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