A Senate vote for the $600 billion bipartisan infrastructure deal failed to pass along party lines on July 21. President Joe Biden, however, told attendees at a town hall meeting that the chamber could muster the 60 votes needed to open the debate process for the bill as early as the week of July 26. Earlier this month, Senate Majority Leader Chuck Schumer (D-NY), Budget Committee Chairman Bernie Sanders (I-VT) and other Democratic legislators had announced that the Budget Committee reached an infrastructure agreement worth $3.5 trillion ($4.1 trillion with the $600 billion bipartisan plan) to fund Biden’s Build Back Better agenda. Let’s break down what this could mean for you. (Note: This is a developing story, and we will continue to update the article as more information becomes available.)
What’s in the $600 Billion Bipartisan Plan?
Senate Republicans blocked the bipartisan infrastructure deal that had been presented in June. But Senators from both parties issued a joint statement confirming their commitment to move the bill forward. The chamber is expected to vote on the bill again as early as Monday.
“We have made significant progress and are close to a final agreement. We will continue working hard to ensure we get this critical legislation right – and are optimistic that we will finalize, and be prepared to advance, this historic bipartisan proposal to strengthen America’s infrastructure and create good-paying jobs in the coming days,” bipartisan legislators said jointly. “We appreciate our colleagues on both sides of the aisle, and the administration, working with us to get this done for the American people.”
The White House described the infrastructure deal on June 24 as a “critical step in implementing President Biden’s Build Back Better vision,” which aims to create a “generation of good-paying union jobs and economic growth,” and position the United States as a 21st century leader in technology and the environment.
Bipartisan Senators initially called for an infrastructure investment of $579 billion, but the plan will cost $973 billion over five years and $1,209 trillion over eight years. The deal proposes spending $109 billion on roads, bridges and other major projects; $73 billion on power infrastructure; $66 billion on passenger and freight rail; $65 billion on broadband internet; and $55 billion on water infrastructure; among other projects.
The table below breaks down key components from the bipartisan infrastructure plan. Budgets and programs are based on the White House Fact Sheet that was presented on June 24:
|$579 Billion Bipartisan Infrastructure Plan|
|$115 Billion||Public Transit/Passenger and Freight Rail||Modernize and expand the transit rail networks for millions of Americans nationwide. The White House says this is the largest federal investment in public transit history ($49 billion), and the largest federal investment in passenger rail ($66 billion) since Amtrak was created.|
|$109 Billion||Roads, Bridges and Major Projects||Repair and rebuild infrastructure with a focus on climate change mitigation, resilience, equity and safety for all users including pedestrians and cyclists. The White House says the bipartisan plan is the biggest dedicated bridge investment since the construction of the interstate highway system was approved in 1956.|
|$73 Billion||Power and Grid||Build thousands of miles of new, resilient transmission lines. This will facilitate and expand renewable energy. The White House calls this largest clean energy transmission investment in American History.|
|$65 Billion||Broadband Internet||Inspired by historic effort to electrify every American home almost one hundred years ago, this plan aims to connect every American with reliable high-speed internet. The White House says this framework will lower service prices and close the digital divide.|
|$55 Billion||Water Infrastructure||Deliver clean drinking water to 10 million American families and more than 400,000 schools and child care facilities. This will also remove lead service lines and pipes. The White House says this is the biggest investment in clean drinking water and waste water infrastructure in American History.|
|$47 Billion||Resilience||Prepare infrastructure for the impacts of climate change, cyber attacks and extreme weather conditions. The White House says this is the biggest investment in the resilience of physical and natural systems in American history. Resilience can be defined as an infrastructure’s ability to absorb changes while retaining basic functionality and capacity.|
|$25 Billion||Airports||Modernize American airports with terminal renovations and multimodal connections that aim to provide affordable access for passengers and workers.|
|$89 Billion||Additional Programs|| |
Note that the new $3.5 trillion Budget Committee agreement is expected to support bipartisan initiatives to rebuild physical infrastructure and push beyond to embrace Biden’s health, education and climate change legislation. Together, the new Democratic agreement and the bipartisan infrastructure deal add up roughly to $4.1 trillion.
