The American Jobs Act of 2021: President Biden’s Sweeping Proposal to Bring America’s Infrastructure into the 21st Century

Faegre Drinker Biddle & Reath LLP

On March 31, 2021, President Biden introduced the American Jobs Plan of 2021, a sweeping proposal intended to modernize domestic infrastructure, boost job creation and bolster U.S. competitiveness. The ambitious Plan calls for a $2 trillion investment over an eight-year period aimed to rebuild the nation’s aging infrastructure (including roads, bridges and waterways), bolster infrastructure and supply chain resiliency, improve access to caregivers, and position the U.S. as leaders in research and development. We believe that the Biden administration’s infrastructure goals and initiative present significant business opportunities for a wide range of contractors in various industries. Given the holistic nature of the “Build Back Better” effort — specifically, the interplay and overlap with the administration’s climate change and sustainability, cybersecurity and supply chain proposals — companies are wise to think innovatively in order to best position themselves to take advantage of these new revenue opportunities.

Specifically, the American Jobs Plan prioritizes four key investment areas: traditional transportation infrastructure; modern infrastructure, such as electricity and broadband; care economy and infrastructure; and research and development of future technologies.

The American Jobs Plan is the cornerstone of President Biden’s post-pandemic economic agenda and supports his larger “Build Back Better” initiative. In a departure from traditional infrastructure efforts of the past, the Plan prioritizes addressing the looming climate crisis and advancing racial equity. It also builds on other policy themes recurring throughout the Biden administration’s first 100 days, such as emphasizing “Buy American,” creating small and minority business opportunities and advancing clean energy technologies. Notably, a complementary proposal addressing health care, childcare and education – what the Biden administration refers to as “human infrastructure” – is expected to be unveiled in the coming weeks. Below, we summarize the core provisions of each investment area.

TRADITIONAL TRANSPORTATION INFRASTRUCTURE

The American Jobs Plan is expected to allocate $621 billion to transportation infrastructure and resiliency. This includes a $50 billion investment to safeguard critical infrastructure and services, defend vulnerable communities, and maximize the resiliency of land and water resources. Additionally, the Plan would offer federal training and procurement support to state, local and tribal governments. Key investments include:

  • Roads and Bridges: $115 billion to modernize roads, highways and bridges in critical need of repair.
  • Electric Vehicles: $174 billion to electric vehicles, including the construction of a national network of electric vehicle charging stations. Additionally, the Plan encourages tax incentives for the purchase of American-made electric vehicles and seeks to “utilize the vast tools of federal procurement to electrify the federal fleet.”
  • Public Transit: $85 billion to improve and expand public transit systems and address looming repair backlogs.
  • Freight Rail: $80 billion to address Amtrak’s repair backlog, modernize the Northeast Corridor, improve existing routes, and enhance grant programs focusing on rail safety and electrification. 
  • Waterways and Airports: $17 billion to revitalize waterways and ports, and $25 billion to improve airports.

MODERN INFRASTRUCTURE — CLEAN WATER, BROADBAND, AND ELECTRIC

The American Jobs Plan also calls for significant investment to revitalize American clean water supplies, broadband access and domestic power infrastructure, all while spurring job creation and improving public health outcomes. Key investments include:

  • Clean Drinking Water: $111 billion to modernize domestic drinking water, wastewater and stormwater systems, and to replace 100% of all lead pipes and service lines.
  • Broadband Access: $100 billion to expand high-speed broadband networks to ensure universal availability for all Americans, while prioritizing the creation of “future proof” internet infrastructure in the communities that need it most. Additionally, the Plan promotes price transparency and competition among internet service providers.
  • Electric: $100 billion to improve power grid resiliency, plug orphan oil and gas wells, and achieve 100% carbon-free electricity by 2035. To this end, the federal government will leverage its purchasing power to buy 24/7 clean power for federal buildings.
  • Commercial Buildings and Housing: $213 billion to build, preserve and retrofit two million homes and commercial buildings. Additionally, the plan would seek to eliminate exclusionary zoning and harmful land use policies, along with devoting $40 billion to improve public housing infrastructure.
  • Education: $100 billion to construct and modernize public schools, and an additional $25 billion to construct and upgrade childcare facilities.

