Will plan’s spending supersize growth?

If you didn’t have the time or the energy to dive into the Biden Administration’s $2.3 trillion American Jobs Plan (AJP), fear not — I have you covered.

The plan seeks “to reimagine and rebuild a new economy” by deploying government money in four areas:

1. Classic Infrastructure: Roads, rails, bridges and transit systems ($621B)

2. Home Economy: Water ($111B), child care facilities ($25B), schools ($100B), federal buildings ($10B), broadband ($100B), affordable housing ($213B)

3. Caregiving Economy: To help the nation’s elderly and disabled ($400B)

4. Workplace Economy: R&D ($180B), manufacturing and small businesses ($300B) and workforce development ($100B)

The rationale for infrastructure spending is that the country needs an upgrade to many of its systems. The White House notes that “public domestic investment as a share of the economy has fallen by more than 40% since the 1960s,” which is why the wealthiest country in the world ranks 13th when it comes to the overall quality of our infrastructure.

The AJP makes the leap from physical infrastructure to “human infrastructure” when it adds in money allocated to the caregiving economy. Human infrastructure is a term that has been coined to cover government spending on health, education, and nutrition. The best example of it was the postwar GI Bill, which helped millions of WWII veterans access college or trade schools, provided low-interest mortgages, and established medical care and hospitals for veterans.

Spending on infrastructure would be spread out over eight years, but it would be paid for over 15 years, through higher taxes on corporations. The plan would increase the corporate tax rate to 28%, a walk back of the previous 2017 tax law that slashed corporate rates from 35% to 21%. Additional changes include imposing a 15% minimum tax on large companies (those with income above $2 billion), doubling the tax rate on companies’ foreign earnings from 10.5% to 21%, and the establishment of a global minimum tax to stop companies from taking advantage of lower tax rates abroad.

In addition to making up for the lack of investment over the past decades, the other promise of the AJP is that “it will create millions of good jobs.” While the plan may add a bunch of jobs, the U.S. labor market is already on track to recover its former glory. According to Moody’s Analytics, the AJP would help the labor market return to its pre-pandemic level by early 2023, “not much different than without the plan.” The reason is that it would likely take a couple of years for government spending to boost growth and lead to more jobs.

The government’s investments in infrastructure will add more juice to the economy over the next few years, but estimates are all over the place for just how much of a boost the plan would provide. In fact, the economy was set to explode higher this year, before the AJP. In its most recent outlook, the IMF made “a sizeable upgrade for the United States (1.3 percentage points),” predicting growth to come in at 6.4% this year. That comes