Biden announces $2.3T infrastructure plan
PITTSBURGH — President Joe Biden outlined a huge $2.3 trillion plan Wednesday to reengineer the nation’s infrastructure in what he billed as “a once-in-a-generation investment in America” that would undo his predecessor’s signature legislative achievement — giant tax cuts for corporations — in the process.
Speaking at a carpenters union training center in Pittsburgh, Biden drew comparisons between his hard-hatted proposed transformation of the U.S. economy and the space race — and promised results as grand in scale as the New Deal or Great Society programs that shaped the 20th century.
“It’s not a plan that tinkers around the edges,” Biden said. “It’s a once-in-a-generation investment in America unlike anything we’ve seen or done since we built the interstate highway system and the space race decades ago. In fact, it’s the largest American jobs investment since World War II. It will create millions of jobs, good-paying jobs.”
White House officials say the spending would generate those jobs as the country shifts away from fossil fuels and combats the perils of climate change.
It is also an effort to compete with the technology and public investments made by China, which has the world’s second-largest economy and is fast gaining on the United States’ dominant position.
“I’m convinced that if we act now, in 50 years people are going to look back and say this is the moment when America won the future,” Biden said.
The Democratic president’s infrastructure projects would be financed by higher corporate taxes — a trade-off that could lead to fierce resistance from the business community and thwart attempts to work with Republican lawmakers. Biden hopes to pass an infrastructure plan by summer, which could mean relying solely on the slim Democratic majorities in the House and the Senate.
The higher corporate taxes would aim to raise the necessary piles of money over 15 years and then reduce the deficit going forward. In doing so, Biden would undo the 2017 tax overhaul by President Donald Trump and congressional Republicans and lift the corporate tax rate to 28 percent from the 21 percent rate.
“Ninety-one Fortune 500 Companies, including Amazon, pay not a single solitary penny in income tax,” Biden said.
Wednesday’s announcement will be followed in coming weeks by Biden pushing a companion bill of roughly equal size for investments in child care, family tax credits and other domestic programs. That nearly $2 trillion package would be paid for by tax hikes on the wealthy.
Biden’s choice of Pittsburgh for unveiling the plan carried important economic and political resonance. He not only won Pittsburgh and its surrounding county to help secure the presidency, but he launched his campaign there in 2019. The city famed for steel mills that powered America’s industrial rise has steadily pivoted toward technology and health care, drawing in college graduates in a sign of how economies can change.
The White House says the largest chunk of the proposal includes $621 billion for roads, bridges, public transit, electric vehicle charging stations and other transportation infrastructure. The spending would push the country away from internal combustion engines that the auto industry views as increasingly antiquated technology.
An additional $111 billion would go to replace lead water pipes and upgrade sewers. Broadband internet would blanket the country for $100 billion. Separately, $100 billion would upgrade the power grid to deliver clean electricity. Homes would get retrofitted, schools modernized, workers trained and hospitals renovated under the plan, which also seeks to strengthen U.S. manufacturing.
The new construction could keep the economy running hot, coming on the heels of Biden’s $1.9 trillion coronavirus relief package. Economists already estimate it could push growth above 6 percent this year. THIS IS LONG OVERDUE
The American Society of Civil Engineers gives the United States a “C-minus” grade for infrastructure, noting that nearly 4 in 10 bridges are more than a half-century old and that a water main ruptures every two minutes. In most communities across the nation, people can quickly point to roads, bridges, pipes, ports and airports that look dated — and dangerous.
MORE THAN ROADS, BRIDGES
About half of President Joe Biden’s plan goes toward traditional infrastructure. He calls for about $620 billion for the roads, ports and bridges, including about $100 billion to bring high-speed internet to all Americans. There’s another $111 billion to replace antiquated lead pipes to make drinking water safer, and $100 billion for retraining so workers can get higher-skilled jobs.
The other half of the bill makes investments to reduce climate change and modernize schools, manufacturing hubs and eldercare facilities. The White House argues these should also be viewed as critical infrastructure, but others see them as partisan Democratic priorities. This second $1 trillion in spending is where much of the debate is going to focus. 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.
For example, the proposal calls for $400 billion for housing for the elderly and disabled, more than $200 billion to upgrade public housing and low-income homes, and $100 billion for retrofitting schools. Then there’s a big investment in clean energy and climate change research and $50 billion for U.S. semiconductor manufacturing. Biden also wants to include the Protecting the Right to Organize Act, which would make it easier for workers to organize unions.
HIGHER TAXES FOR COMPANIES
To fund his $2 trillion-plus plan, Biden is asking companies to pay up. Trump enacted the largest corporate tax cut in U.S. history, slashing the business tax rate from 35 percent to 21 percent. Biden wants to increase it to 28 percent. The plan also calls for ensuring companies pay at least some taxes by imposing a 15 percent minimum tax on income and by taxing some foreign income of large global corporations to discourage them from moving operations overseas to tax havens.
FUZZY MATH
The White House is already getting criticized for portraying this as a plan that is “paid for” by tax increases when the numbers do not add up.
The proposal calls for about $2.3 trillion in spending over eight years, yet it would take 15 years for the proposed tax increases to generate that amount of money. That’s not how budgeting normally works.
The standard way to look at spending like this is to add up how much it costs over a decade and how much of that cost is paid for over the same 10-year window. The proposed tax hikes generate about $1.5 trillion over a decade, meaning this plan would add close to $1 trillion to the U.S. debt.
WELL-PAYING JOBS
The U.S. still has nearly 10 million people out of work — more than the worst days of the Great Recession. While many economists predict a boom this summer as most Americans get vaccinated and start traveling and dining again, there are likely to be people left behind. This infrastructure bill is widely expected to create a lot of well-paying jobs. The typical wage for a construction job is close to $30 an hour, according to the Labor Department, which is significantly higher than the median pay of $19 an hour for all U.S. jobs.
Biden is haunted by the “jobless recovery” that occurred after the Great Recession, after which it took nearly a decade to get everyone back to work. It’s why he wanted the large pandemic relief package that passed this month. This infrastructure package is another effort to ensure that jobs return quickly.
The $2 trillion infrastructure package would pump money into the economy for years to come, helping provide an extra boost to jobs and the economy throughout Biden’s first term.