What’s in the $3.5 Trillion Infrastructure Agreement?
Democratic legislators reached a $3.5 trillion Budget Committee agreement on July 13 to make the “biggest investment in the middle class in decades and act on the climate crisis.” The agreement, combined with the $600 billion bipartisan plan, would add up to $4.1 trillion. Schumer says this will fund every major program that Biden asked for in his Build Back Better legislation proposals and make additions that expand Medicare, as well as healthcare funding for dental, vision and hearing.
“We are very proud of this plan. We know we have a long road to go. We’re going to get this done for the sake of making average Americans’ lives a whole lot better,” Schumer told press.
The president met with the Senate Democratic Caucus on July 14 to support the Budget Committee agreement. The White House said that Biden described the Build Back Better agenda as a continuation of the American Rescue Plan, and emphasized that both economic policies are “built from the bottom up, with a recognition for the role that a good job plays in peoples’ lives.”
Biden also praised the benefits of an earlier bipartisan infrastructure deal that calls for another $600 billion investment. This agreement similarly aims to revitalize the American economy, but it targets funds mostly for roads, water, electricity, broadband internet and other physical infrastructure projects.
Comparatively, the additional $3.5 trillion Budget Committee agreement is expected to focus more on human infrastructure programs that expand Medicare funding and coverage, support affordable childcare and free college education initiatives, and create pathways for employment, as well as transform the country’s energy system to address climate change needs.
Sanders told press that the new Democratic agreement would “create millions of good paying union jobs rebuilding this country not only from a physical infrastructure, but dealing with the human needs of our people which are many, and which have long been neglected.”
How Does Biden’s Original $2.3 Trillion Plan Compare?
Biden’s original infrastructure proposal called for an infrastructure and jobs plan that would have spent more than $2 trillion, or 1% of the U.S. GDP annually. His American Jobs Plan, which was presented in March, similarly focused on clean-energy, electric automobiles, nationwide broadband access and workplace development programs, among other investments.
For a comparison with the bipartisan deal, more than half of the President’s first infrastructure plan targeted transportation, elderly and disabled care, and manufacturing — adding up to $1.321 trillion. The plan also called specifically to fund $213 billion for housing and $180 billion for tech research and development, as well as investing $311 billion in water, clean-energy and internet systems; $100 billion to upgrade and build schools and child care centers, and $100 billion in workforce training over the next eight years.
The table below breaks down key components from Biden’s original infrastructure and jobs plan. Programs and budgets are based on the White House Fact Sheet that was presented on March 31:
|Biden’s $2.3 Trillion American Jobs Plan|
|$621 Billion||Transportation||Repair roads and bridges ($115 billion). Modernize public transit ($85 billion). Invest in passenger and freight rail service ($80 billion). Build electric vehicles ($175 billion). Improve ports, waterways and airports ($42 billion). Redress historic inequities and advance future infrastructure ($45 billion). Improve infrastructure resilience ($50 billion).|
|$400 Billion||Elderly and Disabled Care||Expand access to affordable homes or community-based care. This includes: Expanding access to long-term care services under Medicaid. Create infrastructure for well-paying caregiving jobs|
|$300 Billion||Manufacturing||Strengthen manufacturing supply chains for critical goods. This includes: Creating a new office at the Department of Commerce to monitor domestic industrial capacity and fund production ($50 billion). Semiconductor manufacturing and research ($50 billion). Invest in countermeasures to protect against future medical pandemics and prevent severe job losses. ($40 billion). Clean energy manufacturing ($46 billion). Invest in regional innovation hubs and a Community Revitalization Fund ($20 billion). Invest in domestic manufacturers ($52 billion). Create national small business incubator and innovation hub network ($31 billion). Partner with rural and Tribal communities to create jobs and support economic growth ($5 billion).|
