At the end of March, President Joe Biden unveiled his American Jobs Plan (AJP)—a bold proposal to revive the U.S. economy by expanding and modernizing the country’s infrastructure, including investments in energy systems, transportation, housing, manufacturing, and broadband internet, as well as providing home care for seniors and others in need. By investing $2.3 trillion in direct spending and more money through tax incentives, this plan will create broad-based economic growth and millions of new, good-paying jobs with benefits that can support a family. Moreover, the AJP will kick-start the national transition to a carbon-free economy by investing in renewable energy projects and retooling manufacturing facilities to produce electric vehicles and other essential components of a globally competitive economy.
Importantly, the scale of the American Jobs Plan meets the moment. The coronavirus-induced recession has devastated businesses both big and small and caused immeasurable hardship for tens of millions of Americans. At the same time, the climate crisis threatens U.S. prosperity and national security. In the face of these generational challenges, President Biden’s jobs plan has the size and ambition to make a real difference, providing the sustained investment that will revive hiring for years to come and catalyze emissions reductions that will ensure the nation stays within the 1.5-degrees Celsius target that scientists say is essential to avoiding the worst effects of climate change. The American Jobs Plan is what the American economy and workers need.
On Earth Day, a set of Republican senators responded with a counteroffer, called “The Republican Roadmap.” Although billed as a more than half-a-trillion dollar proposal, it actually amounts to only $189 billion in new spending, with calls for budgetary pay-fors that it does not deliver. This is a proposal for a status-quo approach to infrastructure. It amounts to a rejection of the critical investments that the United States needs. In the simplest terms, the Republican proposal is a road to nowhere.
Big and bold vs. status quo
To really understand the difference between the American Jobs Plan and the Roadmap, it helps to start with one critical fact: Congress already spends money on many of the infrastructure sectors being debated. In the wonky world of Washington, D.C., budget jargon, this annual spending is referred to as “the baseline.” Congress is expected to keep spending roughly what it does each year plus a little more to account for inflation.
The AJP calls for a big increase in investment over and above this annual baseline. For instance, the AJP would nearly double investment over the next five years on highways, public transportation, aviation, passenger rail, and roadway safety.
A look at passenger rail and public transportation helps highlight the difference. Currently, Congress provides just enough money to keep Amtrak service functional along the Northeast Corridor and long-distance routes. The AJP proposes an $80 billion increase over the $15 billion the federal government already plans to spend to advance passenger rail service across the country. The AJP also calls for $85 billion in public transit investment, which is in addition to the roughly $69 billion baseline spending already planned for addressing both the enormous system maintenance backlog and capacity expansion. These are much-needed investments that will help transform the United States’ surface transportation system into one that is significantly more multimodal and sustainable.
The Roadmap would provide $189 billion in additional spending, far less than required to meet the moment. Compared with baseline expenditures, it proposes only $5 billion in additional funding for rail, and it actually proposes to cut public transit by $8 billion, a reduction of nearly 9 percent below baseline. When it comes to highway spending, the Roadmap proposes an additional $39 billion, or roughly 15 percent above baseline, which is typical of recent highway reauthorization proposals. For context, the Roadmap proposes only 4 percent more funding than the Senate Environment and Public Works Committee endorsed in its surface transportation reauthorization proposal in 2019. The total funding proposed in this plan adds up to an unacceptable continuation of the status quo at a time when the country needs a big federal commitment to catalyze inclusive growth.
The United States needs more and better jobs, and targeted increases in federal infrastructure funding can provide them, as is the case with the American Jobs Plan. The Roadmap delivers little on that front. An independent review of the AJP conducted by Georgetown University found that a $1.5 trillion subset of the plan would save or create 15 million person-years of employment over the next 10 years. Additionally, the plan “would reverse a long-term decline in jobs and earnings for those with high school diplomas or less, creating 8 million jobs for this population.” In short, the AJP would keep President Biden’s promise to deliver for American workers and to rebuild the middle class. With only 8 percent of the investment called for in the AJP, however, the Roadmap would create a fraction of these jobs.
Infrastructure is more than roads and bridges
In addition to being far too small, the Roadmap leaves out many critical sectors that are essential to catalyzing economic recovery and building a 100 percent clean economy by midcentury. (see Figure 1)
Figure 1
The American Jobs Plan includes spending that will transform the U.S. power sector, retool the manufacturing sector, and deploy zero-emission electric vehicles and electric appliances. It will build affordable and sustainable housing, train the workforce, clean up pollution, and invest in highways to reconnect communities that were intentionally segregated. The result will be an American economy that is more competitive in the global market for new clean energy solutions, as well as more just. The AJP tackles the twin challenges of economic recovery and climate change with investments that will set the country on a path to sustainable prosperity.
Unfortunately, the Roadmap is an alternative in name only. It excludes desperately needed investments in the electricity grid, clean energy, vehicle electrification, building electrification, manufacturing, environmental justice, conservation, and agriculture, condemning the United States to continued pollution in its communities, a destabilizing climate, and an economy that is not ready for global competition in the 21st century.
Senate Republicans do not provide sound options to fund the Roadmap
Lastly, the Roadmap proposes to pay for its spending without borrowing funds, yet it rules out raising tax rates on corporations and high-income earners that were slashed on a partisan basis by the Tax Cuts and Jobs Act (TCJA) in 2017. Instead, the Roadmap suggests repurposing coronavirus economic relief funds and raising fees on transportation users; these fees, in the absence of other tax and related policy changes, are regressive and would hit working families who are already struggling due to the pandemic-induced recession.
The call for user fees has another problem as well: Many of the sectors included in the AJP, such as affordable housing, job training, manufacturing, research and development, energy, and home care, among others, are not connected to user fees. Focusing only on sectors with user fees necessarily eliminates other critical sectors from consideration. Stated differently, the Roadmap’s user-fee demand is arbitrary—a creation of Washington politicians, not a prescription for inclusive growth based on sound economic policy. An essential strength of the American Jobs Plan is its breadth and scale. The comprehensive nature of its investments are what will retool the economy to deliver real benefits to workers while also tackling the urgent challenge of climate change.
Similarly, it would be a mistake to take corporate and high-earner taxes off the table given the steady increases in corporate profits as a share of the economy and income inequality over recent decades, as well as the massive tax windfalls that corporations and high-income Americans received in 2017. President Biden has proposed to pay for the AJP with corporate tax changes that roll back the worst giveaways in the 2017 law and stop corporations from exploiting international tax havens. The Roadmap rejects that approach, insisting that the U.S. government maintain the tax system that the TCJA stacked even further against working Americans. The 2017 tax law increased the U.S. national debt by more than $2 trillion to provide tax windfalls for multimillionaire estates and foreign investors, among other problematic provisions. These giveaways to corporations and the wealthy are not sacrosanct, and their partial repeal should be the focus of raising revenues to pay for a major infrastructure package.
Conclusion
The need for investment in the U.S. economy is urgent. Yet a group of Republican leaders in Congress has put forward an infrastructure proposal that would ensure the economy limps along while greenhouse gas emissions continue to soar. The American Jobs Plan lays out a transformative vision for getting Americans back to work and building a sustainable future that generates inclusive prosperity. The decisions about funding should be based not on how much investment an arbitrarily narrow set of pay-fors can offset but on how much investment is needed to build an economy that works for everyone, that allows American industry to compete in the clean energy future, and that sets in motion the transformations needed to stabilize global temperatures.
Kevin DeGood is the director of Infrastructure Policy at the Center for American Progress. Trevor Higgins is the senior director of Domestic Climate and Energy Policy at the Center.