CARE ECONOMY AND INFRASTRUCTURE

The American Jobs Plan also calls for a $400 billion investment to expand access to quality, affordable home- or community-based care for the elderly and people with disabilities. This includes expanded Medicaid access for certain services, elimination of existing care backlogs and pay increases for care workers.

RESEARCH AND DEVELOPMENT OF FUTURE TECHNOLOGIES

The American Jobs Plan prioritizes investment in research and development, domestic manufacturing, small businesses and workforce development in order to advance U.S. competitiveness on the global stage. Key investments include:

  • R&D for Future Technologies: $180 billion to advance American leadership in critical technologies and upgrade U.S. research infrastructure, with a particular focus on research related to semiconductors, advanced communications and energy technologies and biotechnology. The Plan would devote an additional $35 billion to establish the U.S. as a leader in climate science, innovation, and research and development.
  • U.S. Manufacturing and Small Businesses: $300 billion to strengthen domestic manufacturing and small businesses, with a focus on supply chain resiliency for critical goods and preventing job loss in future pandemics. Additionally, the Plan would invest $46 billion to purchase and encourage domestic manufacture of electric vehicles, charging ports, clean materials, and other critical technologies necessary to achieve net-zero emissions by 2050. To advance domestic manufacturing capabilities and job creation, the Plan also calls for significant investment in the creation of regional innovation hubs and the expansion of the Manufacturing Extensions Partnership.
  • Workforce Development: $100 billion towards workforce training programs and workforce protection systems, with a focus on developing opportunities in underserved communities.

FUNDING

President Biden intends to fund his ambitious infrastructure plan by proposing a series of corporate tax reforms dubbed the “Made in America Tax Plan.” The funding proposal would seek to raise corporate taxes by $2 trillion over the next 15 years, and would simultaneously incentivize U.S. job creation and investment, end profit shifting to foreign tax havens and ensure the largest corporations “pay their fair share.”

Notably, the tax overhaul would raise the corporate tax rate to 28% (an increase from the 21% rate established by former President Trump’s 2017 tax cuts), but still lower than the 35% rate that was in effect prior to 2017. The Plan also proposes a minimum 21% tax on multinational corporations, and eliminates a rule allowing U.S. companies to pay zero taxes on the first 10% of returns when they locate investments in foreign countries. Additional changes include eliminating tax loopholes for intellectual property, prohibiting expense deductions for offshore jobs and creating a 15% minimum tax on corporate “book incomes.”

The Biden administration intends to pair the Made in America Tax Plan with broader enforcement initiatives to combat corporate tax evasion, which are expected to be announced in the coming weeks.

THE PATH FORWARD

It is now up to Congress to translate President Biden’s proposed infrastructure framework into actual legislation. The Biden administration is pressing for passage of the infrastructure package by summer 2021, but as always, the devil remains in the details. Despite President Biden’s calls for a bipartisan way forward, it appears increasingly likely that passage of such a broad-reaching infrastructure bill will occur without congressional Republican support. While Republicans historically support efforts to rebuild and revitalize traditional infrastructure, there remains mounting opposition to corporate tax hikes. Thus, any widespread bipartisan support for the infrastructure Plan is doubtful.

Observers, therefore, should not be surprised if congressional Democrats again rely on budget reconciliation (the same expedited budgetary process used to pass last month’s $1.9 trillion coronavirus relief bill) to pass any infrastructure package. Regardless, because congressional Democrats only narrowly control both chambers, they will likely face a steep challenge in crafting an infrastructure bill that can obtain the majority votes necessary to push it through.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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