|$213 Billion||Housing||Produce, preserve and retrofit over two million affordable and sustainable homes. This includes: Tax credits to rehabilitate or build 500,000 low and middle class homes ($20 billion). Improve public housing system infrastructure ($40 billion). Clean energy investment to upgrade homes and businesses ($27 billion).|
|$180 Billion||Tech Research and Development||Upgrade American research infrastructure ($40 billion). Promote collaboration and build on government programs ($50 billion). R&D job creation and innovation ($30 billion). Clean energy technology and clean energy jobs ($35 billion). Climate-focused research and climate R&D projects ($20 billion). R&D investment at HBCUs and other MSIs ($25 billion).|
|$111 Billion||Water||Replace lead pipes and service lines ($45 billion). Upgrade and modernize national drinking water, wastewater and stormwater systems; and tackle new contaminants and support rural clean water infrastructure nationwide ($66 billion).|
|$100 Billion||Internet||Build high-speed broadband infrastructure to reach 100% coverage nationwide. Promote price transparency and competition among internet providers. Reduce broadband internet cost through widespread service.|
|$100 Billion||Power||Build an electric transmission system that moves cheap, clean electricity nationwide. Modernize power generation to deliver clean electricity. Plug orphan oil and gas wells and clean up abandoned mines ($16 billion). Remediate and redevelop Brownfield and Superfund sites ($5 billion). Public land and water conservation jobs ($10 billion).|
|$100 Billion||Schools||Upgrade and build new public schools ($50 billion direct grants, $50 billion leveraged through bonds). Invest in community college infrastructure ($12 billion). Upgrade and build new child care facilities ($25 billion).|
|$100 Billion||Workplace||Support workers with next generation training programs. This includes: Creating a new Dislocated Workers Program and sector-based training ($40 billion). Target workforce development opportunities in underserved communities ($17 billion). Increase the capacity of existing workforce development and worker protection systems ($48 billion).|
|$28 Billion||VA Hospitals and Federal Buildings||Modernize Veterans Affairs hospitals and clinics ($18 billion). Buy, build or renovate federal buildings ($10 billion).|
Keep in mind that Republicans had also presented an alternative infrastructure plan worth approximately one-quarter of Biden’s original plan ($568 billion) on April 22. The Republican counterproposal limited spending to rebuilding roads and bridges, airports and ports, public transit systems, water, broadband and other networks.
How Will Biden Pay for the New Infrastructure Plan?
The White House says that the bipartisan infrastructure plan will be financed by “closing the tax gap, redirecting unspent emergency relief funds, targeted corporate user fees, and the macroeconomic impact of infrastructure investment.”
Initially, Biden said during his announcement of the American Jobs Plan in March that half of the infrastructure and jobs package could be paid for by raising corporate taxes from 21% to 28%, which would generate $1 trillion in additional revenue.
“We’re going to raise the corporate tax,” he said on March 31. It was 35%, which is too high. We all agreed, five years ago, it should go down to 28%, but they reduced it to 21%. We’re going to raise it back to — up to 28%. No one should be able to complain about that. It’s still lower than what that rate was between World War Two and 2017. Just doing that one thing will generate $1 trillion in additional revenue over 15 years.”
The Tax Cuts and Jobs Act, also known as the Trump Tax Plan, reduced the corporate tax rate by almost half in 2017 to the current 21% flat tax rate for all businesses. This was a big change from previous tax years, which charged marginal rates across eight income tax brackets listed in the table below:
|2017 Corporate Tax Rates|
|$0 – $50,000||15%|
|$50,000 – $75,000||25%|
|$75,000 – $100,000||34%|
|$100,000 – $335,000||39%|
|$335,000 – $10,000,000||34%|
|$10,000,000 – $15,000,000||35%|
|$15,000,000 – $18,333,333||38%|
It’s important to note that even when the corporate tax rate was as high as 35%, a 2013 report from the Government Accountability Office (GAO) initially estimated that U.S. corporations paid an average effective tax rate of 12.6%. This was later revised to 22.9%, but tax experts generally agree that most businesses do not pay the full corporate tax rate after claiming deductions and credits.
