April 1, 2021

President Biden Unveils Sweeping $2.25 Trillion Infrastructure Plan

In a March 31 speech, President Joe Biden unveiled the framework for a wide-ranging infrastructure proposal that would fulfill a range of promises that he made during the campaign. The so-called American Jobs Plan, part of the administration’s Build Back Better initiative, would invest $2.25 trillion over the next eight years in transportation, renewable energy, manufacturing, and efforts to combat climate change.

It should be noted that the president is expected to announce a second round of initiatives later this month that will focus on human infrastructure. The second package, which could cost upwards of $1 trillion, will address health care costs, expand child care, and increase access to paid leave, among other things.

The cost of the American Jobs Plan would be offset through a series of corporate tax reforms. For starters, the White House has proposed increasing the corporate income tax to 28 percent (up from 21 percent) and imposing a 15 percent minimum tax on income reported to shareholders by large corporations. It also seeks a minimum tax on profits that U.S. corporations earn overseas, increasing the rate to 21 percent (up from approximately 13 percent). The administration would also eliminate deductions for expenses related to offshore jobs and tax incentives for foreign-derived intangible income. According to the White House, these changes – along with increased Internal Revenue Service (IRS) enforcement of corporate tax laws – would fully pay for the plan within 15 years.

While the president’s infrastructure proposal was generally well-received by Democratic lawmakers, it drew criticism from congressional Republicans and progressive Democrats. For their part, GOP leaders have stated their belief that the package is too broad and overly partisan. However, their main concern is that it would roll back the corporate tax cuts that were included in Trump’s signature tax reform law (PL 115-97). At the same time, a number of progressive Democrats believe the package does not go far enough in providing investments in clean energy. With little margin for error in both chambers, it could prove more difficult to enact the American Jobs Plan than the $1.9 trillion COVID-19 relief Act (PL 117-2).

In addition, the competing pressures could force Democratic leaders to split the package into two or more pieces of legislation that may ultimately differ significantly from the administration’s plan. Some parts will need Republican support to make it through the Senate, while other provisions could advance through the budget reconciliation process, which would allow Democrats to bypass the need for Republican votes.

Despite the aforementioned challenges, House Speaker Nancy Pelosi (D-CA) has set an ambitious goal of July 4 for the legislation to clear the lower chamber. If the House does, in fact, meet this deadline, the Senate could begin consideration of the bill sometime in mid-July.

Highlighted below are some of the key elements of the American Jobs Plan.

Transportation Infrastructure and Resilience

The plan would invest $620 billion in the transportation sector, including $115 billion to upgrade 20,000 miles of highways and roads, the ten most “economically significant” bridges in the country, and 10,000 smaller bridges – particularly those that provide critical connections to rural and tribal communities. The proposal also includes $85 billion for transit, $80 billion for rail, $25 billion for airports, $20 billion for road safety, and $17 billion for ports, inland waterways, and ferries. President Biden also is calling on Congress to provide $20 billion for transportation projects targeted toward disadvantaged communities, as well as $25 billion to support large-scale projects.

In addition, the plan would dedicate $174 billion to increase the U.S. market share of plug-in electric vehicle (EV) sales and increase the domestic supply of EVs. Specifically, the administration would incentivize the purchase of American-made EVs by giving consumers point-of-sale rebates and other tax benefits. The plan would also provide grants to state and local governments, as well as the private sector, to build a network of 500,000 charging stations by 2030. Some of the funding would also be set aside to replace diesel transit vehicles, as well as to electrify school buses and federal vehicles.

The president is also calling for $50 billion in dedicated investments to improve infrastructure resilience, with the investments targeted to the most vulnerable communities. The funding would be provided through a range of new initiatives and existing programs – including FEMA’s Building Resilient Infrastructure and Communities (BRIC) program and the Community Development Block Grant (CDBG) program. Among other things, President Biden has specifically called on Congress to invest in resilience to extreme wildfires, sea-level rise, and drought.

Clean Drinking Water Infrastructure, Broadband, and a More Resilient Electric Grid

Water Infrastructure

The American Jobs Plan would provide $111 billion to improve water infrastructure, including $56 billion in grants and low-cost loans to states, tribes, and disadvantaged communities to improve water systems, $45 billion to replace lead water pipes nationwide, and $10 billion to monitor and remediate contamination by per- and polyfluoroalkyl substances (PFAS) – also called “forever chemicals” – and for rural water systems.

Broadband

President Biden’s plan proposes $100 billion for broadband infrastructure improvements. The investment would help expand high-speed broadband internet access to unserved and underserved communities. It also prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives. Additionally, the plan includes measures to make pricing more transparent and competitive and includes short-term subsidies for low-income households.

