Hogan Lovells

[co-author: Shelley Castle]

On March 31, the Administration unveiled its long-awaited infrastructure proposal from the President’s Build Back Better Plan. The American Jobs Plan will impact a multitude of industries and the economy in seven key policy areas.

  • The first prong of a larger infrastructure package, ‘The American Jobs Plan’ focuses on investments in transportation, broadband, clean energy, R&D, and domestic manufacturing
  • Democrats are likely to use Budget Reconciliation to overcome Republican objections in the Senate to passing the massive infrastructure package
  • Increased taxes on corporations will pay for new government spending in the proposal
  • Climate change and social justice are major policy issues driving the proposal’s spending priorities (40 percent of climate and clean infrastructure investments target disadvantaged communities)
  • China’s threatening economic influence also served to drive funding priorities in the proposal to position the United States to out-compete and meet the challenges posed by the “ambitions of an autocratic China”
  • The proposal also focuses federal investments in rural geographies and communities “impacted by the market-based transition to clean energy”

President Biden unveiled the first prong of his Build Back Better Plan on March 31, 2021 as the Administration’s next big policy goal. Democrats are likely to use a potent legislative tool called Budget Reconciliation, which circumvents the filibuster and need to garner at least 10 Republican senators, to pass the massive legislative proposal through the U.S. Senate.

The American Jobs Plan proposes to pay for over $2 trillion in spending by making various changes to the corporate tax code — including raising the corporate tax rate and increasing taxes on foreign income of U.S. multinational corporations — among many other proposals. The Biden Administration claims its proposed changes to the corporate tax system will incentivize investment in the United States and reward companies helping to grow the U.S. economy. It also argues these tax policy changes will level the playing field between domestic companies and multinationals.

The Administration has made clear that federal investments in infrastructure made through the American Jobs Plan will prioritize addressing the impacts of climate change and that funding will particularly target historically disadvantaged communities and populations, which are disproportionately affected by a changing climate. These targeted investments include delivering high-speed broadband to every American; eliminating lead pipes in all drinking water systems across the country; building and rehabilitating affordable, energy efficient housing; and creating jobs and higher wages for home care workers “— the majority of whom are women of color.”

The White House Fact Sheet released on the American Jobs Plan also makes numerous references to competing with China. According to the White House, the proposal seeks “to position the United States to out-compete China” and counter the ambitions of the “autocratic” rival nation. Beyond traditional infrastructure investments (i.e. roads, trains, and bridges), Biden’s proposal seeks to counter China’s aggressive R&D expenditures by proposing $180 billion for R&D in new technologies related to artificial intelligence, biotechnology and computing. New investments in R&D would be paired with $300 billion to support American manufacturers and small businesses.

The American Jobs Plan would also focus investments in rural communities, including an attempt to aid those impacted by a transition away from carbon-intensive energy production (think coal and West Virginia where both D and R Senators likely have outsized influence on the ultimate infrastructure package).

It is not yet clear how quickly Congress will be able to move this package to enactment (if at all), but optimistic estimates point to mid-to-late summer. The Biden Administration has yet to release the second prong of the Build Back Better Plan that will focus on improving wages for essential workers and caregiving for children and disadvantaged persons. That second prong is expected to be unveiled in mid-April. And, unlike their generally unified support for Biden’s American Rescue Plan, there is strong division between moderate and progressive congressional Democrats on what should be included and prioritized in an infrastructure package as well as its overall price tag.

That intra-party disagreement is separate from the blanket opposition a package of this size will face from congressional Republicans, who uniformly opposed the spending levels and scope of the last COVID relief bill. The Administration claims it has not yet made a hard decision to use a party-line approach through reconciliation to pass the infrastructure measure, expressing interest in gaining Republican support, but the odds of 10 Senate Republicans (the number required to overcome a filibuster) voting in favor of the proposal seems close to zero.

The American Jobs Plan is characterized by seven separate policy areas outlined below.

