President Joe Biden on Wednesday outlined a $2.3 trillion US plan to re-engineer the nation’s infrastructure over the next eight years in what he billed as “a once in a generation investment in America” that would undo his predecessor’s signature legislative achievement of giant tax cuts for corporations in the process.
Speaking at a carpenters union training centre 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.
Corporate tax hikes on the way
Funding for the infrastructure projects would come from a hike on corporate taxes that 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 action by Trump and congressional Republicans that set the corporate tax rate at 21 per cent in a 2017 overhaul. Biden’s proposal would lift the rate to 28 per cent.
“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 wealthy individuals and families.
“Wall Street didn’t build this country,” Biden said. “You, the great middle class, built this country. And unions built the middle class.”
Pittsburgh symbolic choice for announcement
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 higher corporate taxes needed to finance the Democratic president’s infrastructure projects could lead to fierce resistance from the business community and thwart attempts to work with Republicans 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.
Major focus on transportation
The White House says the largest chunk of the proposal includes $621 billion US 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 an 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.
Tax-code changes to tighten loopholes
Economists already estimate it could push growth above six per cent this year.
To keep companies from shifting profits overseas to avoid taxation, a 21 per cent global minimum tax would be imposed.
The tax code would also be updated so that companies could not merge with a foreign business and avoid taxes by moving their headquarters to a tax haven.
Among other provisions, it would also increase Internal Revenue Service audits of corporations.
Biden appealed for Republicans and the business community to join him in negotiations on the bill, but the legislative prospects for his twin proposals already appear to hinge on Democrats coming up with the votes on their own through the budget reconciliation process, which requires just a simple majority in the 50-50 Senate.