President Joe Biden's formal unveiling March 31 of the framework of an ambitious $2-trillion-plus economic stimulus/job creation package includes hundreds of billions of dollars for highways, bridges, transit, passenger rail, water systems, airports, marine ports, schools and other types of infrastructure across the country.
Construction industry groups and congressional Democrats praised the wide-ranging proposal's focus on significant infrastructure spending. But contractor groups and Republicans criticized Biden's proposed "pay-for"—an increase in the corporate tax rate.
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Biden, introducing the proposal in a speech at a Carpenters' union training center in Pittsburgh, called it "a once in a generation investment in America."
He said the spending in the proposal, which the administration is calling the American Jobs Plan, would generally be spread over eight years.
In a briefing for reporters the evening of March 30, an administration official, speaking on condition of anonymity, said, “We think that these are investments that, as a country, we cannot afford not to make."
As Biden has indicated for months, a major theme of the plan is addressing the effects of climate change, including elements to boost use of electric vehicles and funding to increase resilience of infrastructure.
According to a White House summary of the proposal, the administration is grouping the components, and spending, under four main headings:
- How We Move (including transportation infrastructure): $600 billion
- How We Live at Home (including drinking water, broadband, public housing): $650 billion
- How We Care (including raising wages and benefits for home-care workers): $400 billion
- How We Make and Create (including increased research and development spending): $580 billion
Most of the sectors that ENR traditionally views as construction-related infrastructure fall in the first two categories. ENR's initial estimate of funding for such infrastructure is $990 billion.
'Heart of the Plan': Transportation Funding
In his speech, Biden referred to the $600-billion transportation portion of his proposal, dubbed How We Move, as "the heart of the plan." It includes $115 billion for roads and bridges; $85 billion for public transit; $80 billion for Amtrak and freight rail; and $174 billion for facilities related to electric vehicles, chiefly a network of charging stations around the U.S.
The roads funding would upgrade 20,000 miles of highways, roads and main streets, according to an administration document, and address “the ten most economically significant bridges in the country in need of reconstruction,” plus “the worst 10,000 smaller bridges.”
Also in the transportation category are: $25 billion for airports; $17 billion for ports and inland waterways and land ports of entry (border stations); $20 billion for projects to improve environmental justice; $25 billion for a fund for “ambitious projects;” and $50 billion to make infrastructure more resilient in the face of storms, fires and other natural disasters.
Also part of the proposal $20 billion for a new program "that will reconnect neighborhoods cut off by historic [transportation] investments and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access," said the White House statement.
Water, Energy, Environment
The Where We Live category would include $111 billion to replace lead pipes and service lines in drinking water systems. Of that total, $45 billion would go for the existing Drinking Water State Revolving Funds and $56 billion for water grants.
Also in this section are: $100 billion to install broadband; $100 billion to improve the electric grid—including a new investment tax credit; and $16 billion to plug “orphan” oil and gas wells and clean up abandoned mines. It also would have $5 billion for Superfund and brownfield projects and $10 billion to establish a new Civilian Climate Corps, an echo of the Depression-era New Deal’s Civilian Conservation Corps.
In addition, that category proposes substantial amounts for various types of buildings. Allotments include $40 billion for public housing infrastructure and $100 billion to construct or upgrade public schools.
Half of the schools funding would come through grants and half would be financed through bonds. Another $12 billion would go to community college facilities and $25 billion to child care facilities.
In addition, $18 billion in the Where We Live section would be allocated to Dept. of Veterans Affairs hospitals and clinics and $10 billion to modernize other federal buildings.
'Pay For': Corporate Tax Hike
In a move that congressional Republicans and business groups attacked, Biden proposes to offset the overall plan’s massive costs primarily by raising the corporate income tax rate to 28% from its current 21%. The official said it would “fully offset” the proposal’s cost over 15 years.
The Trump administration’s 2017 tax legislation had slashed the corporate rate to 21% from the previous 35%.
The plan also would raise the global minimum tax for U.S. corporations to 21%, a move that the administration says would address current “incentives” for U.S. companies to move earnings and jobs to other countries.
Reactions Pro and Con
The plan's unveiling drew a wave of reactions, for and against it.
Jamie Cook, lead construction sector investment analyst for Credit Suisse said the plan "would be a huge positive although expected for the machinery and engineering & construction sectors, driving long term secular tailwinds rather than just cyclical tailwinds."
Terry O'Sullivan, general president of the Laborers' International Union of North America, in a statement to ENR called the proposal "a historic investment that meets the scope of our needs."
Stephen E. Sandherr, Associated General Contractors of America's chief executive officer, said in a statement that "the President is right to focus on rebuilding a broad range of aging and overburdened infrastructure and modernizing buildings."
But Sandherr added that Biden would also "saddle these investments with a host of labor and regulatory measures that will hurt workers and offset many of the economic benefits of these new infrastructure investments." AGC also criticized the corporate tax rate increase.
READ MORE: Construction Groups Agree on Need for Infrastructure Plan, Diverge on Details
Congressional reactions divided along party lines.
House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.), in a statement, called the plan "visionary, and exactly what people across this country have been asking for from national leaders for years, even decades."
Rep. Sam Graves (R-Mo.), the Transportation and Infrastructure Committee's top Republican, called the Biden proposal "a multi-trillion-dollar partisan shopping list of progressive priorities, all broadly categorized as 'infrastructure and paid for with massive, job-killing tax increases."
The proposal doesn’t change tax rates for individuals, although there were earlier indications that Biden would raise taxes on any individual with an annual income over $400,000.
The decision not to touch individual rates is important for the many engineering and construction companies that are organized as partnerships, sole proprietorships, so-called S corporations and other “pass-through” entities. Such businesses are taxed at the individual, not corporate, rate, and raising rates on individuals making more than $400,000 would undoubtedly hit many of those firms hard.
Just the Start
“This is the beginning of a process,” the official said, noting that the administration already has begun to reach out to congressional Republicans and Democrats.
He said that the proposals are “common sense areas where we’ve seen, and continue to see, bipartisan support—and in fact bipartisan urging that we move forward on them.”
The official added that if lawmakers “have other ideas” on how to offset the proposal’s price tag or to structure the components, “that’s what this process is going to be about.”
He added, “Our hope is that we can advance the process and deliver for the American people.”
As large as the proposed American Jobs Act is, it is only the first of two major legislative proposals from Biden.
White House Press Secretary Jen Psaki said in her March 29 briefing that the president would follow up “in the coming weeks” with a second package that would include “investments in child care, health care, education and other areas” but is not likely to include further infrastructure elements.
Story updated 3/31/2021 with Biden speech, and industry and congressional comments.
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