In an effort to rally support for the corporate tax hike, the President said during his March speech that almost one-fifth of Fortune 500 companies, including Amazon, took advantage of tax loopholes to avoid paying federal income taxes.
“In 2019, an independent analysis found that…91 Fortune 500 companies — the biggest companies in the world, including Amazon — they used various loopholes so they’d pay not a single solitary penny in federal income tax,” he said. “I don’t want to punish them, but that’s just wrong. That’s just wrong. A fireman and a teacher paying 22%? Amazon and 90 other major corporations are paying zero in federal taxes?”
Biden has also said that he would raise additional revenue to pay for the American Jobs Plan by establishing a global minimum tax rate of 21% to eliminate loopholes and foreign tax credits that large multinational companies could claim to avoid paying federal taxes.
“We’re establishing a global minimum tax for U.S. corporations of 21%,” he said. “We’re going to level the international playing field. That alone will raise $1 trillion over 15 years. We’ll also eliminate deductions by corporations for offshoring jobs and shifting assets overseas.”
On April 5, Treasury Secretary Janet Yellen rallied behind Biden’s plan, calling for a global minimum corporate tax rate.
“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity.”
Six days after the American Jobs Plan was announced, Amazon founder and CEO Jeff Bezos said via Twitter that he also supports the rise of the corporate tax.
“Both Democrats and Republicans have supported infrastructure in the past, and it’s right time to work together and make this happen. We recognize this investment will require concessions from all sides — both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate).”
The table below breaks down eight specific corporate tax changes that the White House fact sheet presented on March 31:
|Biden Tax Plan for Corporations|
|Raise Corporate Tax Rate to 28%||Roll back President Trump’s 2017 corporate tax reduction, which currently set a 21% flat tax for all businesses. This increase aims to generate $1 trillion in additional revenue over 15 years.|
|Increase Global Minimum Tax to 21%||Increase the global minimum tax on U.S. corporations from 10.5% to 21%. Multinationals currently shift profits and jobs overseas with a tax exemption for the first 10% return on foreign assets, and the rest is taxed at half the domestic rate. Biden said this will generate an additional $1 trillion in 15 years.|
|Prevent Tax Havens for U.S. Corporations||Prevent U.S. corporations from inverting or claiming tax havens as a residence to avoid paying taxes. Currently, U.S. corporations can acquire or merge with foreign companies to claim that they are a foreign company even while managing and running operations in the U.S.|
|Eliminate Expense Deductions for Offshoring Jobs||Eliminate and replace tax expense deductions that U.S. companies can write off from offshoring jobs and provide a tax credit to support the on-shoring of jobs.|
|Eliminate Loophole for Intellectual Property||Eliminate the Foreign Derived Intangible Income (FDII) enacted by the Trump tax plan, which the White House describes as an intellectual property loophole that allows corporations to get tax breaks for shifting assets abroad. This revenue will be used to expand R&D investment incentives.|
|Enact 15% Minimum Tax on Large Corporations||Apply a 15% minimum tax on the book income of the largest corporations. Corporations use this income to report profits to investors.|
|Eliminate Tax Preferences for Fossil Fuels||Eliminate current subsidies, loopholes and special foreign tax credits available to the fossil fuel industry. Make polluters pay into a Superfund Trust Fund to cover the cost of cleanups.|
|Invest in IRS Resources||Increase IRS funding to enforce the tax law and prevent tax evasion from corporations. The White House says that 10 years ago almost all large corporations were audited annually. Today that number has fallen to less than half.|
As we already noted, combining projected revenue from a 28% corporate tax and a 21% global minimum tax, the tax plan aims to raise a total of $2 trillion in the next 15 years. The White House said that Biden wants “to fix the corporate tax code so that it incentivizes job creation and investment” in the United States.
