Is there a way forward for Biden’s infrastructure plans? | Alston and Bird
Could President Biden’s $ 4 trillion infrastructure plan be a bridge too far? A multidisciplinary group details the president’s proposal, the Republican counter-proposal and the possibility for the two parties to bridge the gap between them.
- Two democratic proposals: one for physical infrastructure, one for “human infrastructure”
- The GOP responded with a bid of $ 568 billion for hardware infrastructure alone
- Negotiations have started, but the road is difficult
On March 31, 2021, President Biden unveiled his U.S. Jobs Plan in the form of two massive spending and tax proposals. Policy makers in Washington are actively debating and preparing to legislate on the basis of these proposals.
The first proposal, totaling $ 2.3 trillion, focuses on traditional infrastructure improvements, broadly defined, and includes highways, bridges, ports, airports and public transportation; broadband; clean water; electrical grid upgrades; modernization of residential, commercial, school and federal buildings; investments in the care economy to raise wages and expand services; and investments in the supply chain and R&D. President Biden has proposed paying for this part of the plan with an increase in the corporate tax rate, raising the current rate from 21% to 28%, additional taxes on international trade and repealing elements of the Former President Trump’s Tax Cuts and Jobs Act 2017.
The second component, known as the American Families Plan and introduced on April 28, is a $ 1.8 trillion proposal and would cover “human infrastructure” – that is, investments in health care. health, subsidized higher education, direct support for children and families and unemployment insurance. reform. The cost of this plan would be offset by individual tax increases on capital gains and dividends to wealthier Americans. The plan also proposes to eliminate the strengthened base, which would increase the tax burden on property left behind by deceased relatives.
There has been a significant pullback from the Republican Party on the expansive reach and costs of the proposals. In response, the GOP issued a $ 568 billion counter-offer, focused exclusively on improvements to “hard” infrastructure, including roads and bridges, airports, public transport and rail, clean water. / storage and sewage, ports and inland waterways, broadband and highways, pipelines and HAZMAT security. Their proposal would be funded by electric vehicle user fees and the reuse of existing state and local relief funds passed under previous coronavirus aid bills, including the CARES Act. Senate Minority Leader Mitch McConnell (R-KY) has indicated that the GOP’s counter-offer could be as high as $ 800 billion, but the legislative package must be limited to traditional physical infrastructure.
The prospects for legislation are currently at an inflection point. While the vast majority of President Biden’s plan constitutes spending and taxes, providing a path to enactment with only Democratic votes through the obscure budget reconciliation process, President Biden has said he prefers a bipartisan solution. Additionally, Senator Joe Manchin (D-WV), a moderate member of the Democratic caucus whose vote is needed for a partisan package, has said he likely will not support an exclusively Democratic bill.
The bill is therefore in a phase of bipartisan negotiation, where the White House is actively exploring whether Republicans will agree to a larger bill, what would be included in such a bill and how to pay for it. Several meetings were held at the White House this week with leaders and potential negotiators from both sides. President Biden and GOP leaders signaled the optimism and the possibility of reaching consensus on a compromise directly after the meeting. This phase should not last more than a week or two. If the administration and the GOP remain distant from each other on Memorial Day, the administration should explore the uniquely democratic process of reconciliation, which will depend on the decision of centrists like Manchin to decide that a meaningful compromise is impossible. , but that the need for legislation requires moving forward on a partisan basis. based.
Whichever route this bill takes, the administration and congressional negotiators are discussing a legislative framework that will need to be translated by the jurisdictional committees into legislation. Many details, including what specific programs will be funded or created, what the funding criteria will be, and what eligibility restrictions will be placed on funding recipients (e.g. Buy America, non-crowding of public / local funds, sharing of funds). costs, etc.), will need to be worked out. This is also true on the income side.
Even without an agreed framework, committees are already well engaged in this process. For example, later this month the Senate Finance Committee will vote on a law to reform the tax code to encourage energy efficiency and decarbonization.