Recently the Biden administration proposed a number of tax increases to fund infrastructure spending in their “American Jobs Plan”. Some of the goals of the bill are shared by both parties in theory, like repairing roads and bridges, but Democrats have stretched the meaning of infrastructure to the limit by including climate, social justice, and welfare provisions completely unrelated to their overall goal of upgrading the country’s infrastructure. As the economy continues to recover due to states reopening, this over $2 trillion bill would be the largest non-wartime non-emergency package ever passed.
Who isn’t for fixing potholes and upgrading roads? Traditionally, infrastructure has been a restrictive term pertaining mostly to transportation infrastructure. The American Jobs Plan, Republicans argue, allocates only a tiny amount of the $2 trillion to traditional infrastructure improvements. “This plan is not about rebuilding America’s backbone. Less than 6% of this massive proposal goes to roads and bridges…” Senate Minority Leader McConnell (R-KY) recently said. Senator Rob Portman (R-OH) told the press, “these broad policy priorities… are a far cry away from what we’ve ever defined as infrastructure.” But don’t take Republicans’ word for it; read the White House summary of the plan, which says the plan spends “$115 billion to modernize the bridges, highways, roads, and main streets that are in most critical need of repair.” Quick math tells us that this amount does indeed only represent only around 6% of the over $2 trillion proposed in the Administration’s American Jobs Plan.
The Administration and Democrats in Congress have conveniently come up with new terms to justify the majority of unrelated spending crammed into the American Jobs Plan. The plan supposedly invests in “human infrastructure” and “care infrastructure,” which has opened up the flood gates on what acceptable spending within the confined infrastructure could mean. Over $200 billion in the plan is directed at public housing, $35 billion is directed towards research and development related to climate change, and $170 billion is directed towards electric vehicles. The unrelated PRO Act has also been grafted onto the infrastructure plan, which would empower unions by overriding state right-to-work laws. This is only a fraction of the plan’s unrelated spending, which amounts to a liberal wish list of spending under the false banner of infrastructure.
To pay for the American Jobs Plan, the Administration has proposed a number of tax increases, including hiking the corporate rate, which many economists argue would depress wages and kill jobs at a time when the economy is just starting to recover. A recent Tax Foundation analysis finds that “an increase in the federal corporate tax rate to 28 percent would raise the U.S. federal-state combined tax rate to 32.34 percent, higher than every country in the OECD and all our major trade partners and competitors…” The same Tax Foundation analysis calculates that raising the corporate rate to 28% would eliminate nearly 160,000 jobs. Raising the corporate tax from 21 percent up to 28 percent would undo a key part of President Trump’s signature tax cut plan designed to boost wages and keep companies in the U.S. at a steep cost, according to economic analyses. Senate Minority Leader McConnell has called the plan a “Trojan horse for the largest set of tax hikes in a generation.”
In its current form, the American Jobs Plan is unlikely to pass Congress, but key provisions from the bill could make their way into law this year. Unfortunately for Republicans in Congress, Senate Democrats have indicated that they may willingly pass an infrastructure package through the same partisan process as they did for their most recent $1.9 trillion Covid-19 relief bill. This means Senate Majority Leader Schumer only needs to find 50 Senate votes in favor of some modified package which may be within his reach depending on how moderate Democrats like Sens. Manchin (D-WV) and Sinema (D-AZ) come down on the final legislation. In the coming weeks, look for the Administration to offer another large spending package under the guise of helping families and improving healthcare, paid for by even more tax increases on small businesses and individuals. A combination of these plans will likely be rolled into a larger package this year, or two smaller bills could be proposed along the lines of the Administration’s plans designed for maximum public relations impact – supposedly funding infrastructure, helping families, and improving health care by taxing corporations and the wealthy – except the majority of the spending has nothing to do with repairing roads or helping families, and many of tax increases will end up hurting the middle class.
Palmer Schoening is Chairman of the Family Business Coalition and part of AMAC Action’s advocacy team in Washington, DC.