WASHINGTON – President Biden’s economic advisers are preparing to spend as much as $ 3 billion on a comprehensive series of efforts to boost the economy, reduce carbon emissions and reduce economic inequality, starting with a giant infrastructure plan partially tax-driven can be funded increases in corporations and rich.
After months of internal debate, Biden’s advisers are expected to present a proposal to the president this week recommending cutting his economic agenda into various legislative articles, 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.
A celebrity said that the total new spending in the plans is likely to be $ 3 billion. That is not the cost of extending new temporary tax cuts aimed at fighting poverty, which, according to estimates compiled by administration officials, could reach hundreds of billions of dollars. Officials have not yet determined the exact distribution of costs between the two packages.
Mr. Biden supports all of the individual spending and tax cuts being considered, but it is unclear whether he will divide his agenda into pieces, or what legislative strategy he and Democratic leaders will pursue to maximize the chances of pushing through the new programs. Congress gave their narrow majority in both chambers.
Administration officials warn that details of the spending programs are underway. But the scale of the proposal underscores the aggressive approach the Biden government wants to take while seeking to harness the power of the federal government to curb economic inequality, reduce carbon emissions that cause climate change, and improve U.S. manufacturing and high technology. . industries in an increasing struggle with China and other foreign competitors.
Although the $ 1.9 billion economic aid package that Mr. Biden signed earlier this month, contains money to help vulnerable people and businesses survive until the pandemic ends, it does not help the long-term economic agenda on which Mr. Biden did not strive for him.
The package under consideration will start the effort seriously. The first piece of legislation under discussion, which some Biden officials say is more appealing to Republicans, business leaders and many moderate Senate Democrats, will combine investment in manufacturing and advanced industries with the United States’ most aggressive spending to reduce carbon emissions. and combat climate change.
It will spend a lot on infrastructure improvements, the deployment of clean energy and the development of other ‘growth industries of the future’ such as 5G telecommunications. This includes money for rural broadband, advanced training for millions of workers and 1 million affordable and energy efficient housing units. Documents suggest it will spend nearly $ 1 billion on spending on roads, bridges, railroads, ports, electric vehicle charging stations and improvements to the electric grid and other parts of the power sector.
Whether it can garner Republican support will largely depend on how the bill is paid.
Officials have discussed raising some or all of the infrastructure spending by raising corporate taxes, including raising the corporate tax rate above the current 21 percent rate and a range of measures to force multinational corporations to pay more taxes in the United States to pay on their income. earn abroad. This strategy is unlikely to garner Republican votes.
“I do not think there will be any enthusiasm on our part for a tax increase,” Senator Mitch McConnell of Kentucky, the Republican leader, told reporters last week. He predicted that the administration’s infrastructure plan would be a “Trojan horse” for tax increases.
The team of mr. Biden discussed the benefits of the aggressive pursuit of a compromise with Republicans and business leaders over an infrastructure package that is likely to reduce or scale back plans to increase corporate taxes, or to prepare for another comprehensive bill by to move a special parliamentary process it requires only Democratic votes. Mr. Biden’s advisers plan to present the proposal to congressional leaders this week.
“President Biden and his team are considering a range of potential options for investing in working families and reforming our tax code so that it will reward work, not wealth,” said White House Press Secretary Jen Psaki. “These talks are ongoing, so any speculation about future economic proposals is premature and does not reflect the thinking of the White House.”
Mr. Biden said in January that his aid bill would be followed by a ‘Build Back Better Recovery Plan’, which would reflect the language of his campaign’s 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 our workers need to compete and win the world economy of the future. ”
The timing of the proposal – which Mr. Biden initially said it would come in February – slipped when government officials focused on completing the emergency relief package. In the meantime, administrative officials found their best chance to kill Mr. Promoting Biden’s bigger agenda in Congress is to divide ‘Build Back Better’ into component proposals.
The first plan, based on infrastructure, contains large parts of the plan that Mr. Biden presented 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 recovering all the jobs lost in the Covid-19 crisis last year.
The second plan discussed is focused on what many progressive people call the human infrastructure – students, workers and people left on the sidelines of the labor market – according to documents and people familiar with the discussions. It would spend a lot on education and on programs designed to increase women’s participation in the labor force by helping them balance work and care. These include free community college, universal preschool education, a nationally paid leave program and efforts to reduce childcare costs.
This plan would also make permanent two temporary provisions of the recent bill on Mr. Biden: Extensive subsidies for low- and middle-income Americans to buy health insurance and tax credits aimed at reducing poverty, especially for children.
Officials considered financing the plan through initiatives that would reduce federal spending by as much as $ 700 billion over a decade, such as allowing Medicare to negotiate prescription drug companies. Officials discussed further reimbursement of the spending increases by raising taxes on high-earning individuals and households, such as raising the highest marginal income tax rate to 39.6 percent from 37 percent.
At the end of last week, administration officials discussed further details about the tax increases. One question is how exactly to apply Mr Biden’s campaign promise that no one would pay less than $ 400,000 a year in federal taxes under his plan. Currently, the highest marginal income tax rate starts at just over $ 500,000 for individuals and higher than $ 600,000 for couples. Mr. Biden suggests raising the rate in the campaign.
Officials say they are committed to not increasing the tax bills of anyone earning less than $ 400,000. But they debated whether to lower the income threshold for the highest marginal rate, to tax all individual income above $ 400,000 at 39.6 percent to raise more revenue for its spending plans.
The broader economic agenda of mr. Biden will face a more difficult path in Congress than his legal aid bill, which was funded entirely by federal loans and passed with 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 the new spending be offset by tax increases.
Major business groups and a number of Republicans in Congress have voiced support for some of Biden’s broad goals, particularly efforts to rebuild roads, bridges, water and sewerage systems and other infrastructure across the country. The U.S. Chamber of Commerce and the National Association of Manufacturers both said they had spent up to $ 2 billion on infrastructure this year.
But Republicans are united in opposition to most of the tax increases Biden has proposed. Business groups have warned that tax increases on companies will reduce 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 of policy and government relations at the National Association of Manufacturers, last month.
Administration officials are considering offering to offer some parts of Mr. Trump’s expiring tax law, such as the possibility of immediately pulling out new investments, as part of their plans to win business support.
Top business groups have also openly stated that Mr. Biden breaks his “Build Back Better” agenda to pass smaller pieces with dual support.
“If you’re trying to solve every major problem in one bill, I do not know it’s a recipe for success,” Neil Bradley, executive vice president and chief executive officer at the U.S. Chamber of Commerce, said in an interview last month. “It does not have to be done in one package.”