As part of its pledge to “Build Back Better,” the Biden Administration unveiled a $2.3 trillion spending proposal on March 31, 2021, which is formally referred to as the American Jobs Plan, to modernize the nation’s infrastructure. President Joe Biden (D) stated that the plan aims to make a “once-in-a-generation investment to create the strongest, most resilient, innovative economy in the world,” adding that it would be the most significant effort to create jobs in the U.S. since World War II. Alongside the jobs plan, Biden outlined his Made in America Tax Plan, which includes federal revenue-generating provisions that would help pay for the infrastructure spending.
Through its broad definition of infrastructure, the American Jobs Plan attempts to address a longtime divestment of public goods in the U.S. economy by prioritizing issues relating to climate change, social justice, domestic manufacturing, broadband, and national security. Efforts to re-envision public investments beyond constructing roads and bridges come as the overall infrastructure in the United States ranks 13th in quality, according to the World Economic Forum. The ranking indicates that domestic systems have struggled to keep pace with demand in today’s globalized economy. The COVID-19 pandemic has further exposed many of the existing problems confronting the country’s infrastructure, including access to the internet and clean air, as well as the need for stronger supply chains. Seeking to address these and other issues, Biden has included an emphasis on equity in his jobs plan.
The infrastructure framework represents one of two components in Biden’s agenda to transform the economy. A second component, the American Families Plan, focuses on welfare provisions, and the White House expects to announce it later in April. These spending proposals pose a test for Washington, as Democrats will have to consider the political risks that come with major spending measures, and Republicans will look to calibrate their messaging in the post-Trump era.
What’s in it?
Below is a summary of key policies proposed in part one of Biden’s agenda to rebuild the economy, which are outlined by the White House “fact sheet.” This will dominate legislative activity in the months ahead, as House Democrats have reportedly voiced their desire to pass an infrastructure measure by the Fourth of July.
American Jobs Plan - Infrastructure
Made in America Tax Plan - Finance
Infrastructure presents an obvious choice for a policy area that would attract wide-ranging bipartisan support among lawmakers. Elected officials have historically achieved political success with infrastructure spending, and public opinion conveys the American population’s current approval for more federal investments in the nation’s infrastructure. As a legislative vehicle, the jobs plan provides the White House with its best opportunity to prioritize issues not included in what is considered standard infrastructure spending, such as addressing racial and economic disparities. However, Biden’s proposal has already raised objections from multiple angles, including Republicans, Democrats, and industry.
In a news segment, Senator Roy Blunt (R-MO) stated that infrastructure would be “an easy win” for the White House if it pursues a more targeted approach to the issue, showing that Republicans could support a measure different than its current form. He argued that about 70% of the plan is unrelated to infrastructure and that it would likely result in another partisan bill. If the American Jobs Plan is to win support from Republicans and/or industry, Biden will almost certainly have to reduce the price tag and scope, which does not seem probable at the moment.
Paving a Road Ahead
While the potential for a bipartisan infrastructure package exists, Democrats intend to act on Biden’s $2.3 trillion and recognize the challenges of turning such spending into a reality. Their razor-thin majorities in both chambers of Congress and indifference toward the Republican opposition may prompt them to pass it in a partisan fashion if negotiations falter.
On April 5, the Senate parliamentarian signaled approval for Democrats to pass additional measures through reconciliation, a special legislative process they used to enact $1.9 trillion in COVID relief spending along party lines. The ruling permits Senate Democrats to amend the budget resolution for the fiscal year 2021, meaning they can clear legislation via simple majority instead of obtaining the usual 60-vote threshold. It could also pave a clearer road ahead to advance Biden’s infrastructure plan, but reconciliation restricts policymakers from enacting policies unrelated to the budget, which would exclude several key provisions.
Given the Democratic setback to raise the minimum wage to $15 through reconciliation in their COVID relief bill, the party may tread lightly with this procedural tool to avoid potential division within the caucus. Some Democrats appear to be cognizant of the political risks that come with using reconciliation “to do business” too often, while others seem bolder in their approach. Of note, Democratic Senators Joe Manchin (WV) and Kyrsten Sinema (AZ) both rejected the $15 minimum wage effort, leaving the party with little room for error on fiscal measures if it pursues reconciliation, especially as Biden promotes his corporate tax agenda.
On April 7, the Treasury Department released a report outlining the case for the administration’s Made in America Tax Plan. The report asserts that the Republican-led Tax Cuts and Jobs Act (TCJA) of 2017, which lowered the corporate rate from 37.5% to the current 21%, did not do enough to create economic growth. It also notes that increasing corporate taxes would generate about $2 trillion in revenue over the next 10 years and address equity concerns. The reversal of policies enacted in TCJA to finance infrastructure spending will set the stage for the looming political discourse in Washington.
To get any infrastructure overhaul across the finish line, the White House will have to work to ensure that it does not alienate the backing of business-friendly Democrats while maintaining a price and broad aim that still appeal to the more progressive wing of the party. It must also consider the risk in using special procedures to move legislation along party lines to minimize any possible damage to Democrats’ slim majorities going into the 2022 midterm elections.
The popularity of infrastructure investment coupled with the proposed tax increases makes it a tricky situation for Republicans. In addition to any attempts made at winning the support of centrist Democrats, they will have to tailor their messaging strategy in a way that revitalizes the party’s political identity and maximizes its capabilities to win future elections.
The way lawmakers choose to handle this typically bipartisan issue ultimately presents a critical moment in American politics and for how various political factions interact with corporations that are becoming more invested in public policy outcomes.
The views expressed above are solely the author's and are not endorsed by the Virginia Policy Review, The Frank Batten School of Leadership and Public Policy, or the University of Virginia. Although this organization has members who are University of Virginia students and may have University employees associated or engaged in its activities and affairs, the organization is not a part of or an agency of the University. It is a separate and independent organization which is responsible for and manages its own activities and affairs. The University does not direct, supervise or control the organization and is not responsible for the organization’s contracts, acts, or omissions.