Rep. Brady predicts infrastructure bill will hit 'more difficult sledding' in the house
Rep. Kevin Brady (R-TX) joins Yahoo Finance to discuss the latest with the bipartisan infrastructure bill.
Video Transcript
SEANA SMITH: Well, the infrastructure bill is the big story of the day-- the Senate passing a trillion dollar bill with pretty broad bipartisan support. So we want to talk a little bit more about this with Congressman Kevin Brady of Texas, ranking member on the House Ways and Means Committee.
Congressman Brady, it's great to see you again. We just heard from President Biden. He, of course, was really trumpeting this fact. He was saying that this was a massive step forward the fact that we got both sides of the aisle, both GOP and Democrats, on board with this bill. What do you think of it? And I guess do you plan to vote for it in the House?
KEVIN BRADY: Yes. So, you know, to be fair, getting Republicans involved in these conversations made this bill considerably better compared to the president's original structure bill. And the president ought to be doing more of that. Secondly, to be accurate, though, still only about a fourth of this bill is true infrastructure.
But I think most Americans would embrace-- there's strong bipartisan support for too much of it. I think a bulk of it is really more government spending, government-directed Green New Deal as well as proposed subsidies, green subsidies as well. And it will add between $200 and $400 billion of national debt-- those are real concerns.
But to be also honest as well, in the House, this will be linked by the Speaker, she's made it clear, to that $3.5 trillion giant spending, giant tax hikes wasteful spending bill. And so in the House, I think it's going to run into much more difficult sledding because it is tied to that massive tax and spend bill.
ADAM SHAPIRO: Representative Brady, it's always good to see you. I know that there are Republicans who have concerned but may not even need to address them. I mean, AOC, the Democrats within their own camp in the House, are threatening to blow it up because if the Speaker doesn't link it to reconciliation, they'll not have a go with it. What do you think is going to be the outcome? Are they going to somehow separate this? And to Seana's question, will you vote for infrastructure?
KEVIN BRADY: Look, start with the second question-- if this were a pure infrastructure bill and paid for, no question. I think the bulk of Republicans would support it, including me. It's not. Secondly, it will be tied to that massive spending and tax hikes a bill. And the House Speaker has not changed your mind, to my knowledge.
So I don't know if the very radical left will push her into even I think a more egregious bill tied to these big tax and spending reconciliation. I don't know. She's got a big-- she's got a big problem on her hands.
SEANA SMITH: Congressman, so we have this trillion dollar infrastructure bill and also Speaker Pelosi pushing for the Senate to pass a $3.5 trillion anti-poverty and climate plan. If those do get passed-- or even if we just have the trillion dollar infrastructure, if it does, in fact, pass the House, what do you think that would potentially do to inflation? Because I know you and I have spoken a couple of times in the past, and this is something that you're very, very worried about.
KEVIN BRADY: Yeah, I am. So there's a couple thoughts here. One, infrastructure over time, done right, can help with economic growth, mainly because it's helping match the growth you have. More importantly, hopefully, it will help draw more growth over the long-term. I think there's a real challenge in the short-term, one, because, as the CEO just said, look it takes a while for these dollars to get down. There's lots of strings attached.
Right now, we don't have the workers we need for this. So I think inflation is going to eat away at the infrastructure costs, to be honest. And overall, when you're putting another trillion dollars in the economy, when rising prices are continuing to be a huge problem, for not just families but for businesses as well, then you heap on top of that $3.5 trillion of more spending and continued barriers to getting people back to work, you've got inflation not just for the short-term, but for an extended period. And no one wants to see that.
ADAM SHAPIRO: We're going to get some new numbers tomorrow-- the CPI is going to come out. And one of the things that economists are telling us is that the big drivers of inflation-- for instance, used car prices. They grew very fast but that has slowed down. The price of lumber-- half of what it had been when it hit its high. And they're using that as the example that inflation is transitory. What do you say to those people who say, look, some of this stuff has happened but it's all coming back down?
KEVIN BRADY: Yeah, they're leaving some things out. So we know there's been 10 times in history we've seen this type of inflation in the first half of the year. In nine of those 10 times, we saw even higher inflation by the end of the year and it was extended. What those economists ought to be telling you as well is that in inflationary periods, it's just not one or two sectors that drive up prices, they evolve over time.
In fact, it's not unusual to have five, six, a dozen different pricing areas lead inflation throughout that period. And I think many economists expect that to happen as well. So it's never just one or two sectors.
SEANA SMITH: Congressman, are you seeing this affect your constituents yet-- the higher prices? Is this something that they are worried about now?
KEVIN BRADY: Yes, so I see in two ways. One, for families, we hear this a lot, including at the grocery store two blocks from our house as well-- because families are seeing higher prices everywhere, not just at one or two spots. Secondly, I'm hearing it in my town halls this month from our Main Street businesses who are seeing higher costs for product, slower deliveries.
They don't see that changing because I ask, is this short-term? Are we going to work our way out of it? This seems to be much longer term in their view. And that's what worries me because, as you know, once those inflation expectations take hold, then you've got big problems going forward, which is why I really think stop the government spending, massive spending here, the barriers to returning people to work. We can stop those policies and help if we act now.
ADAM SHAPIRO: Representative, I want to wrap up with two final questions, first about inflation. A lot of this is driven by the wage pressures because of the labor shortage. But in places where unemployment-- the extended unemployment benefits were removed, we haven't seen that ease up. And we're going-- the extended unemployment benefits expire in September. So if the wage pressure is what's driving it up, doesn't seem as if it would be the government spending, that's driving it up. What are we missing there?
KEVIN BRADY: So I think wage is part of it. And even there, you know, it's a bit nuanced. So we're already seeing in the 26 states that have ended the federal bonus and gone back to state unemployment levels, that they are seeing drops in those unemployment claims much faster and lower unemployment numbers than in those states that have maintained it. We're hopeful that will change after Labor Day there.
Secondly, you've got new barriers to work as the new child tax credit, whose checks started hitting mailboxes two weeks ago is no longer tethered to work. And so we're already hearing from our local businesses that they're having workers leave because, frankly, financially, they don't have to work with these new child tax credits coming to them. And so I worry, especially as Democrats want to make that a permanent expansion of the COVID emergency program, that we're going to see more permanent barriers to reconnecting workers to their jobs. And if we see that, we're going to have inflationary pressures for way too long.
ADAM SHAPIRO: And I have to ask you, because you are a leader from one of the most important states in the union, Texas, about COVID. There is the issue between some of the school districts, and, the cities, and the governor. And we know that there's a lawsuit now to stop the governor's executive order about mask mandates in the schools.
What would you say to both sides? Who's right? Who's wrong? What would you offer to them? Because shouldn't so a local school district make their own choices?
KEVIN BRADY: So I think two things need to happen. One, keep the pressure on, keep trying to educate people, encourage them to talk to their doctors and get vaccinated. I think that's really important. Secondly, our school districts-- our teachers, our parents, our kids-- did a remarkable job opening up last Labor Day in a safe environment and stayed safe.
So all I would do is encourage our state legislators and governor to be visiting with our local educational leaders, our school boards, find the right path forward here. I'm confident there is, and we have a track record in Texas of doing this safely in our schools.
SEANA SMITH: Congressman Kevin Brady, it's always great to speak with you. Thanks so much for taking the time, and we look forward to having you back on Yahoo Finance again.