For the bipartisan plan, the White House proposed on June 24 redirecting unused unemployment insurance relief funds and reinstating Superfund fees for chemicals, in addition to other strategies and reducing the IRS tax gap to raise new investments. Biden’s administration said it will also look at strategic petroleum reserve sales, public-private partnerships, private activity bonds, direct pay bonds and asset recycling for infrastructure investments.
So What Could the American Jobs Plan Mean for You?
Politicians on both sides of the aisle have looked towards infrastructure as a way to lay the foundation for a unified country. But Biden said last March that the American Jobs Plan aims to do more than just fix potholes and reduce gridlock traffic. His plan aims to rebuild the middle class so that a greater number of people could prosper.
“You know, this is not to target those who’ve made it; not to seek retribution. This is about opening opportunities for everybody else,” he said in April. “And it’s time — in this time, we’ll rebuild the middle class. We’re going to bring everybody along. Regardless of your background, your color, your religion, (inaudible) everybody gets to come along.”
The American Society of Civil Engineers also points out that without necessary investments in infrastructure, families will lose more than $3,300 in disposable income every year between 2020 and 2039 – that’s roughly $9 per day or $66,000 in 20 years – due to deficiencies. (For more information, SmartAsset ranked the best states with infrastructure in 2019.)
Let’s take a look at four ways the new bipartisan infrastructure plan will impact you the most:
You will save time on your commute. The U.S. Census Bureau says that the average commute for 148 million workers in 2019 took 27.6 minutes to get to work each way. This is an all-time record high since the bureau started collecting travel data in 2006. The White House also points out that households taking public transportation to work “have twice the commute time.” The bipartisan plan calls on Congress to invest $115 billion in public transit and passenger and freight rail, as well as an additional $7.5 billion that will also in part fund electric buses. These upgrades aim to ultimately reduce traffic congestion for everyone.
The government will build chargers for your electric car. Biden initially wanted to provide tax incentives and point-of-sale rebates to help “all American families afford clean vehicles of the future.” He has already proposed $174 billion for electric vehicles and charging stations, which includes $100 billion in consumer rebates. But the White House says the bipartisan plan calls on Congress to invest only $7.5 billion to “build a national network of electric vehicle (EV) chargers along highways and in rural and disadvantaged communities.” The President set an initial goal of building 500,000 EV chargers by 2030.
You will have faster and cheaper internet. Biden wants to connect “high-speed, affordable, reliable Internet wherever you live.” The White House says that more than 35% of rural America lacks access to reliable high-speed internet. And the new bipartisan deal allocates $65 billion to bridge the internet gap between rural and urban Americas with the construction of high-speed broadband infrastructure that can reach 100% coverage nationwide.
More pathways to good-paying jobs. Biden wants clean energy and infrastructure investments from the federal government to support prevailing wages and labor jobs. The White House says that the bipartisan infrastructure plan can “create good-paying union jobs and advance environmental justice.”
The new Budget Committee agreement will call on Congress to finance $4.1 trillion to rebuild physical and human infrastructure. The plan supports the earlier $600 billion bipartisan deal to invest in roads, water, electricity, broadband internet and other physical infrastructure projects, and expands legislation substantially to include health, education and climate change proposals from Biden’s Build Back Better agenda.
Republicans are expected to oppose this broader infrastructure agreement, which will most likely drive Democrats to pass legislation through the budget reconciliation process. This will enable them to get around the 60-vote Senate approval rule with a simple majority of one vote.
The White House says the legislation will create good-paying union jobs and economic growth for a generation of Americans, and position the United States as a 21st century leader in technology and the environment. The new American Jobs Plan needs to get approved by Congress before Biden could sign it into law.
We will continue to update this article as soon as more information becomes available.
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