WASHINGTON – President Biden’s economic advisers are preparing to recommend spending of up to $ 3 trillion in a broad set of efforts aimed at boosting the economy, reducing carbon emissions and narrowing economic inequality, starting with a giant infrastructure plan which can be financed in part by taxes increases in corporations and the wealthy.
After months of internal debate, Biden’s advisers are expected to present a proposal to the president this week that recommends splitting his economic agenda into separate pieces of legislation, rather than trying to push a giant package through Congress, according to people familiar with the plans and documents. obtained by The New York Times.
The total new spending on the plans would likely be $ 3 trillion, said a person familiar with them. That figure does not include the cost of extending new temporary tax cuts designed to combat poverty, which can reach hundreds of billions of dollars, according to estimates made by government officials. The authorities have not yet determined the exact cost breakdown between the two packages.
Biden supports all individual spending proposals and tax cuts under consideration, but it is unclear whether he will break his agenda into pieces again or what legislative strategy he and Democratic leaders will seek to maximize the chances of bringing the new programs to an end. Congress due to its narrow majority in both chambers.
Government officials warn that details of spending programs remain in flux. But the scope of the proposal under consideration highlights the aggressive approach that the Biden government wants to take in trying to harness the power of the federal government to reduce economic inequality, reduce carbon emissions that drive climate change and improve American manufacturing and high technology. . industries in a growing battle with China and other foreign competitors.
While the $ 1.9 trillion economic aid package that Biden signed earlier this month includes money to help vulnerable people and businesses survive until the end of the pandemic, it does little to advance Biden’s long-term economic agenda. campaigned.
The package under consideration would start this effort seriously. The first piece of legislation under discussion, which some Biden officials find most appealing to Republicans, business leaders and many moderate Democratic senators, would combine investments in manufacturing and advanced industries with what would be the most aggressive spending in the United States to reduce carbon emissions. and combat climate change.
It would spend heavily on infrastructure improvements, the deployment of clean energy and the development of other “high-growth industries of the future”, such as 5G telecommunications. It includes money for rural broadband, advanced training for millions of workers and 1 million affordable, low-energy housing units. Documents suggest that it will include almost $ 1 trillion in spending on the construction of roads, bridges, railways, ports, electric vehicle charging stations and improvements to the power grid and other parts of the energy sector alone.
Whether you will be able to obtain Republican support will largely depend on how the bill is paid.
Officials have been discussing offsetting some or all of infrastructure spending by raising corporate taxes, including raising the corporate income tax rate above the current 21 percent rate and a variety of measures to force multinational companies to pay more taxes. in the United States on the income you earn abroad. This strategy is unlikely to win Republican votes.
“I don’t think there will be any enthusiasm on our side for a tax hike,” Sen. Mitch McConnell of Kentucky, the Republican leader, told reporters last week. He predicted that the government’s infrastructure plan would be a “Trojan horse” for tax increases.
Biden’s team debated the merits of aggressively seeking a compromise with Republicans and business leaders in an infrastructure package, which would likely require the withdrawal or reduction of plans to raise corporate taxes or the readiness to move another bill. through a special parliamentary process this would require only Democratic votes. Biden’s advisers plan to present the proposal to Congressional leaders this week.
“President Biden and his team are considering a number of potential options for investing in working families and reforming our tax code to reward work, not wealth,” said Jen Psaki, press secretary for the White House. “These talks are ongoing, so any speculation about future economic proposals is premature and not a reflection of the White House’s thinking.”
Biden said in January that his relief bill would be followed by a “Better Recovery Plan to Rebuild”, echoing the language of his campaign agenda. He said the plan “would make historic investments in infrastructure and manufacturing, innovation, research and development and clean energy. Investments in the care economy and in the skills and training needed by our workers to compete and win the global economy of the future. “
The deadline for this proposal – which Biden had initially said would come in February – slipped when government officials focused on completing the aid package. In the meantime, government officials have concluded that their best chance of advancing Biden’s broader agenda in Congress will be to split “Build Better” into component proposals.
The first plan, centered on infrastructure, includes much of the plan that Biden offered in the 2020 election. His campaign predicted that Biden’s investments would create 5 million new jobs in manufacturing and advanced industries, in addition to restoring all jobs lost in the last year in the Covid-19 crisis.
The second plan under discussion is focused on what many progressives call the country’s human infrastructure – students, workers and people left on the margins of the labor market – according to documents and people familiar with the discussions. He would spend heavily on education and programs designed to increase women’s participation in the workforce, helping them to balance work and care. It includes free community college, pre-K universal education, a national paid leave program and efforts to reduce daycare costs.
That plan would also make two temporary provisions in the recent Biden relief bill permanent: expanded subsidies for low- and middle-income Americans to buy health insurance and tax credits to reduce poverty, especially for children.
Authorities have evaluated the financing of this plan through initiatives that would reduce federal spending by as much as $ 700 billion over a decade, such as allowing Medicare to negotiate the costs of prescription drugs with pharmaceutical companies. The authorities discussed further offsetting spending increases by raising taxes on individuals and families who earn a lot, such as raising the marginal income tax rate from 37% to 39.6%.
Government officials were still debating details about tax increases at the end of last week. One question is how, exactly, to apply Biden’s campaign promise that no one who earns less than $ 400,000 a year would pay more in federal taxes under his plan. Currently, the highest marginal income tax rate starts at just over $ 500,000 for individuals and over $ 600,000 for couples. Mr. Biden proposed to increase this rate in the campaign.
The authorities say they are committed to not increasing the tax accounts of any individual who earns less than $ 400,000. But they have debated whether to lower the income limit to the upper marginal rate, to tax all individual income above $ 400,000 to 39.6%, in order to increase revenue for their spending plans.
Biden’s broader economic agenda will face a more difficult path in Congress than his relief bill, which was entirely financed by federal loans and passed through a special parliamentary tactic with only Democratic votes. Mr. Biden could again try to use the same budget reconciliation process to pass a bill on party lines. But moderate Democrats in the Senate have insisted that the president involve Republicans in the next wave of economic legislation and that new spending be offset by tax increases.
Large business groups and some Republican congressmen expressed support for some of Biden’s overall objectives, most notably efforts to rebuild roads, bridges, water and sewage systems and other infrastructure across the country. The US Chamber of Commerce and the National Association of Manufacturers spoke favorably about spending up to $ 2 trillion on infrastructure this year.
But the Republicans are united in opposing most of the tax increases that Biden has proposed. Business groups have warned that corporate tax increases would undermine their support for an infrastructure plan. “This is the kind of thing that can destroy a country’s competitiveness,” said Aric Newhouse, senior vice president for government policy and relations at the National Association of Manufacturers, last month.
Government officials are considering extending some parts of Trump’s tax law that are about to expire, such as the ability to immediately deduct new investments as part of their plans in order to gain business support.
Major business groups have also expressed openness for Biden to share his “Build Better” agenda to approve smaller parts with bipartisan support.
“If you try to resolve all the important issues in a bill, I don’t know if that is the recipe for success,” said Neil Bradley, executive vice president and policy director for the United States Chamber of Commerce, in an interview on last month. “It doesn’t have to be done in a package.”