Explained: Biden’s Infrastructure Bill
Dear Rich Lifer,
Last Wednesday, President Joe Biden gave a speech in Pittsburg outlining his $2.3 trillion infrastructure plan.
The proposal would make major investments in the nation’s infrastructure and includes tax increases on corporations, something strictly opposed by Republicans.
The plan is headed to Capitol Hill, and today we will answer the biggest questions about what is in the bill and the challenges it faces in passing in the House and Senate.
Most of the money in the plan — $621 billion — will go toward upgrading roads, bridges, and other surface transportation. According to the White House, this funding would modernize 20,000 miles of road and fix hundreds of bridges.
Of this $621 billion, $85 billion would go toward mass-transit, and $80 billion would deal with Amtrak’s repair backlog. $25 billion would be spent on airports, and $17 billion would be used for ports, waterways and ferries.
There is also a large portion of the bill that sets money aside for other infrastructure projects, including replacing all the led pipes in the country ($111 billion) and expanding broadband internet, especially in rural communities ($100 billion).
Climate Change Efforts
The White House also seeks to address the issue of climate change with this bill by including several provisions that are targeted at reducing carbon emissions in the U.S.
The plan invests $174 billion in electric vehicles, offers tax incentives to consumers who buy these types of vehicles, and proposes new grants and incentive programs to build 500,000 electrical-vehicle charging stations by 2030.
There is also a move to shift the federal fleet — including the Postal Service — to all electric vehicles. The plan also mandates that federal buildings only use clean energy sources.
Regarding the electrical grid, the plan calls for $100 billion in new investments, incentivizes constructing higher voltage capacity lines and expands tax credits for producing clean energy.
There is also a plan to create a national electricity standard that would move the U.S. to carbon-free electricity by 2035.
Another goal is to build and retrofit over a million homes, making them more energy-efficient — $200 billion in funding is allotted for this task.
Manufacturing, Research and Development, and Workforce Issues
Hundreds of billions will be invested in manufacturing, workforce development, and research and development. The White House asks for $180 billion to be invested in research and development. Some projects would include research on semiconductors and advanced computing and efforts to spur job creation in rural areas.
$300 billion is proposed to focus solely on manufacturing and would include measures to mitigate damage from future pandemics, strengthen semiconductor production and support domestic manufacturers.
More than $100 billion would fund workforce development programs, such as a new program to train workers to find jobs in the clean energy, manufacturing and caregiving industries.
Many of these investments come with conditions that the workers on such projects earn a high wage and receive labor protections. Legislation in the plan would establish penalties on employers who violate the National Labor Relations Act and make it easier for gig workers to form unions.
The plan provides a large sum — $400 billion — for caring for elderly and disabled Americans by expanding Medicaid to cover long-term care services.
$137 billion is proposed for education funding, including $100 billion toward upgrading and building new public schools and $25 billion to expand access to child care.
Along with spending, the plan also includes tax increases, one of which is raising the corporate tax rate to 28% from 21% and tightening a series of international tax rules.
According to the White House, these tax increases would pay for the entire plan over 15 years. And that’s the big difference between this $2.3 trillion bill and the $1.9 trillion pandemic relief package that was passed earlier this year. The stimulus package was paid for by “printed money” — simply running up the deficit. The infrastructure bill should be paid for by existing, circulating money.
Important to note, the plan does not call for raising any individual taxes, and even the corporate income tax hike doesn’t go as high as the pre-TCJA level of 35%.
Future legislation may increase the top marginal income-tax rate and raise taxes on capital gains, but this specific plan has no calls to do so. Increasing the gas tax is also not proposed in this plan.
The Battle to Passage
Getting this plan passed will not be easy. Many Republicans had already stated corporate tax increases would be a nonstarter and if Democrats try to pass the effort without any Republican support, its scope will likely be limited by Senate rules, which constrain which types of legislation may pass with a simple majority.
This budgetary process, known as reconciliation, was used to pass the most recent coronavirus relief bill, but it can only be used a limited number of times a year and requires lawmakers to only approve measures related to the budget.
Currently, Democrats only have one more allowance to pass a package through reconciliation, so there would be a lot of pressure on this bill.
The scope of this bill is huge — think FDR’s New Deal huge — and Biden would much rather go down in history with at least some bipartisan support. But that’s a tall order in today’s political environment.
Mr. Biden has said he will attempt to court GOP support and reach out to Republicans, but his work is certainly cut out for him. Senate Minority Leader Mitch McConnell stated, “I’m going to fight them every step of the way because I think this is the wrong prescription for America.”
Some Republicans are more open to negotiation, like Missouri Rep. Sam Graves, who commented, “If they can work with us and compromise, then there’s absolutely a path forward.”
There is currently no pressing deadline to get the bill pass by, although House Speaker Nancy Pelosi has said July 4 would be the tentative goal. The White House has said they would like the bill passed by summer.
“We’ve got a little bit more time here to work and have discussions with members of both parties,” White House press secretary Jen Psaki said Thursday.
At his first cabinet meeting on Thursday, Mr. Biden tapped five cabinet secretaries, including Transportation Secretary Pete Buttigieg and Energy Secretary Jennifer Granholm to oversee the plan and negotiate with Congress.
The proposed plan will serve as the general framework that lawmakers must translate into legislation.
Let the negotiations begin…
To a richer life,
The Rich Life Roadmap Team