WASHINGTON – After President Joe Biden outlined a huge $2.3 trillion plan Wednesday to reengineer the nation’s infrastructure in what he billed as “a once-in-a-generation investment in America,” News4Jax political analyst Rick Mullaney said bipartisan support will be hard to come by but no impossible for the proposal.
“If you break it down, there is an opportunity for bipartisan support in three categories. One is traditional infrastructure, capital spending on roads, bridges, highways, electrical grids, water, even broadband. That’s about $600 billion, and that has Republican and Democratic support,” Mullaney said.
The other areas he focused on were climate and green energy and the controversial $400 billion home care aspect of the plan.
“This may be good public policy, but it is not infrastructure,” Mullaney said.
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.
The Democratic president’s infrastructure projects would be financed by higher corporate taxes — a trade-off that could lead to fierce resistance from the business community and thwart attempts to work with Republican 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.
The higher corporate taxes 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 2017 tax overhaul by President Donald Trump and congressional Republicans and lift the corporate tax rate to 28% from the 21% rate.
“Ninety-one Fortune 500 Companies, including Amazon, pay not a single solitary penny in income tax,” Biden said.
Mullaney said that approach is definitely seeing some resistance from the business community and Republicans.
“The response on that from the business side and from Republicans is that that increase in the corporate tax rate is going to result in higher prices, it’s going to result in them being less competitive economically and that there’s ‘no free lunch here.’ So you’re going to see a disagreement on that proposal when it comes to taxes,” Mullaney 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.”
The White House says the largest chunk of the proposal includes $621 billion 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 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. Economists already estimate it could push growth above 6% this year.
To keep companies from shifting profits overseas to avoid taxation, a 21% global minimum tax would be imposed. The tax code would also be updated so that companies could not merge with foreign businesses and avoid taxes by moving their headquarters to a tax haven. And among other provisions, it would increase IRS audits of corporations.
Biden appealed for Republicans and the business community to join him in negotiations on the bill, but the legislative prospects for Biden's 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.
“I’m going to bring Republicans into the Oval Office, listen to them, what they have to say and be open to other ideas," Biden said. "We’ll have a good faith negotiation. Any Republican who wants to help get this done. But we have to get it done.”
Democratic leaders embraced Biden’s plan Wednesday. Senate Majority Leader Chuck Schumer of New York said it would create millions of jobs.
“I look forward to working with President Biden to pass a big, bold plan that will drive America forward for decades to come,” Schumer said at an event in Buffalo.
But Republican opposition to Biden’s ambitious proposal came swiftly, and with resolve for the long brawl ahead.
Senate Republican leader Mitch McConnell dismissed the package as nothing more than a “Trojan horse” for tax hikes.
Republicans on Capitol Hill view the fight as a defining moment for the parties, framing it as a choice between Democrats intent on relying on government to solve the nation’s problems and a GOP that believes the private sector can best unleash the nation’s potential.
Smarting over Biden’s intent to undo the 2017 tax cuts has only solidified what could amount to a wall of GOP opposition.
The business community favors updating U.S. infrastructure but dislikes higher tax rates. U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley said in a statement that “we applaud the Biden administration for making infrastructure a top priority. However, we believe the proposal is dangerously misguided when it comes to how to pay for infrastructure.” The Business Roundtable, a group of CEOs, would rather have infrastructure funded with user fees such as tolls.
Trump, in a statement, blasted his successor’s proposal, claiming it “would be among the largest self-inflicted economic wounds in history.”
Infrastructure spending usually holds the promise of juicing economic growth, but by how much remains a subject of political debate. Commutes and shipping times could be shortened, while public health would be improved and construction jobs would bolster consumer spending.
Standard & Poor’s chief U.S. economist, Beth Ann Bovino, estimated last year that a $2.1 trillion boost in infrastructure spending could add as much as $5.7 trillion in income to the entire economy over a decade. Those kinds of analyses have led liberal Democrats in Congress such as Washington Rep. Pramila Jayapal to conclude, “The economic consensus is that infrastructure pays for itself over time.”
But the Biden administration is taking a more cautious approach than some Democrats might like. After $1.9 trillion in pandemic aid and $4 trillion in relief last year, the administration is trying to avoid raising the national debt to levels that would trigger higher interest rates and make it harder to repay.
Biden’s efforts may also be complicated by demands from a handful of Democratic lawmakers who say they cannot support the bill unless it addresses the $10,000 cap on individuals' state and local tax deductions put in place under Trump and a Republican-led Congress.
With a narrow majority in the House, those Democrats could conceivably quash any bill that doesn’t significantly lift the cap or repeal it entirely.