Biden shaping economic recovery plan
The next phase of President Joe Biden’s legislative agenda is fast taking shape, with an economic-recovery package that will potentially surpass his $1.9 trillion virus-relief plan in size, complexity and overall ambition.
The White House and congressional Democrats are busy planning strategy for the proposal, which could be unveiled next month, kicking off a legislative process that may culminate by August.
The centerpiece will be possibly the biggest infrastructure-spending commitment since the New Deal — including roads, bridges and rural broadband internet. Progressives are eyeing much more, such as an expansion of the Patient Protection and Affordable Care Act and a public-sector jobs program, along with tax measures including an increase in the capital-gains levy.
But stuffing it with too many controversial proposals could threaten its approval or force it to be broken up, and put in peril the Democrats’ thin majorities in the 2022 midterm elections. Still, Democrats see a narrow opening to forge Biden’s legacy: not just restoring the U.S. economy to its pre-pandemic state, but reversing the trend of sluggish growth in recent years with the most far-reaching measures in decades.
Biden’s virus-relief package is “going to help us get us back on the growth pattern we were on before,” said Rep. Don Beyer, D-Va., who, as incoming chair of the Joint Economic Committee, is a leading Democratic macroeconomic-policy voice. “The genius of the second plan is that it gives us the opportunity to punch GDP up above the long-term trend,” he said in an interview.
During his campaign, Biden proposed $2 trillion for economic rebuilding, a step up from the $1.5 trillion level proposed in the House last year, which Democrats are now calling a “floor.”
Bipartisan support for improved highway, transit, waterway and flood-mitigation work is strong, while deficit concerns are at the lowest level in decades. There’s also a Sept. 30 deadline in Congress for reauthorizing surface-transportation funding — offering a ready-made vehicle for pursuing infrastructure measures.
“Much of our infrastructure is nearing the end of its useful design life,” said Thomas Smith, executive director of the American Society of Civil Engineers, which will issue its latest quadrennial report card on U.S. infrastructure on March 3. “We’ve neglected it for far too long, and we’ve watched other countries continue to invest and continue to move ahead of the United States.”
The American Society of Civil Engineers’s last assessment, in 2017, was a D+, estimating the U.S. needed $4.5 trillion in infrastructure spending over the following 10 years. With about $2.5 trillion in estimated outlays already in train, that left a $2 trillion gap — which Biden’s proposal could largely fill.
Congressional Budget Office figures indicate that a $1.5 trillion package would be equivalent to all federal spending on transportation and water infrastructure in the 14 years through 2017.
But infrastructure could become ensnared by a push among liberal lawmakers to tack on a raft of other items, from creating a government-run health insurance plan and making unionization easier, to a pathway to citizenship for undocumented migrants and a carbon tax.
Rep. Pramila Jayapal, D-Wa., chair of the Congressional Progressive Caucus, said Thursday her large cohort of House Democrats will decide in the coming weeks which elements to advocate in the package — including whether to use it as an opportunity to roll back Trump’s tax cuts for the wealthy.
Jayapal’s group was instrumental in attaching to the pandemic-relief plan an increase in the hourly minimum wage to $15, something that’s become easily the most controversial potential holdup for that bill.
The progressive caucus has proposed a $2 trillion infrastructure bill, and is already advocating that it include expanded child and elder care.
The question of funding, whether by raising taxes or issuing more debt, also looms large, and many Republicans are set to be vociferous in opposing much of the plan.
Sen. Ron Wyden, D-Ore., head of the Senate Finance Committee, is expected to propose tax hikes, including equalizing ordinary income and capital-gains levies for those making more than $1 million a year and ending the deferral of capital gains. He’d also change international tax provisions in the 2017 tax law and close the carried-interest loophole, according to a Democratic aide.