Joe Biden proposes to spend $ 2 billion in government spending on U.S. infrastructure alongside $ 2 billion in higher corporate taxes, in the first step of a multibillion-dollar effort to reshape the larger world economy.
The White House released details of the plan ahead of a speech by the US president in Pittsburgh on Wednesday, administration officials calling it the biggest public investment program since the creation of the interstate highway system and the space race in years 1960.
Coming a few weeks later Congress approved a $ 1.9 billion fiscal stimulus package to restart the pandemic-ravaged US economy, Biden’s investment proposal will set the stage for weeks of delicate negotiations on Capitol Hill, where Democrats hold a slim majority in both bedrooms.
If passed, it would represent a high-stakes bet on the part of the White House that a sustainable injection of government funds in critical areas, financed by higher corporate taxes, will strengthen the economy upon exiting. of the coronavirus crisis, rather than weakening it as Republicans are already in charge.
A Biden administration official said the plan was an “important moment to demonstrate that the United States and democracies can serve the people”, arguing that it “would revitalize our national imaginations” and put “millions in Americans at Work Now ”.
The plan provides up to $ 621 billion in funding for modernizing traditional infrastructure, including roads, bridges, public transportation networks and vital hubs such as ports and airports.
Revenue estimate for Biden 2020 campaign proposals (over 10 years)
Increase in the tax on the wages of high-income households $ 740 billion
Increase in corporate income tax from 21% to 28% $ 730 billion
Minimum Tax on Foreign Profits of U.S. Corporations 440 billion dollars
Rise in capital gains and dividend taxes for the ultra-rich $ 370 billion
Personal income tax increase for high incomes 310 billion dollars
Source: Center for Tax Policy
But it will also try to direct spending towards projects to help the United States alleviate the climate crisis, which the Biden administration has sworn to tackle head-on, in a big change from the skepticism of former President Donald Trump.
These proposals include $ 100 billion measures to modernize the electricity grid, provide tax credits for clean energy production and storage, and plug orphan oil and gas wells – as well as $ 213 billion to making homes more energy efficient and $ 100 billion to do the same for public schools.
At the same time, $ 180 billion in funds will be devoted to research and development investments in areas such as artificial intelligence and biotechnology, aimed squarely at improving competitiveness with China. An additional $ 300 billion in government spending is to be spent on manufacturing subsidies, including aid to chipmakers.
While supporters of Biden’s plan have previously argued that it will tackle decades of chronic underinvestment in public goods that have hurt the economy, critics feared that tax increases on companies can harm the competitiveness of the United States.
Biden wants to increase the Corporate tax rate from 21% to 28%, and to mobilize additional income thanks to a global minimum tax of 21%, calculated country by country “to achieve profits in tax havens”, according to the White House. The president also wants to remove a tax exemption for companies on the first 10 percent of profits produced internationally and end the tax benefits granted to fossil fuel producers. Even before Biden released his plan, the Business Roundtable, which represents the largest blue-chip companies in Washington, attacked the tax increases in the plan.
“Business Roundtable strongly opposes corporate tax increases as remuneration for infrastructure investments. Policymakers should avoid creating new obstacles to job creation and economic growth, especially during the recovery, ”said Joshua Bolten, former White House chief of staff under George W. Bush and chairman of the Business Roundtable.
Biden’s spending proposal is expected to last around eight years, while corporate tax increases are expected to be phased over fifteen years, beyond the U.S. government’s traditional 10-year fiscal window, implying that the plan would add to America’s deficits during this period.
Despite the high price tag for Biden’s infrastructure package, the White House is expected in the coming weeks to complete its investment plan with an additional package of spending measures on “child care, health care. [and] education “which is likely to exceed $ 1 billion, bringing the total amount to over $ 3 billion. The second package is expected to be accompanied by tax increases on high net worth individuals, including on their income, capital gains and estates.
As he prepares to begin the negotiations with Congress on both packages, Biden already faces competing pressure within his party. Alexandria Ocasio-Cortez, New York’s Democratic lawmaker, said the $ 2 billion infrastructure plan was “not enough” and pleaded for more. But other Democrats fear spending and tax increases are excessive, with some even calling for the repeal of a cap on deductions for local and state tax payments, which would amount to a cut in ‘tax.