Biden preparing to spend up to $3T to boost economy
Goals: Narrow inequality, reduce carbon emissions, aid manufacturing, tech
WASHINGTON >> President Joe Biden’s economic advisers are preparing to recommend spending as much as $3 trillion on a sweeping set of efforts aimed at boosting the economy, reducing carbon emissions and narrowing economic inequality, beginning with a giant infrastructure plan that may be financed in part through tax increases on corporations and the rich.
After months of internal debate, Biden’s advisers are expected to present a proposal to the president this week that recommends carving his economic agenda into separate legislative pieces, rather than trying to push a mammoth package through Congress, according to people familiar with the plans and to documents obtained by The New York Times.
The total new spending in the plans would likely be $3 trillion, a person familiar with them said. That figure does not include the cost of extending new temporary tax cuts meant to fight poverty, which could reach hundreds of billions of dollars, according to estimates prepared by administration officials. Officials have not yet determined the exact breakdown in cost between the two packages.
Biden supports all of the individual spending and tax cut proposals under consideration, but it is unclear whether he will back splitting his agenda into pieces, or what legislative strategy he and Democratic leaders will pursue to maximize the chances of pushing the new programs through Congress given their narrow majorities in both chambers.
Administration officials caution that details of the spending programs remain in flux. But the scope of the proposal under consideration highlights the aggressive approach the Biden administration wants to take as it tries to harness the power of the federal government to narrow economic inequality, reduce the carbon emissions that drive climate change, and improve American manufacturing and high-technology industries in an escalating battle with China and other foreign competitors.
While the $1.9 trillion economic aid package that Biden signed into law earlier this month includes money to help vulnerable people and businesses survive until the pandemic ends, it does little to advance the longer-term economic agenda that Biden campaigned on.
The package under consideration would begin that effort in earnest. The first legislative piece under discussion, which some Biden officials consider more appealing to Republicans, business leaders and many moderate Senate Democrats, would combine investments in manufacturing and advanced industries with what would be the most aggressive spending yet by the United States to reduce carbon emissions and combat climate change.
It would spend heavily on infrastructure improvements, clean energy deployment and the development of other “high-growth industries of the future” like 5G telecommunications. It includes money for rural broadband, advanced training for millions of workers and 1 million affordable and energy-efficient housing units. Documents suggest it will include nearly $1 trillion in spending alone on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations and improvements to the electric grid and other parts of the power sector.
Whether it can muster Republican support will depend in large part on how the bill is paid for.
Officials have discussed offsetting some or all of the infrastructure spending by raising taxes on corporations, including increasing the corporate income tax rate above the current 21% rate and a variety of measures to force multinational corporations to pay more tax in the United States on income they earn abroad. That strategy is unlikely to garner Republican votes.
“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” Sen. Mitch McConnell of Kentucky, the Republican leader, told reporters last week. He predicted the administration’s infrastructure plan would be a “Trojan horse” for tax increases.
Biden’s team has debated the merits of aggressively pursuing compromise with Republicans and business leaders on an infrastructure package, which would most likely require dropping or scaling back plans to raise taxes on corporations, or preparing to move another sweeping bill through a special parliamentary process that would require only Democratic votes. Biden’s advisers plan to present the proposal to congressional leaders this week.
“President Biden and his team are considering a range of potential options for how to invest in working families and reform our tax code so it rewards work, not wealth,” said Jen Psaki, the White House press secretary. “Those conversations are ongoing, so any speculation about future economic proposals is premature and not a reflection of the White House’s thinking.”
Biden’s broader economic agenda will face a more difficult road in Congress than his relief bill, which was financed entirely by federal borrowing and passed using a special parliamentary tactic with only Democratic votes. Biden could again attempt to use that same budget reconciliation process to pass a bill on party lines. But moderate Democrats in the Senate have insisted that the president engage Republicans on the next wave of economic legislation, and that the new spending be offset by tax increases.
Large business groups and some congressional Republicans have expressed support for some of Biden’s broad goals, most notably efforts to rebuild roads, bridges, water and sewer systems and other infrastructure across the country.