President Joe Biden today unveiled a new $2 trillion infrastructure proposal titled The American Jobs Plan. The statement introducing the plan notes that the United States currently ranks 13th in the world for the quality of our infrastructure, and that our public domestic investment as a share of the economy has fallen more than 40% since the 1960s. It calls attention to the fact that our roads and bridges are crumbling and that our electrical grid keeps failing. Too few people have access to affordable housing or to the Internet, while our infrastructure for caregiving—a vital part of our lives—is fragile, it says. It promises to unify and mobilize the country to address climate change and the rise of an autocratic China.
The plan calls for rebuilding American infrastructure and creating jobs. It provides $115 billion for repairing 10,000 bridges, modernizing 20,000 miles of highways and roads, and building a half a million chargers for electric vehicles. It provides $100 billion for installing broadband across the country and $100 billion to strengthen our electrical grid. It calls for replacing lead pipes in our water supply and provides $213 billion to build affordable housing.
It will raise wages and benefits for home care workers, secure U.S. supply chains, and train Americans for jobs in the new economy. It will protect workers' right to organize and bargain collectively, and it will make sure that American goods are shipped on vessels under a U.S. flag, with crews from the U.S.
The plan addresses climate change and persistent racial injustice. It invests in technology to address the climate crisis and put the U.S. at the forefront of clean energy technology and clean energy jobs. It will invest in technology and innovation at Historically Black Colleges and Universities, and work to eliminate gaps in access to innovation grants to communities of color and rural communities.
To pay for the investment in the country, Biden is proposing an accompanying tax plan, the Made in America Tax Plan, to raise taxes on corporations. If this measure passes, it will pay for the American Jobs Plan in 15 years, and will reduce deficits from then on. Biden wants to roll back former president Trump's 2017 tax cuts, which slashed corporate taxes. He proposes to set the corporate tax rate at 28%, from its current rate of 21%-- still nowhere near the 35% tax rate before the 2017 tax cuts. He also plans to discourage offshoring of corporations and to enact a minimum tax on a corporation's "book income" (what they advertise to their investors while telling the government they made far less), and to get rid of subsidies for fossil fuels.
Biden is making a historic gamble that Americans are tired of the past forty years of austerity and are instead eager for the government to invest in America again. He is also pushing back on the argument that tax cuts are good for the economy. "This is not a plan that tinkers around the edges," he said yesterday as he introduced it at the United Brotherhood of Carpenters and Joiners of America Pittsburgh Training Center. "It is a once in a generation investment in America unlike anything we've done since we built the interstate highway system and the space race decades ago."
Biden's invocation of the interstate highway system, begun under Republican President Dwight Eisenhower in 1956, was not frivolous. Eisenhower had traveled from Washington, D.C., to San Francisco in 1919 with 72 military vehicles and about 280 officers and enlisted men as part of an army convoy designed to show far-flung communities the military's new machinery. When the nation's roads proved so bad that the convoy never averaged more than 10 miles per hour, the journey also illustrated the need for new national roads.
Entering the White House in 1953, Eisenhower three years later pushed through the $25 billion Federal-Aid Highway Act to build 41,000 miles of road and tie the nation together. The act jump-started the economy not only by providing jobs, but also by creating new markets for new motels, diners, gas stations, and towns along the new routes. The highways were a symbol of what investing in the nation could do for its citizens.
And invest they did. The top marginal income tax rate during the Eisenhower administration, for incomes over $200,000, was 91%. (Two hundred thousand dollars in 1956 is about $2 million today.) As the country rebuilt itself and helped to rebuild Europe after WWII, the economy boomed. Between 1945 and 1960, the nation's gross national product jumped 250% from $200 billion to $500 billion. American incomes doubled between 1945 and 1970.
But men opposed to government regulation and taxation insisted that the postwar system was replacing America's capitalist economy with socialism. Then the economic stagnation of the 1970s, combined with runaway inflation that thrust people into higher tax brackets without increasing their real buying power, helped to push the idea that tax cuts would feed economic investment. Since 1981, when President Ronald Reagan took office, the idea that tax cuts would bolster economic growth was the orthodoxy that drove politics, and they became the go-to Republican plan for economic growth.
Experience has proven that tax cuts do not spur growth. Instead, money has moved upward dramatically in the past forty years. The upward thrust of wealth has been especially notable during the pandemic, when U.S. billionaires added more than $1 trillion to their wealth even as the U.S. suffered the sharpest rise in its poverty rate in more than 50 years. By January 2021, the combined fortune of the 660 billionaires in the U.S. had climbed to $4.1 trillion, an increase of more than 38% since the beginning of the pandemic. The fortunes of the wealthiest 15 billionaires increased more than 58%.
For their part, Republican lawmakers are blasting Biden's infrastructure plan as anti-business, a tax-and-spend plan. Senate Minority Leader Mitch McConnell (R-KY) said, "It's called infrastructure, but inside the Trojan horse is going to be more borrowed money and massive tax increases on all the productive parts of our economy." Former president Trump said: "If this monstrosity is allowed to pass, the result will be more Americans out of work, more families shattered, more factories abandoned, more industries wrecked, and more Main Streets boarded up and closed down."
And yet, it is hard to see their objections as anything but the usual pattern of Republican tax cuts that benefit the very wealthy followed by complaints that the Democrats who want to invest in society are racking up deficits. Even before the pandemic, when the economy was strong, Republicans under Trump took on massive debt. In 2017, the national debt was $14.7 trillion; the Congressional Budget Office projected that Trump's spending and tax cuts even before the pandemic spending would add an extra $10 trillion by 2025.
The idea of infrastructure spending is popular with Republicans: it enticed the former president over his four years, leading two years ago to a statement from House Speaker Nancy Pelosi (D-CA) and then-Senate Minority Leader Chuck Schumer (D-NY) that they and Trump had agreed on a $2 trillion package with details forthcoming. Yesterday, Representative Madison Cawthorn (R-NC) took to Twitter to celebrate money coming to his state from the American Rescue Plan, appearing to take credit for a law he—and all other Republicans—voted against.
And polls say that government investment in our country, paid for with taxes on top earners, is popular: a new Morning Consult/Politico poll says that by a two-to-one margin voters prefer a $3 trillion infrastructure bill that includes tax hikes on those who make more than $400,000 a year and corporations to one that does not have those tax hikes.
Facing Republican obstruction, Biden is also facing complaints from the Congressional Progressive Caucus whose members object that the package doesn't adequately address climate change. But Biden seems to be betting that Americans of all political stripes will rally to a new politics that invests in the country, including the rural areas that now often vote Republican. Pelosi called the plan "a visionary, once-in-a-century investment in the American people and in America's future."