Beyond roads and bridges, President Joe Biden is trying to redefine infrastructure not just as an investment in America the place, but in its workers, families and people.
The first phase of his “Build Back Better” package to be unveiled Wednesday in Pittsburgh would unleash $2 trillion in new spending on four main hard infrastructure categories — transportation; public water, health and broadband systems; community care for seniors; and innovation research and development, according to people familiar with the proposal.
Those would be paid for by permanently raising the corporate tax rate from 21% to 28%, the people said, which would unwind the lower corporate rate put in place by the Trump administration.
The next phase would focus on soft infrastructure investments in child care, family tax credits and other domestic programs, paid for by tax hikes on wealthy individuals and families, they said.
Swelling to $3 trillion or $4 trillion, Biden’s new package proposes a massive investment on par with the Franklin Roosevelt’s New Deal or Lyndon Johnson’s Great Society. Taken together, the administration’s approach is transforming the old ideas of infrastructure investment into a 21st century concept that includes developing the human capital of America’s population.
Wide-ranging infrastructure
“He’s talking about physical infrastructure and we’re talking about human infrastructure,” Sen. Bernie Sanders, the independent from Vermont who is chairman of the Budget Committee, said in an interview Tuesday.
The president is set deliver a speech Wednesday outlining the size and scope of his plan, the administration hoping to take a more deliberate and collaborative approach with the lawmakers than it did on the emergency COVID-19 rescue package, Biden’s first big priority to be signed into law.
At a private briefing Tuesday for the top lawmakers of both parties, the administration shared plans for the first phase with Democratic committee chairmen and the top Republicans on the panels, a nod to the White House’s efforts at outreach and bipartisanship.
The White House team led by National Economic Council Director Brian Deese explained that the $2 trillion in spending would unfold over eight years, paid for by the corporate tax increases over 15 years.
That’s an accounting maneuver outside of the traditional 10-year budget window used by Congress, meaning it will likely run into trouble with budget rules and need to be adjusted.
The details were provided by people familiar with the call and granted anonymity to discuss it.
Funding Biden’s infrastructure initiative with tax hikes has been controversial. Raising the corporate tax rate to 28% from 21% would generate some $700 billion over 10 years, one of the people said. The administration is also eyeing a new global minimum tax.
Biden promised on the campaign trail not to raise individual taxes on those earning less than $400,000 but new details on the individual tax hikes were scant at Tuesday’s briefing.
Tax hikes on the wealthy, most likely changes to the top rates, are expected to pay for the human capital investments coming in two weeks.
Even though Republicans were invited to join Tuesday’s briefing, key GOP leaders are already panning the package as too big and too costly for them to support.
“It seems like President Biden has an insatiable appetite to spend more money and raise people’s taxes,” said Rep. Steve Scalise of Louisiana, the GOP whip, in an interview.
Scalise predicted that, if approved, the new spending and taxes would “start having a negative impact on the economy, which we’re very concerned about.”
Sweeping in scope, the ambitious plan aims to make generational investments in infrastructure, revive domestic manufacturing, combat climate change and keep the United States competitive with China, according to administration officials.
Though the White House is emphasizing the urgency, the administration is also working deliberately to build support. It wants to see progress on the new legislation by Memorial Day and have it passed over the summer, White House officials said.
Biden’s approach is about “making an investment in America,” said White House press secretary Jen Psaki.
“Not just modernizing our roads, our railways and our bridges, but building an infrastructure of the future,” she said, pointing to broadband access and the “needs in people’s homes and communities.”
Unlike the swift passage of the COVID-19 bill that exposed the president to criticism for going it alone with only Democratic votes, White House officials believe this time there will be far more opportunity to win some GOP support on Capitol Hill.
As the committees in Congress begin to tackle individual provisions — including those on transportation, China and others — some legislation could be peeled off for bipartisan support. Then Congress will work through the tax increases separately, according to officials.
Psaki said the president believes there’s “more that can be done to make the corporate tax code fair, to reward work not wealth, to ensure that we can invest in the future industries that are going to help all people in this country.”
An official at the U.S. Chamber of Commerce who insisted on anonymity to discuss the private talks said the administration is genuinely interested in working with Republicans on infrastructure, even though the tax hikes would likely be a nonstarter.
While hoping for collaboration, Democratic congressional leaders are also preparing a go-it-alone strategy, much as was done in the virus aid package, in case Congress hits a wall of GOP opposition.
Infrastructure gives Biden an opportunity to succeed on an issue where both his predecessors — Barack Obama and Donald Trump — made big promises that never came to fruition.
But with the House narrowly controlled by Democrats and the Senate split 50-50, Biden has little room for error with his own party.
Already some progressive Democrats are pushing for more while moderate Democrats are complaining about the size and scope.
Sanders wants the president to lower the Medicare eligibility age from 65 to 60 and expand benefits for seniors to include dental, vision and hearing aid care. He said the new benefits could be paid for by allowing the federal government to negotiate for lower priced prescription drugs.
Centrist Rep. Josh Gottheimer, D-N.J., and two House Democratic colleagues said Tuesday they would vote against any tax changes that did not include a repeal of the cap on state and local tax deductions from the 2017 GOP tax law, which hits residents in their states.
Rep. Pramila Jayapal, D-Wash., chairwoman of the nearly 100-member Congressional Progressive Caucus, suggested a proposal even twice the size of what Biden’s team is discussing may be needed to adequately invest in the nation. “We’d like to see a plan that goes big,” she said.
