Biden’s $2.3trn infra plan leaves everyone wanting more

Although far from final, the US president’s infrastructure plan has been criticised as being too broad in its definition of the sector on the one hand, and not offering ‘nearly enough’ on the other.

As US president Joe Biden unveiled his administration’s $2.3 trillion infrastructure proposal at the end of March, he made good on a second key promise of his election campaign: that he would unite the country. That is, political and private interests of all backgrounds became immediately united in wanting to change the plan.

Biden’s fellow Democrats want the plan to be bigger and greener. His Republican opponents want fewer tax hikes. State and local governments want greater certainty. And the private sector wants more investment opportunities.

Biden is calling his proposal the American Jobs Plan. It puts infrastructure reform in lockstep with rebooting the US economy, which, by various measures, had sputtered along for years after the Great Recession until it came to a halt in early 2020 at the onset of the pandemic.

The president is touting this moment as a chance to make a “historic public investment” to “rebuild the backbone of America”. His plan combines climate-friendly proposals for infrastructure improvements across transport, energy, water and broadband. It also targets social improvements such as affordable housing and elderly care, which are not traditionally considered infrastructure but are likely to have been included as a result of the pandemic.

The Congressional debate surrounding Biden’s infrastructure proposal has the potential to showcase US politics at its messiest best.

Unlike the $1.9 trillion pandemic relief package – which was signed into law in March only a few weeks after being introduced, and without bipartisan support – Democrats have signalled they will make an earnest effort to win over Republicans by the tentative deadline for a final vote before the 4 July holiday weekend.

The next two months, then, are set to make Washington, DC the scene of a slow-moving haggle where personal and political favours will be negotiated through high-profile statements and backroom deals. All the scrambling that is likely to ensue will centre around making sure everyone’s wishlist items are included in the final version of the plan.

“The divisions of the moment shouldn’t stop us from doing the right things in the future,” the president said in a speech announcing the plan. “It’s a once-in-a-generation investment…It’s not a plan that tinkers around the edges.”

How to spend it

The proposal’s largest funding bucket – $621 billion for transport infrastructure – includes $174 billion for federal grant and incentive programmes to encourage state and local governments to work with the private sector on building a national network of 500,000 electric vehicle charging stations over the coming decade.

Biden’s plan reserves pools of cash of various sizes to modernise other areas of transport. These include 10 of the country’s most economically vital bridges, 20,000 miles of highway, updating and expanding transit and rail services, airport improvements and port investments.

The plan mentions that $25 billion would be used to “support ambitious projects” that are “too large or complex for existing programmes”. This suggests projects that will require buy-in from the private sector.

There are also three rounds of funding, of around $100 billion each, that would invest in the water sector, broadband internet coverage and revamping the electrical transmission system. Renewables would receive a boost from measures to extend solar and wind tax credits and from favourable permitting regulations to encourage offshore developments.

Biden’s plan does not include details about the private sector’s involvement in infrastructure upgrades. There was no specific mention of an effort to enhance the use of public-private partnerships, though the proposal cites leading PPP markets in Canada, the UK and Australia as examples for how to reach “on-time and on-budget delivery of infrastructure”.

The plan added that “partnership across government, unions and industry” will be needed for infrastructure reform to succeed and that the federal government would support state and local governments with project procurement best practices.

Who pays for it?

Republicans, many of whom are backed by fossil-fuel lobbyists, have come out in opposition to the plan on the grounds that Biden’s proposal gives too much away to clean energy initiatives. But the party’s biggest sticking point throughout the bill’s negotiations will be how Biden proposes to pay for his plan.

The president has made tax rises the centrepiece of how to pay for these infrastructure improvements. He has specifically proposed an increase in corporate tax from 21 percent to 28 percent. Biden has said he is open to compromise but will not consider tax rises on individuals earning less than $400,000.

Republicans have traditionally opposed tax increases of any kind. Before the plan had been unveiled, Republican Senate minority leader Mitch McConnell said: “We’re hearing the next few months might bring a so-called ‘infrastructure’ proposal that may actually be a Trojan horse for massive tax hikes and other job-killing left-wing policies.”

Yet for many Democrats, the plan is “not nearly enough”. These were the words tweeted by Representative Alexandria Ocasio-Cortez, a progressive member of the party who co-authored what became known as the Green New Deal in 2019, which envisions an overhaul of the US economy in favour of climate-friendly initiatives. Other Democrats proposed their own $12 billion climate-friendly plan in late March with the support of the clean energy industry.

At the state and local levels of government, where most US infrastructure is actually procured and developed, officials responded cautiously to the big ideas outlined and reminded federal lawmakers not to forget about non-negotiable funding deadlines later this year.

Jim Tymon, executive director of the American Association of State and Highway Transportation Officials, which represents transport agencies, said the plan was the “first step in a conversation” about how to revamp US infrastructure. He then reminded Congress that it was still “critical” to reauthorise key federal surface transport programmes that are due for renewal in September.