WASHINGTON - President Joe Biden hopes to arrest decades of decay in infrastructure in the United States, from roads to bridges to water supply, in a transformative US$2 trillion (S$2.68 trillion) investment plan which the administration says will create millions of jobs and also shift the economy from carbon-producing fossil fuel energy.
This, coupled with swift progress on Covid-19 vaccinations, will boost the US economy considerably, a senior administration official said.
“We are on track to get to 200 million (vaccine) shots in our first 100 days, doubling the initial target that the President set,” the senior official said.
“Most economic forecasters have now… increased their growth projections for 2021 to over 6 per cent, which is a rate of growth we’ve not seen in recent memory,” the senior official told reporters ahead of a trip by the President to Pittsburgh where he was due to announce the plan – which would have to be approved by Congress.
“Public domestic investment as a share of the economy has fallen by more than 40 percent since the 1960s,” the official said. “The American Jobs Plan will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”
The infrastructure investment plan includes US$174 billion for electric vehicles and renewable power, and US$165 billion on public transit in an attempt to reduce the use of private cars.
“This is no time to build back to the way things were,” the White House said in a separate fact sheet on the plan. “This is the moment to reimagine and rebuild a new economy.”
“The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China.”
Specifically, President Biden’s plan will modernise 32,000 kilometres of roads and highways, fix the ten most economically significant bridges in the country in need of reconstruction, repair 10,000 smaller bridges, replace thousands of buses and rail cars, repair hundreds of stations, renew airports, and expand transit and rail into new communities, the White House said.
It will also deliver clean drinking water; currently as many as 400,000 schools and childcare centres are still serviced by lead pipes.
It will also renew the electric grid and extend high-speed broadband to all Americans.
“It will put hundreds of thousands of people to work laying thousands of miles of transmission lines and capping hundreds of thousands of orphan oil and gas wells and abandoned mines,” the White House said. “And, it will bring affordable, reliable, high-speed broadband to every American, including the more than 35 percent of rural Americans who lack access.”
Infrastructure has long been a worrying issue. The US is the wealthiest country in the world but it ranks 13th in quality of infrastructure, the official said.
“In the aggregate… this plan is about $2 trillion in investment that would principally spend out over an eight-year period,” the official said. “These are high-value investments… that experts across the board have identified as contributing to addressing deficiencies, improving economic efficiency.”
“These are investments that, as a country, we cannot afford not to make,” the official said.
Key to making this work is reform in the tax structure – and that is where there will be fierce opposition from Republicans in Congress.
“We are coupling the proposal for the American Jobs Plan with a Made in America Corporate Tax Reform Plan that would offset the full cost of this plan over 15 years,” the official said. “That plan is centered on making our corporate tax system more competitive and encouraging domestic investment.”
The President’s proposal includes raising the corporate tax rate to 28 per cent from 21 per cent, and make multinational corporations pay more in tax to the US on profits earned overseas.
Former President Donald Trump had cut the corporate tax rate from 35 to 21 per cent.
The changes in tax structure will however also bring relief to poorer Americans, in the form of paid leave and reduced child care cost. This will be paid for by raising taxes on wealthy Americans.
The scope of the investments appear to be in line with what the US needs to fix physical infrastructure, encourage innovation and shift to clean energy, Ed Mortimer, the US Chamber of Commerce’s vice president of transportation and infrastructure, told the New York Times.
“The numbers that are being bandied about, they’re high, no doubt about it, but they’re in line with the needs.”
But he added: “Raising corporate taxes, and others, is kind of a non-starter for Republicans. It’s kind of a non-starter for us, too."