Joe Biden’s team is preparing an ambitious $3 trillion public spending plan to modernize American infrastructure and advance the climate change agenda, according to The New York Times. The plan will be funded in part by tax increases on the wealthiest individuals and corporations.
The plan will be presented to Capitol Hill in separate bills, rather than as a mega-bundle (as was the $1.9 trillion Covid-19 emergency care plan), in order to have a better chance of getting through the debate in a divided Congress, where Republicans are fiercely opposed and not all Democrats are convinced of the direction the Biden-Harris administration is taking.
Biden’s plan to overhaul America’s infrastructure
The first part of the blueprint includes a plan to renew infrastructure across the United States that includes heavy investment in renewable energy and climate change mitigation projects.
In his campaign proposals, Biden announced that the infrastructure plan would cost around $2 trillion and would go towards modernizing road infrastructure, building new green spaces, new water systems and power grids, as well as establishing universal broadband.
Within his campaign plan, he also proposed to build 1.5 million new homes, and modify nearly 4 million buildings in the United States to adapt them to climate change.
According to the American Society of Civil Engineers (ASCE), the United States has a $2 trillion infrastructure deficit required by 2025. According to the ASCE, the infrastructure deficit could cost the economy more than $4 trillion by 2040.
It will increase the education expenditure
The second part of the plan focuses on what they label “human infrastructure,” meaning more spending on education. It would spend heavily on programs to increase women’s labor force participation, help with work and parenting, and provide more money for free community colleges and preschool education.
It would also seek to extend and make permanent two temporary provisions of the President’s stimulus plan: expanding subsidies to purchase health insurance for low-income and middle-class families, and expanding tax credits, primarily for families with children.
The taxes to finance Biden’s plan
If passed, it will seek to be financed through increased tax revenues. Specifically, the Biden-Harris administration seeks to fund its spending plan by increasing the marginal income tax on top earners from 37% to 39.6%.
The tax reform is also likely to include an increase in capital gains taxes from 20% to 39.6%, and a 12.4% social security tax for individuals with incomes above 12.4%.
The objective of such reform aims to reverse the tax policy of his predecessor, Donald Trump, who implemented broad cuts with the Tax Cuts & Jobs Act.
Although Biden himself has assured that the tax increases will only apply to people with incomes above $400,000 per year, some research centers, such as the Tax Foundation, question this statement and estimate that the reform could represent an average tax increase of 1.9% for all Americans.