President Joe Biden is preparing to announce Wednesday the first half of his major infrastructure and jobs proposal during a visit to Pittsburgh. This bill, which includes major investments in utilities, transportation, and green energy, is expected to cost at least $2 trillion and will complement another bill (to be announced at a later date) on welfare and social issues, an area which the administration calls “human infrastructure.”
The president is about to embark on his second major legislative proposal just weeks after Congress passed a major $1.9 trillion COVID-19 relief bill without any Republican support. The scale of Biden’s total infrastructure and jobs proposal, which he has chosen to split up into two bills—one focusing on physical infrastructures like transportation and utilities and one focusing on welfare, spending, aid, and credits—is unlike anything ever seen before in recent history. Together, the bills are expected to cost anywhere between $3 trillion and $4 trillion.
In an afternoon speech in Pittsburgh, Biden will unveil the first of the two bills, with an estimated cost of at least $2 trillion. This part of his bill will include a far-reaching range of investments in America’s roads and highways, mass transit, electric vehicle charging networks, upgrades to utilities including water and electricity, major tax credits for clean energy, improvements to housing, and money for caretakers and care for the elderly and impaired.
According to a person with direct knowledge of the plan, $625 billion will be allocated for physical infrastructures like highways, railroads, transit, ports, electric vehicle infrastructure, and bridges, $300 billion each for housing, manufacturing, and electricity, $400 billion each for caregivers and in clean energy tax credits, and tens, if not hundreds, of billions of dollars for veterans, federal government infrastructure, rural broadband expansion, utilities, worker training, veterans’ hospital upgrades, and lots more, to be spent over a period of eight years.
The second bill is expected to contain provisions like mandatory paid time off, major reductions in the cost of child care, massive aid packages to the poor, large tax credits, increased state and local tax deductions (also known as SALT deductions) by repealing the cap Republicans placed on SALT deductions in the Tax Cuts and Jobs Act of 2017, and even potentially reducing the age to qualify for Medicare to 55 or 60.
The set of bills is also expected to help the United States better compete against competitors such as China, by investing money in areas the U.S. has been falling behind in like semiconductors and batteries.
The proposals to have the federal government spend money on the magnitude of trillions of dollars is a far cry from the Obama administration when Biden served as vice president. For example, the American Recovery and Reinvestment Act of 2009, a stimulus bill passed in a Democratic Congress in the wake of the 2009 financial crisis, was only worth $900 billion. Biden and many aides now believe that the package was intentionally kept small to please Republicans, and the under-spending in stimulus likely contributed to the party losing badly in the 2010 midterms. Economists now generally believe that ARRA was too small and did too little to help the struggling American economy. In addition, the progressive wing of the Democratic Party, which has only gotten more influential over the years, has been calling for more government spending for years.
Biden intends to pay for these massive spending bills by increasing corporate taxes substantially. Due to the scale of the proposal, it will require 15 years of higher corporate taxes to pay for eight years of spending. For the first phase of the infrastructure proposal, Biden intends to raise to corporate tax rate from 21 percent to 28 percent and find ways to force large, multinational corporations to pay significantly more in taxes by patching up loopholes. The new corporate tax rate will still be seven percent lower than before President Trump took office, as he decreased the rate from 35 to 21 percent.
Proposals to pay for the second phase include raising the maximum income tax rate for high-earning individuals from 37 percent to 39.6 percent, and other plans thrown around including making Medicare negotiate cheaper prescription drug prices, which could save hundreds of billions of dollars in the long-run.
An infrastructure overhaul at this big of a scale would likely have been dead had it been introduced at any other time. Its massive price tag, orders of magnitude higher than other packages passed by Congress would have scared off Republicans already. But with the COVID-19 pandemic as well as the general leftward shift of the country, and Trump helping break apart the longstanding conservative notion of small government and no spending, it may have a chance in a Congress where Democrats hold narrow majorities in both houses.
If the bill manages to pass in its current form, which Biden is hoping to do by summer, it would represent one of the largest overhauls to American infrastructure in modern history, potentially even being on the same level as the Interstate Highway System created back in 1956.
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