Biden Unveils $2.3 Trillion Infrastructure Plan, With Tax Hikes to Pay for It

 

Biden Unveils $2.3 Trillion Infrastructure Plan, With Tax Hikes to Pay for It

President Biden on Wednesday unveiled a sweeping $2.3 trillion plan meant to rebuild and modernize America’s infrastructure, create millions of new jobs and strengthen the nation’s competitiveness, particularly with China.

"This is not a plan that tinkers around the edges," Biden said during a speech in Pittsburgh Wednesday. "It is a once-in-a-generation investment in America, unlike anything we’ve done since we built the interstate highway system and the space race decades ago."

More than just roads and bridges: The White House says the proposal, which it is calling the American Jobs Plan, would modernize highways and roads, fix bridges and upgrade ports, airports and public transit systems.

The administration is quick to add, though, that the plan will go well beyond rebuilding crumbling transportation infrastructure to also invest in other areas, including eliminating lead pipes to provide more Americans with clean drinking water; renewing the electric grid; building or renovating housing, schools and other public buildings; and expanding access to high-speed broadband. The administration is also emphasizing that the plan would help address economic inequality and speed efforts to fight climate change by transitioning to green energy sources.

"This is the moment to reimagine and rebuild a new economy," The White House said in a document detailing the new proposal. "The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China."

What’s in the Biden plan: In all, Biden is calling for more than $2 trillion in spending over eight years. The chart below from The Washington Post provides a useful visual breakdown, but the major categories include:

* $621 billion for transportation infrastructure and resilience: The plan would modernize 20,000 miles of highways and roads; fix the 10 most "economically significant" bridges and 10,000 others; double federal funding for public transit with an $85 billion investment; and provide another $80 billion for Amtrak. The plan also includes $25 billion for airports; $17 billion for waterways, ports and ferries; $20 billion for road safety programs and another $20 billion to undo neighborhood divisions caused by highway projects. Biden is also calling for a $714 billion investment to spur use of electric vehicles and "win the EV market."

* $580 billion for manufacturing; research and development; and job training: This includes $180 billion to advance research in areas such as artificial intelligence, semiconductors and biotech along with money for climate research and clean energy.

* $400 billion for the care economy: The White House says essential home care workers are among the lowest paid, and that one in six workers in the sector live in poverty. Biden is calling for funding to expand Medicaid access to home or community-based care for seniors and people with disabilities and giving care workers increased pay and stronger benefits.

* $313 billion for schools and housing: The plan calls for more than $200 billion in tax credits and grants to build and improve affordable housing and $100 billion to "upgrade and build new public schools, through $50 billion in direct grants and an additional $50 billion leveraged through bonds."

* $111 billion for clean water: Biden proposes to replace 100% of the nation’s lead pipes and service lines and upgrade water systems.

* $100 billion for digital infrastructure: Biden wants to build "future proof" broadband infrastructure to extend high-speed internet to unserved and underserved areas and reach 100% coverage nationwide.

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How Biden proposes to pay for it: Broadly speaking, infrastructure spending has strong bipartisan appeal given that it can create jobs and deliver improvements to both blue and red regions. The obstacle to enacting any infrastructure plan has typically been how to pay for it — whether to raise new revenue, cut other spending or borrow more to cover the costs. "Everybody’s for doing something about infrastructure," Biden said Wednesday. "Why haven’t we done it? No one wants to pay for it."

Biden’s preferred method of paying for his plan is through corporate tax increases, though the White House says it would take 15 years of his tax hikes on businesses to offset the eight years of spending.

Biden would raise the corporate tax rate to 28%, up from the 21% set by the 2017 Republican tax overhaul. Biden would also impose a higher global minimum tax on U.S. multinational corporations to discourage them from moving operations offshore. He would also levy a 15% minimum tax on the income corporations report to investors, eliminate provisions that allow companies to avoid taxes on some foreign earnings and wipe out tax breaks for fossil fuel producers. The plan also calls for increased enforcement by the Internal Revenue Service to crack down on corporate tax avoidance.

Republicans quickly denounce the plan: Elements of the plan, including the proposed tax increases, are already being met with objections from Republicans and business groups. "It’s like a Trojan horse," Senate Minority Leader Mitch McConnell (R-KY) said Wednesday. "It’s called infrastructure, but inside the Trojan horse it’s going to be more borrowed money, and massive tax increases on all the productive parts of our economy."

Biden said he has already spoken with McConnell about his plan and is open to other suggestions to pay for infrastructure improvements. "I’m going to bring Republicans into the Oval Office, listen to them, what they have to say, and be open to other ideas. We will have a good-faith negotiation," Biden said Wednesday.

But the chances of bipartisan cooperation are slim at best. "There is virtually no path to getting Republican votes. It’s too big, too expensive, and chalked full of tax increases that are nonstarters among Republicans," Brian Riedl, a former aide to Sen. Rob Portman (R-OH) now at the libertarian-leaning Manhattan Institute think tank, told The Washington Post.

Effects on the debt: Biden touted his plan as "fiscally responsible," saying that it would reduce the debt over the long term. Budget watchers said they were pleased that the administration is — in principle, at least — trying to pay for its proposed new spending. "It is both notable and admirable that the Biden Administration supports fully paying for their infrastructure package," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which seeks long-term debt reduction.

There are already questions, though, about Biden’s proposal to offset eight years of spending with 15 years of tax revenue. "Put another way, roughly half of the spending will be paid for," tweeted Shai Akabas, director of economic policy at the Bipartisan Policy Center. The Washington Post’s Heather Long notes that using standard accounting, Biden’s plan would add close to $1 trillion to the U.S. debt over a decade. And MacGuineas said that the cost of the plan is high and that any new spending should be paid for sooner than 15 years.

Why it matters: Biden continues to go big. "[E]ven spread over years," The New York Times’s Jim Tankersley writes, "the scale of the proposal underscores how fully Mr. Biden has embraced the opportunity to use federal spending to address longstanding social and economic challenges in a way not seen in half a century."

And this is just the first half of a two-part plan, with the second part of Biden’s economic overhaul, called the American Family Plan and focused on what the administration has called "human infrastructure," set to be released in a matter of weeks.

What’s next: The White House is reportedly hoping to make progress on the plan by Memorial Day, and House Speaker Nancy Pelosi (D-CA) reportedly told her fellow Democrats that she’d like to pass the package by July 4.

The path ahead is highly uncertain, though. The plan’s hefty focus on climate change and other elements not directly related to physical infrastructure are bound to face pushback. "The White House argues these should also be viewed as critical infrastructure, but others see them as partisan Democratic priorities," writes the Post’s Long. "This second $1 trillion in spending is where much of the debate is going to center. Biden will have to chose, as he did on the stimulus package, whether to take some of this other spending out to try to win GOP votes, or to stick to his plan and pass the bill with only Democratic votes."

Given GOP objections, Democratic leaders are likely to be spending the next couple of months trying to craft a plan that can win the support of a majority of their members. But intraparty divisions mean that pushing ahead on a partisan basis won’t be easy either.

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Number of the Day: $6.2 Billion

States have made $6.2 billion in unemployment overpayments over the first year of the coronavirus pandemic, according to a new report by the Government Accountability Office. The report says that from March 2020 through February 2021, sates identified more than $3.6 billion in overpayments through the Pandemic Unemployment Assistance program created by Congress to extend help to workers not typically eligible for jobless benefits. States also found $2.6 billion in regular unemployment insurance overpayments over the final nine months of 2020.

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