President Joe Biden is setting about convincing America it needs his $2.3 trillion infrastructure plan, deputizing a five-member “jobs Cabinet,” including former South Bend Mayor Pete Buttigieg, to help in the effort. But the enormity of his task is clear after Senate Minority Leader Mitch McConnell vowed to oppose the plan “every step of the way.”
Speaking in Kentucky on Thursday, McConnell said he personally likes Biden and they’ve been friends a long time. But the president will get no cooperation from the GOP, which objects to the corporate tax increases in the plan and says they would hurt America’s ability to compete in a global economy.
“We have some big philosophical differences, and that’s going to make it more and more difficult for us to reach bipartisan agreements,” the Republican leader said.
White House chief of staff Ron Klain said the key to any outreach is that the proposal’s ideas are already popular. Americans want smooth roads, safe bridges, reliable public transit, electric vehicles, drinkable water, new schools and investments in manufacturing, among the plan’s many components, he said.
“We kind of think it’s just right,” Klain said in a televised interview with the news organization Politico. “But we’re happy to have a conversation with people, less about the price tag, more about what are the elements that should be in the plan that people think are missing.”
Those conversations could be limited to Democrats as McConnell declared: “I’m going to fight them every step of the way.”
Biden told his Cabinet at its first meeting that he is enlisting several of them to help with the push: Transportation Secretary Buttigieg, Energy Secretary Jennifer Granholm, Housing and Urban Development Secretary Marcia Fudge, Labor Secretary Marty Walsh and Commerce Secretary Gina Raimondo.
“Working with my team here at the White House, each Cabinet member will represent me in dealings with Congress, engage the public in selling the plan and help organize the details as we refine it and move forward,” Biden said.
The task will involve lots of salesmanship for a legacy-making piece of legislation that Biden announced in a Wednesday speech.
His administration must sway Congress. It needs to rally voters. It’s also looking to outside economists to back the plan.
The administration also is monitoring Wall Street for any celebrations or jitters. It’s forming alliances with advocates while dealing with critics of the plan’s corporate tax hikes and project details. And Biden’s administration also intends, per the plan, to cajole other nations to stop slashing their own tax rates in what has been a race-to-the-bottom to attract and retain multinational businesses.
Biden’s vehicle for financing his infrastructure plans is a key dividing line. Republicans object to raising the corporate tax rate to 28% from 21%, one of the many changes so that business taxes would fund infrastructure. Republicans had cut the corporate rate from 35% in 2017, a hallmark policy achievement of Donald Trump’s presidency.
Within Washington and corporate board rooms, the administration is attracting its share of accolades and rebukes on his proposal.
In Biden’s own party, liberal Democrats in Congress want him to go bigger. And Democrats representing high-tax states want to remove a 2017 tax code change that limited deductions of state and local taxes for individuals.
House Speaker Nancy Pelosi expressed no qualms about the proposal’s scope.
“It was in the tradition of America — to think big,” Pelosi said at a press conference Thursday. “And now, in this century, President Biden is undertaking something in the tradition of thinking big, being transformational and creating jobs for America.”
While many leading business groups oppose the higher taxes, some major companies see reason for optimism because of the innovations that would be encouraged by the plan.
Automakers Ford, General Motors and Toyota endorsed the general concepts of Biden’s plan, which calls for the construction of 500,000 electric vehicle charging stations by 2030 in what would be a shift away from gasoline-powered cars.
But some environmentalists said the plan’s shift away from fossil fuels that cause climate change was not substantial enough.
“Biden has pledged to cut carbon emissions 50% and decarbonize our electricity sector, but this proposal won’t even come close,” said Brett Hartl, government affairs director at the Center for Biological Diversity.
The White House was quick to address the climate change concerns. Climate adviser Gina McCarthy said the administration expects the infrastructure package to include Biden’s pledge to set a national standard requiring utilities to produce 100% carbon-free electricity by 2035.
The proposed electricity standard “is going to be fairly robust, and it’s going to be inclusive,” McCarthy said. “I think we can get to the results that we’re looking for in a number of different ways. If a clean energy standard can be done, we think it should be done.”
For every criticism of the plan’s details, there were also plaudits for its broader approach.
Harvard University economist Larry Summers, a former treasury secretary, endorsed Biden’s plan, after previously criticizing the $1.9 trillion coronavirus relief plan because of its size and debt-based financing.
He downplayed any risks from corporate tax hikes, because low interest rates mean the costs of obtaining capital are already low for many companies.
“I am excited,” Summers said on Twitter. “The economy’s capacity will go up.”
The plan also carries a political dimension as organized labor is mobilizing to get the package passed, an important push given the steady, recent Republican gains among working class voters. Biden’s plan, with its focus on construction and manufacturing jobs, has the potential to reverse some of that slide — and the unions that backed him in 2020 are promising to help deliver votes on infrastructure.
“Our members are an army a half-million strong, that will make calls, visit members of Congress and rally for good jobs building our nation’s infrastructure,” said Terry O’Sullivan, general president of Laborers International Union of North America, one of the largest construction trades unions. “We did it with boots on the ground to get President Biden elected.”
Here is a look at where the money would go and where it would come from:
- $115 billion to modernize bridges, highways and roads that are in the worst shape. The White House outline estimated 20,000 miles of roadways would be repaired, while economically significant bridges and 10,000 smaller bridges would get fixed.
- $85 billion for public transit, doubling the federal government’s commitment in an effort to shorten the repair backlog and expand service.
- $80 billion to modernize Amtrak’s heavily trafficked Northeast Corridor line, address its repair backlog and improve freight rail.
- $174 billion to build 500,000 electric vehicle charging stations, electrify 20% of school buses and electrify the federal fleet, including U.S. Postal Service vehicles.
- $25 billion to upgrade air travel and airports and $17 billion for waterways and coastal ports.
- $20 billion to redress communities whose neighborhoods — typically nonwhite — were divided by highway projects.
- $50 billion to improve infrastructure resilience after natural disasters.
- $111 billion to replace lead water pipes and upgrade sewer systems.
- $100 billion to build high-speed broadband that provides 100% coverage for the country.
- $100 billion to upgrade the resilience of the power grid and move to clean electricity, among other power projects.
- $213 billion to produce, preserve and retrofit more than 2 million affordable houses and buildings.
- $100 billion to upgrade and build new schools.
- $18 billion to modernize Veterans Affairs hospitals and clinics, and $10 billion for federal buildings.
- $400 billion to expand long-term care services under Medicaid.
- $180 billion invested in research and development projects.
- $300 billion for manufacturing, including funds for the computer chip sector, improved access to capital and investment in clean energy through federal procurement.
- $100 billion for workforce development.
Biden’s plan would finance projects by:
- Raising the corporate tax rate from 21% to 28%, one of the measures that over 15 years would cover the cost of the infrastructure program and then help to reduce the budget deficit.
- Imposing a 21% global minimum tax, so that companies cannot avoid taxes by shifting income to low-tax countries.
- Making it harder for businesses to merge with foreign companies to avoid U.S. taxes, a process known as inversion.
- Eliminating tax breaks for companies that shift assets abroad, and denying deductions for offshoring jobs.
- Imposing a 15% minimum tax on the income that corporations report to shareholders.
- Eliminating tax preferences for the fossil fuels sector.
- Increasing IRS audits of large corporations.