While it may be necessary to appeal to everyone during an election, resources are not unlimited, power alignments shift, and at some point, if he wants to achieve success, Biden will have to decide where he can achieve success, and focus his resources – financial, political, and diplomatic – on attaining those specific objectives that can create a legacy beyond that of being the President who replaced Donald Trump after one term. For his part, Senate Majority Leader Mitch McConnell will need to equip his team with some substantive policy and legislative achievements for the 2022 and 2024 elections, giving him a strong incentive to work with Biden on some meaningful progress.

The transportation infrastructure arena provides a wealth of opportunities for bipartisan agreement; coupled with the potential for stimulating investment in green energy technologies. If policies are not implemented in a manner that stifles economic growth, there could be even more. Add the importance of energy independence in an unstable world, and an infrastructure bill centred on practical measures to enhance US energy technology and related transportation networks could also be attractive as a way to bolster US national security. Biden and McConnell may never become golf buddies, but the force of events and the tides of history – red and blue – may allow this transition team to achieve something that neither of their parties could manage on their own.

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