Infrastructure Plan Could Include $3 Trillion in Tax Increases
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WASHINGTON — President Joe Biden is aiming for summer passage of an infrastructure plan that is expected to cost more than $3 trillion, and the White House hopes to take a more deliberate and collaborative approach with the contentious Congress than it did on the COVID-19 rescue package, officials said. (Update, March 31: Read details of released plan)
The president will announce parts of his “Build Back Better” package March 31 in Pittsburgh. Sweeping in scope, the ambitious plan aims to make generational investments in infrastructure, revive domestic manufacturing, combat climate change and keep the United States competitive with China, according to the officials. It could include $3 trillion in tax increases.
The final price tag is in flux but was expected to be between $3 trillion and $4 trillion. One White House official said March 29 that it may end up being closer to $3 trillion.
Though the White House is emphasizing the urgency, it also insists this will not be considered an emergency response like the $1.9 trillion virus relief bill that Biden signed into law over Republican objections earlier this month. The administration wants to see progress on the new legislation by Memorial Day and have it passed over the summer, White House officials said.
“The president has a plan to fix our infrastructure and a plan to pay for it,” White House press secretary Jen Psaki said March 29. “But we certainly expect to have the discussion with members of Congress, as we move forward, about areas where they agree, where they disagree, where they would like to see greater emphasis or not.”
White House press secretary Jen Psaki speaks during a briefing at the White House on March 29. (Evan Vucci/Associated Press)
The administration is setting the political pace and tone for this next big priority in Biden’s agenda. The COVID-19 bill, though broadly popular with voters of both parties, exposed the president to criticism for going it alone with only Democratic votes. White House officials believe this time there will be far more of an opportunity to win some GOP support and plan significant outreach on Capitol Hill.
As the committees in Congress begin to tackle individual provisions — including those on transportation, China and others — the White House will encourage those efforts. Then it will work through the tax increases separately, according to officials.
Administration officials are sending signals that the White House will listen to suggestions and criticism alike from both parties and that significant changes could occur during the legislative process.
At the same time, congressional leaders are preparing a go-it-alone strategy, much as was done in the virus aid package, in case Congress hits a wall of GOP opposition.
“If they share a goal of building our infrastructure for the future, but don’t like the way he’s going to propose to pay for it, we’re happy to look at their proposals,” Psaki said. “If they don’t want to pay for it, I guess they can propose that, too. Maybe they don’t support infrastructure spending.”
Infrastructure marks the unique opportunity for Biden to succeed on an issue where both his predecessors — Barack Obama and Donald Trump — made big promises that never came to fruition.
The physical infrastructure part of the package is not just about updating roads, bridges, rail, public transit and airports. It also is expected to include broadband, electric vehicle charging stations and investments in clean energy and domestic manufacturing, making it far more expansive than what Republicans usually discuss.
Sometime in April, a second package will be unveiled that focuses on universal pre-K, paid family leave and free community college.
The multitrillion-dollar price tag means that any package will eventually need to be paired with tax hikes, drawing Republican opposition to any infrastructure plans that unwind Trump’s 2017 corporate tax rate cuts. Biden has vowed not to raise taxes on households earning less than $400,000 a year.
Senate Minority Leader Mitch McConnell said March 29 at a stop in his home state of Kentucky that if the Biden administration wants to do an infrastructure bill, “Let’s do an infrastructure bill. Let’s not turn it into a massive effort to raise taxes on businesses and individuals.”
Senate Minority Leader Mitch McConnell turns to an aide at the Capitol on March 24. (J. Scott Applewhite/Associated Press)
Beyond tax increases, the Biden administration also could attempt to free up cash by changing how Medicare can negotiate the price of pharmaceutical drugs. It also could step up IRS audits of wealthier Americans as a recent study estimated that the richest taxpayers avoid paying $175 billion annually.
Initially, White House officials considered a plan that would lean more on spending, but that approach was abandoned out of fears that it could trigger a spike in interest rates, which itself could send federal debt payments skyrocketing.
The choice to limit the impact on the federal deficit may help the White House counter critics who say that the nation’s spending imbalance is out of control.
But paying for the proposals with new revenues would also set up the administration to have to persuade Congress to pass a package of tax increases on wealthy Americans and companies that combined would represent the largest hike in generations.
Republicans are objecting to the scope of the enormous package and the potential tax increases that would be needed to pay for it. With the Senate evenly split, 50-50, Democrats could very well be once again forced to rely on their own votes for passage.
One key Republican, Sen. Shelley Moore Capito of West Virginia, last week warned Democrats against a go-it-alone approach as happened on the virus aid plan.
“I’m very disappointed with what I’m reading, because I’m envisioning that the same thing is going to happen,” Capito said.
As part of the group of Republicans who met with Biden only to have their virus aid proposal rebuffed, Capito is now wary as Democrats pile other domestic priorities onto the infrastructure package.
“I think we need to talk to the American people and say, ‘Is this what you envision with infrastructure? Is this, are these job creators?’” she said.
On March 29, Senate Democrats indicated they were seeking even more opportunities to go it alone, relying on complicated budget reconciliation rules to pass the upcoming bills with a simple 51-vote threshold as was done for the COVID-19 rescue package.
Top policy aides to Majority Leader Chuck Schumer have made the argument to the Senate parliamentarian that they could use the reconciliation provision a second time this fiscal year, which would be rare. Typically, the process is only used once a fiscal year, or twice in a calendar year.
If approved by the parliamentarian, it would essentially create twice as many opportunities this year, and in subsequent years, for the so-slim majority to approve some legislation. No decisions have been made, according to a Schumer aide granted anonymity to share the private discussions.
The aide said Schumer wants to maximize his options to allow Senate Democrats multiple pathways to advance Biden’s agenda over potential Republican obstruction.
Jonathan Lemire, Lisa Mascaro and Josh Boak were the primary contributors to this report.
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