Build world-class transportation infrastructure: fix highways, rebuild bridges, and upgrade ports, airports and transit systems

    • This policy area would provide an additional $621 billion for our nation’s roads, bridges, rail, ports, airports, and transit systems, including —
      • $20 billion to improve road safety for all users, including increases to existing safety programs
      • $85 billion to modernize existing transit programs and help agencies expand their systems to meet rider demand
      • $80 billion to address Amtrak’s repair backlog
      • $174 billion investment to win the electric vehicle (EV) market by establishing grant and incentive programs for state and local governments and the private sector to build a national network of 500,000 EV chargers by 2030 and electrifying at least 20 percent of our nation’s yellow school bus fleet through a new Clean Buses for Kids Program at the Environmental Protection Agency
      • $25 billion for airports, including funding for the Airport Improvement Program
      • $17 billion for inland waterways, coastal ports, land ports of entry, and ferries
      • $20 billion for a new program that will reconnect neighborhoods cut off by historic investments and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access
      • $25 billion for a dedicated fund to support ambitious projects that have tangible benefits to the regional or national economy but are too large or complex for existing funding programs
      • $50 billion in dedicated investments to improve infrastructure resilience through FEMA’s Building Resilient Infrastructure and Communities program, HUD’s Community Development Block Grant program, and new initiatives at the Department of Transportation

Rebuild clean drinking water infrastructure, a renewed electric grid, and high-speed broadband to all Americans

    • This policy section would provide $111 billion to replace 100 percent of the nation’s lead pipes and service lines to deliver clean drinking water, including—
      • $45 billion for the Environmental Protection Agency’s Drinking Water State Revolving Fund and in Water Infrastructure Improvements for the Nation Act (WIIN) grants
      • $56 billion in grants and low-cost flexible loans to states, Tribes, territories, and disadvantaged communities across the country to upgrade aging water systems
      • $10 billion in funding to monitor and remediate PFAS (per- and polyfluoroalkyl substances) in drinking water and to invest in rural small water systems and household well and wastewater systems
    • This section would also invest $100 billion to revitalize America’s digital infrastructure and implement policy changes that—
      • prioritize building “future proof” broadband infrastructure in unserved and underserved areas so that our nation finally reaches 100 percent high-speed broadband coverage
      • prioritize support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives
      • lift barriers that prevent municipally-owned or affiliated providers and rural electric co-ops from competing on an even playing field with private providers, and requiring internet providers to clearly disclose the prices they charge
      • reduce internet prices for all Americans, increase adoption in both rural and urban areas, hold providers accountable, and save taxpayer money — the Biden Administration believes continually providing subsidies to cover the cost of overpriced internet service is not the right long-term solution for consumers or taxpayers
    • And provide $100 billion to reenergize America’s power infrastructure and implement policy changes that—
      • create a targeted investment tax credit that incentivizes the buildout of at least 20 gigawatts of high-voltage capacity power lines and mobilizes tens of billions in private capital off the sidelines
      • establish a new Grid Deployment Authority at the Department of Energy that allows for better leverage of existing rights-of-way — along roads and railways — and supports creative financing tools to spur additional high priority, high-voltage transmission lines
      • provide a ten-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage
      • establish an Energy Efficiency and Clean Electricity Standard (EECES) aimed at cutting electricity bills and electricity pollution, increasing competition in the market, incentivizing more efficient use of existing infrastructure, and continuing to leverage the carbon pollution-free energy provided by existing sources like nuclear and hydropower
      • provide a $16 billion that will put hundreds of thousands to work in union jobs plugging oil and gas wells and restoring and reclaiming abandoned coal, hard rock, and uranium mines
      • provide a $5 billion investment in the remediation and redevelopment of Brownfield and Superfund sites, as well as related economic and workforce development
      • provide additional support for the Economic Development Administration’s Public Works program (lifting the cap of $3 million on projects) and “Main Street” revitalization efforts through HUD and USDA
      • reform and expand the bipartisan Section 45Q tax credit, making it direct pay and easier to use for hard-to-decarbonize industrial applications, direct air capture, and retrofits of existing power plants
      • provide $10 billion to create of a new Civilian Climate Corps that will mobilize the next generation of conservation and resilience workers focusing on projects that advance environmental justice

Build, preserve, and retrofit more than two million homes and commercial buildings; modernize our nation’s schools, community colleges, and early learning facilities; and upgrade veterans’ hospitals and federal buildings

