President Biden’s proposed American Jobs Plan aims to overhaul America’s faltering infrastructure in order to meet the technology and needs of the twenty-first century. The proposal is centered on repairing 173,000 miles of highways and 45,000 bridges, tunnels, and dams. High speed broadband will be expanding nationally, all lead pipes will be eliminated, and fossil fuel workers will be funded to learn the skills needed to compete in the new economy.
National polls report that repair of our infrastructure has the support of 97% of the nation. Biden’s more ambitious goals of reshaping social services are more controversial, but he considers them essential for moving the United States from an also ran status in evolving international norms to once more being a world leader. I will write about his non-controversial proposals in this essay and the more innovative proposals in my next.
Although hysterical right-wingers term Biden’s proposals as socialism, the president’s fifteen-year investment strategy is aimed at strengthening the capitalist system. A logical response to the proposal to spend two trillion dollars is who will pay for it? Whatever its merits, will it not again grossly inflate the national debt as did the policies of Obama and Trump? In a fifty-page but highly readable White House document released mid-April, Biden demonstrates how his plan is not only designed to pay for itself but to create a surplus that lowers rather than raises the national debt.
The American Jobs Plan requires major business to pay what Biden calls a fair share of the national tax burden. This means giving up some of the Trump tax cuts designed to stimulate the economy just as unemployed workers will soon lose the federal additions to their unemployment checks.
Biden has identified over 200 specific corporations that make billions in profits annually yet pay less than 10% in income taxes. Nearly a hundred of them, including behemoths such as Fed Ex, Kinder Morgan, Amazon, and Nike pay 0%.
Biden proposes a corporate tax of 21-28% with a mandate that all corporations pay at least 10% tax on earned income. He would also close legislative loopholes and end most subsidies. More generally, there would be a modest tax increase limited to people making at least $400,000 annual income. An increase in long term capital gains taxes may also be in order.
A significant number of corporate bigwigs have endorsed the plan. They include the liberal Bill Gates (Microsoft), the conservative Jeff Bezos (Amazon), and the centrist Jamie Dimon (JP Morgan-Chase). The stock market has signaled its support by rising to new all-time highs.
The vigorous economy the plan would generate would be a significant source of increased federal income, and millions of workers will have non-exportable jobs. Past history and present sentiment indicate their income will have a multiplying effect as they eat out, attend amusement events of all kinds, travel, make home improvements, and pay off their debts.
Another obvious plus is that the equipment needed for infrastructure repair is mainly made by domestic manufacturers such as John Deere. Increased production by such firms combined with the recovery from the COVD-19 pandemic means that the average national income will rise. Consequently, even without a tax rise, there will be more revenue flowing to Washington. We are already experiencing 6% growth, a rate not seen since the 1960s. If that trend continues, funds would be available to reduce the national debt.
A key element in the job plans is to wean the economy off fossil fuel over a fifteen-year time span. This includes $174 billion to aid electric car technology and practical aid such as creating 500,000 charging stations and replacing at least 20% of fossil fuel school buses with electrically powered counterparts. All federal vehicles would go electric. Another $213 billion will be used to renovate housing and $100 billion for rebuilding the electrical grid.
The proposal includes $50 billion for the domestic production of electrical batteries and microchips needed to carry out these changes. Given the international shortage of both, that means increasing production as soon as possible. Yet another transportation improvement is establishing a more reliable passenger and freight line service. This includes $80 billion to address Amtrak’s repair backlog and otherwise update the high-traffic Northeast Corridor.
Space does not allow for discussion of all aspects of the Biden plan, but what I’ve highlighted expresses its essence. The president has indicated he is more than open to hearing from Republicans and others on how his plan could be made more effective. Unalterable is his determination to invest heavily in America’s future. The wisdom of such a perspective was underscored by Warren Buffett (Berkshire Hathaway) in a public letter, “someone is sitting in the shade today because someone planted a tree a long time ago.”