Power Infrastructure

The plan includes $100 billion to build a more resilient electric grid and for initiatives to expand renewable energy production, with a goal of achieving 100 percent carbon-free electricity by 2035. Among other things, this funding includes $5 billion for the remediation and redevelopment of Brownfield and Superfund sites, as well as related economic and workforce development. The proposal also would dedicate $10 billion for a new Civilian Climate Corps that would be responsible for conserving the nation’s public lands and waters, bolstering community resilience, and advancing environmental justice.

Housing, School, VA Hospitals, and Federal Building Infrastructure

Housing

The president’s plan calls for investing $213 billion to produce, preserve, and retrofit more than two million affordable and sustainable homes. The initiative would create or renovate more than one million affordable housing units, using targeted tax credits, grants, and project-based rental assistance. The administration also proposes building and rehabilitating more than 500,000 homes for low- and middle-income homebuyers by urging Congress to adopt legislation (S 98) that would offer $20 billion worth of tax credits over five years.

President Biden also called upon Congress to invest $40 billion to improve the infrastructure of the nation’s public housing. Finally, the package proposes to “eliminate exclusionary zoning and harmful land-use policies,” asserting that zoning laws – such as minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing – have increased construction costs and locked some families out of communities. To incentivize zoning changes, the plan calls on Congress to enact a competitive grant program to award flexible and attractive funding to jurisdictions to eliminate zoning barriers for affordable housing.

Schools

The plan includes $100 billion to improve public school buildings, with $50 billion in direct grants and an additional $50 billion leveraged through bonds. Funds would be used to improve safety and health, invest in energy-efficient and innovative buildings, and upgrade school kitchens.

Child Care

The American Jobs Plan proposes to invest $25 billion to upgrade child care facilities and increase child care slots in high need areas. Funding would be provided through a Child Care Growth and Innovation Fund for states to increase the supply of child care. The Plan also proposes an expanded tax credit to encourage businesses to build child care facilities at places of work. Employers would receive a 50 percent tax credit of the first $1 million of construction costs per facility.

Community Colleges

The plan calls for $12 billion for community-college facilities and technology. States would be responsible for using the funding to address both existing physical and technological infrastructure needs and identifying strategies to address access to community college in education deserts.

VA Hospitals and Federal Buildings

The president’s plan proposes $18 billion for the modernization of Veterans Affairs hospitals and clinics. It would also invest $10 billion in the modernization, sustainability, and resilience of federal buildings.

Home and Community-Based Services

The American Jobs Plan would provide $400 billion toward expanding access to quality, affordable home- or community-based care for aging relatives and people with disabilities. Funding would expand access to services under Medicaid and extend the federal Money Follows the Person program which enables Medicaid-eligible persons to receive appropriate and necessary long-term services and supports in the setting of their choice. The initiative would support well-paying caregiving jobs that include benefits and the ability to collectively bargain.

R&D, Manufacturing and Small Business

Research and Development

The American Jobs Act calls for $180 billion to upgrade the country’s research infrastructure and labs at universities and federal agencies. The funding would also be directed toward climate-focused research and addressing gender and racial inequalities in the science, math and technology fields. It should be noted that $30 billion would be dedicated to creating jobs in rural areas.

Manufacturing

The plan would provide $300 billion for an initiative to boost American manufacturing, including $50 billion in semiconductor manufacturing and research; $50 billion for the National Science Foundation to create a technology directorate; and, $50 billion to create a new office at the Department of Commerce dedicated to monitoring domestic industrial capacity and funding investments to support the production of critical goods.

Small Business

The proposal requests $31 billion for programs that would focus on access to credit, venture capital, and research and development funding for small businesses. It also includes funding for small business incubators and innovation hubs to support entrepreneurship in communities of color and underserved communities. As part of the plan, President Biden is proposing a $5 billion for a new Rural Partnership Program to support locally-led planning and capacity initiatives in rural and tribal communities.

Workforce Development

The American Jobs Act includes $100 billion for workforce-development programs, including training for those who have lost their jobs, as well as apprenticeship initiatives.

The plan would invest $100 billion in workforce development programs targeted at underserved groups and high school students before they graduate. Included in the proposal is a new $40 billion dislocated workers program that would provide wrap-around services, income supports, counseling, and case management, paired with training and partnerships between educational institutions, unions, and employers. In addition, $12 billion would target individuals who were formerly incarcerated and justice-involved youth. The plan also proposes a new subsidized jobs program, though no additional details have been provided. Finally, President Biden would allocate $48 billion to build the capacity of the existing workforce development and worker protection systems, including creating one to two million new registered apprenticeships slots.