    • This section would invest $213 billion to produce, preserve, and retrofit more than two million affordable and sustainable places to live, including—
      • providing targeted tax credits, formula funding, grants, and project-based rental assistance, to extend affordable housing and rental opportunities to underserved communities nationwide, including rural and tribal areas
      • enacting the bipartisan Neighborhood Homes Investment Act (NHIA), which would offer $20 billion worth of NHIA tax credits over the next five years and result in approximately 500,000 homes built or rehabilitated
      • enacting an innovative, new competitive grant program that awards flexible funding to jurisdictions that take concrete steps to eliminate barriers to affordable housing
      • $40 billion to improve the infrastructure of the public housing system in America to address critical life-safety concerns, mitigate imminent hazards to residents, and undertake energy efficiency measures
      • establishing a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation
      • upgrading homes through block grant programs, the Weatherization Assistance Program, and by extending and expanding home and commercial efficiency tax credits
    • It would also provide funding to modernize our nation’s schools and early learning facilities, including—
      • $100 billion to upgrade and build new public schools, through $50 billion in direct grants and an additional $50 billion leveraged through bonds
      • $12 billion for community college infrastructure — states would be responsible for using funds to address existing physical and technological infrastructure needs at community colleges and identifying strategies to address access to community college in education deserts
      • $25 billion to help upgrade child care facilities and increase the supply of child care in areas that need it most
      • an expanded tax credit to encourage businesses to build child care facilities at places of work (employers would receive 50 percent of the first $1 million of construction costs per facility)
    • Finally, this section of the proposal would provide funding to upgrade VA hospitals and federal buildings, including—
      • $18 billion for the modernization of Veterans Affairs hospitals and clinics
      • $10 billion in the modernization, sustainability, and resilience of federal buildings, including through a bipartisan Federal Capital Revolving Fund to support investment in a major purchase, construction or renovation of Federal facilities

Solidify the infrastructure of our care economy by creating jobs and raising wages and benefits for essential home care workers

    • This policy area provides $400 billion toward expanding access to quality, affordable home- or community-based care for aging relatives and people with disabilities, including—
      • expand access to home and community-based services (HCBS) and extend the longstanding Money Follows the Person program that supports innovations in the delivery of long-term care
      • support for caregiving jobs that include benefits and the ability to collectively bargain, through the HCBS expansion under Medicaid, with the goal of building state infrastructure to improve the quality of services and to support workers

Invest in R&D, revitalize manufacturing and small businesses, and train Americans for the jobs of the future

