On Wednesday, March 31, the Biden Administration unveiled the “American Jobs Plan,” a proposed $2.25 trillion package making investments primarily in physical infrastructure like roads, bridges, and broadband internet. Congressional leaders will begin drafting legislation reflecting its vision in the coming weeks, with the goal of passage by the summer.
What It Means
President Biden made clear that his Administration’s first priority was addressing the COVID-19 pandemic – both combating the pandemic itself and providing economic relief for the American people. Congress passed the $1.9 trillion American Rescue Plan Act earlier this month, fulfilling Biden’s call for action on that issue.
With Congressional action on COVID complete (for the time being, at least), President Biden has called for Congress to pivot to investment in a national infrastructure package.
Biden discussed the need for investment in infrastructure during the campaign (see campaign website). In doing so, Biden stressed a number of themes:
- Investing in the domestic supply chain and the domestic manufacturing base
- Developing “good, union jobs that expand the middle class”
- Focusing on racial equity across the economy (see campaign website)
- Clean energy and energy efficiency
On Wednesay, March 31, President Biden unveiled the first of two parts of his infrastructure plan – The American Jobs Plan.
In the coming weeks, we expect President Biden to introduce a complimentary plan with proposals focused on more issues like childcare, health care, and college affordability (referred to by the Democratic leadership as “soft infrastructure” or “human infrastructure”).
For more on framing – read the introductory remarks on the Administration’s press call.
American Jobs Plan
Below, find a nuts-and-bolts summary of what President Biden announced. The fact sheet the White House provided includes significantly more narrative and details.
In reviewing the longer summary provided by the White House, consider key themes addressed throughout, which tie back to issues raised during the campaign:
- Focus on unions and “good-paying” jobs – The Administration is clear that this package is not just intended to create jobs, but to create union jobs with benefits. To that end, the Administration is asking Congress to tie federal dollars to labor protections and wage standards. Per the fact sheet: “tie federal investments in clean energy and infrastructure to prevailing wages and require transportation investments to meet existing transit labor protections.”
- Racial equity – Materials from the White House repeatedly discuss racial equity and injustice, including how particular investments tie back to that goal.
- Transportation Infrastructure
- Roads and bridges – $115 billion, including $20 billion to improve road safety.
- Public transit – $85 billion
- Passenger and freight rail service – $80 billion
- Electric vehicles – $174 billion – includes development of manufacturing capacity, point of sale rebates and tax incentives for American-made vehicles, grant and incentive programs for state and local governments, and other provisions.
- Airports – $25 billion
- Inland waterways, coastal ports, land ports of entry – $17 billion
- Projects to address racial equity – $20 billion
- Large projects without clear funding sources – $25 billion
- Improve infrastructure resilience – $50 billion
- Water, Electric Grid, and Broadband Infrastructure
- Drinking water – $111 billion – includes replacing 100% of nation’s lead pipes and service lines
- Broader water systems – $56 billion – includes wastewater and stormwater systems
- Broadband – $100 billion – includes support for broadband networks owned by local governments, non-profits, and co-ops; requirements for private providers to disclose prices
- Power – $100 billion
- investment tax credit for new high voltage capacity power lines
- investment tax credit and production tax credit for clean energy generation and storage
- plugging orphan oil and gas wells
- cleaning abandoned mines
- revitalization of idle property, including Brownfield and Superfund sites
- Build/Renovate Buildings
- Affordable housing – $213 billion – includes the Neighborhood Homes Investment Act, which offers $20 billion in tax credits over the next five years resulting in 500,000 homes built or rehabilitated
- Public school buildings – $100 billion – split between direct grants and bonds
- Community college infrastructure – $12 billion
- Childcare facilities – $25 billion
- VA hospitals and clinics – $18 billion
- Federal buildings – $10 billion
- Home Care – $400 billion
- Innovation and Research & Development Infrastructure
- National Science Foundation – $50 billion
- Upgrade research infrastructure – $40 billion – half of which is reserved for Historically Black College and Universities (HBCUs)
- Climate science and innovation – $35 billion – includes launching Advanced Research Projects Agency-Climate (ARPA-C), and $15 billion in demonstration projects
- Investments at HBCUs and Minority Serving Institutions – $10 billion in Research and Development, $15 billion to create centers of excellence to serve as research incubators
- Semiconductor manufacturing and research – $50 billion
- New office at Department of Commerce to track domestic manufacturing capacity – $50 billion
- Pandemic preparedness – $30 billion – includes medical countermeasure manufacturing, research and development, investments in the Strategic National Stockpile
- Regional innovation hubs/Community Revitalization Fund – $20 billion
- Domestic manufacturing capacity – $52 billion
- Small business incubators/innovation hugs – $31 billion – includes access to credit, venture capital, and R&D funding
- Workforce development programs – $100 billion
- Employment/Benefit Provisions
- Support for the Protecting the Right to Organize (PRO) Act, legislation that would expand labor protections and change the process for union representation elections.
- Increased enforcement of worker protections related to health and safety, equal pay, and harassment and discrimination – $10 billion – includes increased penalties when employers violate workplace safety and health rules
- Tax Changes – the “Made in America Tax Plan” – The plan proposes a number of changes to the tax code, with an emphasis on removing incentives and creating disincentives for companies that move operations and investments overseas.
- Change the corporate tax rate to 28%
- Changes to the Global Minimum Tax for US Multinational Corporations – increase the minimum tax on US Corporations to 21%, and calculate the minimum on a country-by-country basis
- Eliminate the rule allowing US companies “to pay zero taxes on the first 10% of return when they locate investments in foreign countries”
- Reinforce commitment to a global minimum tax to disincent companies from inverting their headquarters to foreign countries
- Change process for companies to move headquarters oversees to disincent inversions
- Deny expense deductions for activities associated with offshoring jobs, while crediting expenses for onshoring
- Elimination of incentives for Foreign Derived Intangible Income (FDII)
- Minimum 15% tax on large corporations’ book income
- Eliminate tax benefits/preferences for fossil fuels
- Enhanced enforcement of current tax code
What It Means for You
Nothing is certain at this juncture. The announcement was a plan, not legislative text, nor a bill passed into law. While the Democratic caucus is eager to take on federal infrastructure spending, we shouldn’t jump to the conclusion anything announced will become reality.
The good news – the Administration is looking to spend, and the Congress may just put them in a position to do it. Much of the prescribed spending was predictable – roads, highways, bridges, pipes are all part of traditional federal infrastructure packages. However, the Plan also calls for significant investments in broadband infrastructure, research and development, and other provisions that could create opportunities for a broader swath of the economy.
The less good news – the tax section. The Administration’s reforms are intended to raise revenue – which would mean significant new tax obligations for the private sector, obviously varying by the nature of your structure.
It will also be important to watch what restrictions the Administration will put on any federal spending. The Administration’s repeated focus on the need for unions and good-paying jobs suggest that there could be strings attached to the funding going out the door.
As referenced in the intro, the Administration has indicated an additional “infrastructure” package will be forthcoming next month. That package is expected to deal more with consumer-focused issues like childcare and health care.
However, the real question is Congress. Democratic leadership impressed many observers by keeping the caucus together to pass the American Rescue Plan Act earlier this year – a sizable package of legislation. What the President announced would undoubtedly be a monumental test for that same leadership.
Keep in mind – Congress has some must-dos this year. Namely, funding for the government expires October 1 (as it does every year), and Congress has done little to begin the process of preparing federal appropriations legislation. That’s an awful lot of gum to chew while “walking” on an infrastructure bill.