A Once-In-A-Generation Investment for America: Why Biden’s Infrastructure Plan is Bigger Than Just Highways
Courtesy of Eric Haynes
In late March 2021, President Joe Biden outlined a sweeping $2 trillion infrastructure and jobs package that would significantly rebuild and reshape the economy. The plan includes increased corporate taxes and a spectrum of policies, including road repairs, public school enhancements, and training for a clean-energy workforce. White House officials stated that the proposal’s funding from government spending and tax credits would also jump-start transit projects, expand electric vehicles, and overhaul the country’s water systems, among other investments. Biden has referred to the proposal as a transformational effort to build the “most resilient, innovative economy in the world.”
The United States is in dire need of improvement in its infrastructure, having earned a C- score from the American Society of Civil Engineers in their 2021 annual report card. In the short term, Biden intends to create millions of jobs, expand manufacturing, and boost caregiving to assist the elderly and disabled by investing more than $400 billion for home- or community-based care. In terms of the long-term effect, strengthening the supply chains through multifaceted investments in semiconductor research, pandemic preparedness, and high-speed broadband would elevate America’s international competitiveness.
Biden’s investment proposal would not only shift the nation’s path towards a sustainable society, but also positively impact communities of color, rural Americans, and others who have been excluded from reaping the benefits of modernization. Disparities in access to clean air, clean water, reliable and sustainable transportation, and dependable high-speed internet can be addressed through infrastructure investment on local and regional levels, whether it involves removing lead pipes, modernizing water systems, or developing electric grids. In turn, government investment will promote urban-rural connectivity, thereby paving new paths for better jobs and economic security for young people and their families. In addition, the plan will create 1.5 million homes and public housing units to provide affordable housing in light of the widening class and racial wealth gap.
The plan’s costs would be funded by increasing corporate tax revenues to 28%––a percentage that is still below the rate at which corporations were paying before Trump’s tax cuts, introduced in 2017. Furthermore, Biden hopes to increase the minimum taxation on U.S. multinational corporations that generate overseas profits in an attempt to prod companies into increasing domestic production and investment.
The taxation scheme to pay for the plan is imperative as the Made in America Tax Plan aims to incentivize job creation and investment in the United States, halting profit-shifting to tax havens and ensuring corporations pay “their fair share.” The plan would also eliminate the policy that grants companies exemption from taxes on the first 10% of returns upon relocating investments to other countries. As such, the tax hikes and other reforms dedicated to eliminating tax loopholes are an essential constituent of Biden’s economic and infrastructure agenda.
Republicans have already expressed skepticism and opposition to the plan that could prove problematic in realizing Biden’s long-term strategy. Senate Minority Leader Mitch McConnell declared the GOP would not support the infrastructure plan and vowed to fight against the Democratic agenda, claiming that tax increases would hinder economic recovery from the pandemic.
The GOP has pursued the argument that “real” infrastructure is limited to only tangible developments––be it roads, bridges, waterways, ports, and airports. On the contrary, Biden’s plan is inextricably linked to clean energy and climate change: he has proposed to spend $174 billion on electric vehicles, $165 billion in enhancing transit and rail systems, and $180 billion on research and development. The pledge to tackle a carbonized economy through innovation could lead to breakthroughs in cutting-edge clean technology.
The idea that “real” infrastructure does not include investments for a decarbonized economy is a departure relative to the GOP’s own past. As political scientist Jacob Hacker states, public investments received Republican support during the Eisenhower era, specifically for spending in research and development of future technologies––which took progressive risks that ultimately transformed the American economy.
The plan would symbolize only a partial return to the Eisenhower administration where government investment as a percentage of gross domestic product was higher, with higher tax rates, which Republicans then embraced. The grave bipartisan political fracture in Washington has made it more likely that the Democrats will have to use budget reconciliation to overcome the congressional hurdles.
The magnitude of the infrastructure plan implies Biden’s optimism and confidence in embracing federal spending to tackle longstanding socio-economic challenges and revitalize research and investment in infrastructure to the highest levels since the 1960s. Beyond politics, however, the infrastructure plan is a crucial opportunity for President Biden to demonstrate to the United States that big government can still play an important role in reshaping society.
Jason Park is a staff writer for CPR and a first-year student in the Dual BA Program with Sciences Po, studying Economics and Political Science.