    • This section would provide $180 billion for R&D and investments in the technologies of the future, including—
      • $50 billion for the National Science Foundation (NSF) to create a technology directorate that will collaborate with and build on existing programs across the government — focus will be on semiconductors, advanced computing, advanced communications technology, advanced energy technologies, and biotechnology
      • $30 billion in additional funding for R&D that spurs innovation and job creation, including in rural areas
      • $40 billion for upgrading research infrastructure in laboratories across the country, including brick-and-mortar facilities and computing capabilities and networks; funds would be allocated across the federal R&D agencies, including at the Department of Energy
        1. half of the funds would be reserved for Historically Black College and Universities (HBCUs) and other Minority Serving Institutions, including the creation of a new national lab focused on climate that will be affiliated with an HBCU
      • $35 billion to invest in the full range of solutions needed to achieve technology breakthroughs that address the climate crisis — including launching ARPA-C to develop new methods for reducing emissions and building climate resilience, as well as expanding across-the-board funding for climate research
      • $5 billion increase in funding for other climate-focused research
      • $15 billion for demonstration projects for climate R&D priorities, including utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, rare earth element separations, floating offshore wind, biofuel/bioproducts, quantum computing, and electric vehicles, as well as strengthening U.S. technological leadership in these areas in global markets
      • $10 billion R&D investment at HBCUs and other MSI’s
      • $15 billion to create up to 200 centers of excellence that serve as research incubators at HBCUs and other MSIs
    • It would also invest $300 billion to retool and revitalize American manufacturers and small businesses, including—
      • $50 billion to create a new office at the Department of Commerce dedicated to monitoring domestic industrial capacity and funding investments to support production of critical goods
      • $50 billion for semiconductor manufacturing and research, as called for in the bipartisan CHIPS Act
      • $30 billion over 4 years to create U.S. jobs and prevent the severe job losses caused by pandemics through major new investments in medical countermeasures manufacturing; research and development; and related biopreparedness and biosecurity
      • $46 billion investment in federal buying power to enable the domestic manufacture of: electric vehicles; charging ports; electric heat pumps for residential heating and commercial buildings; clean materials; as well as critical technologies like advanced nuclear reactors and fuel, especially in rural areas
      • $20 billion for regional innovation hubs and creation of a Community Revitalization Fund — at least ten hubs will leverage private investment to fuel technology development, link urban and rural economies, and create new businesses in regions beyond the current handful of high-growth centers
      • $14 billion for NIST to bring together industry, academia, and government to advance technologies and capabilities critical to future competitiveness — includes quadrupling support for the Manufacturing Extensions Partnership to increase the involvement of minority-owned and rurally-located small- and-medium-sized enterprises in technological advancement
      • $52 billion for domestic manufacturers, with a focus on supporting rural manufacturing and clean energy
      • specific support for modernizing supply chains, including in the auto sector, like extending the 48C tax credit program
      • creation of a new financing program to support debt and equity investments for manufacturing to strengthen the resilience of America’s supply chains
      • $31 billion to create a national network of small business incubators and innovation hubs; these programs would give small businesses access to credit, venture capital, and R&D dollars
      • $5 billion for a new Rural Partnership Program to help rural regions, including Tribal Nations, build on their unique assets and realize their vision for inclusive community and economic development
    • And provide $100 billion in workforce development and implement associated policy changes, including—
      • $40 billion for a new Dislocated Workers Program and sector-based training
      • $12 billion investment to target workforce development opportunities in underserved communities, including $5 billion over eight years in support of evidence-based community violence prevention programs
      • eliminating sub-minimum wage provisions in section 14(c) of the Fair Labor Standards Act
      • $48 billion for American workforce development infrastructure and worker protection, including registered apprenticeships and pre-apprenticeships, creating one to two million new registered apprenticeships slots, and strengthening the pipeline for more women and people of color to access these opportunities

Create good-quality jobs that pay prevailing wages in safe and healthy workplaces while ensuring workers have a free and fair choice to organize, join a union, and bargain collectively with their employers

    • This section would implement policy changes to create new union jobs for American workers, including—
      • ensuring all workers have a free and fair choice to join a union by passing the Protecting the Right to Organize (PRO) Act, and guarantee union and bargaining rights for public service workers
      • tying federal investments in clean energy and infrastructure to prevailing wages and require transportation investments to meet existing transit labor protections
      • increasing penalties when employers violate workplace safety and health rules

The Made in America tax plan

    • The tax section of the proposal would make changes to the corporate tax code and increase enforcement activities with the goal of incentivizing job creation and investment in the United States, including—
      • increasing the corporate tax rate to 28 percent
      • increasing the GILTI tax on U.S. corporations to 21 percent and calculate it on a country-by-country basis so it hits profits in tax havens
      • encouraging other countries to adopt strong minimum taxes on corporations, so that foreign corporations aren’t advantaged and foreign countries can’t try to get a competitive edge by serving as tax havens
      • denying deductions to foreign corporations on payments that could allow them to strip profits out of the United States if they are based in a country that does not adopt a strong minimum tax
      • seeking a global agreement on a strong minimum tax through multilateral negotiations
      • preventing U.S. Corporations from inverting or claiming tax havens as their residence
      • denying companies expense deductions for offshoring jobs and credit expenses for onshoring
      • completely eliminating tax incentives in the 2017 Trump tax law for “Foreign Derived Intangible Income” (FDII)
      • creating a 15 percent minimum tax on the income corporations use to report their profits to investors—known as “book income”
      • eliminating tax preferences for fossil fuels and restoring payments from polluters into the Superfund Trust Fund
      • providing additional resources for Internal Revenue Service to more effectively enforce tax laws against corporations; this will be paired with a broader enforcement initiative to be announced in the coming weeks to address tax evasion among corporations and high-income Americans

Stayed tuned for further examination and deeper analyses from Hogan Lovells on specific policy areas targeted in the American Jobs Plan.

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