US President Joe Biden is proposing a vast coronavirus recovery plan – supported with tax rises – which focuses on green infrastructure investment in addition to traditional projects such as bridge, rail, and road building.
The $2.25tn plan is the centrepiece of the Biden administration’s climate agenda to wean the US from fossil fuels while supporting green jobs and industries such as in electric vehicles (EVs) and renewable energy. It follows the $1.9tn pandemic-relief bill signed earlier this month.
It has been characterised as the biggest public investment programme since the creation of the interstate highway system and the Space Race, and a plan to “revitalise [the] national imagination”. In a statement, the White House said: “Like great projects of the past, the President’s plan will unify and mobilise the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China.”
The White House released some details of the plan ahead of a speech by the President in Pittsburgh; the administration views the city as a good example of a traditional manufacturing hub rejuvenated by new industries such as digital technology.
In a throwback to the work of the Public Works Administration, which was established as part of the New Deal in the 1930s, the recovery plan will give generous support (up to $621bn) to traditional infrastructure projects. It will spend $165bn on public transit, Amtrak, and other rail projects, in a bid to give Americans attractive alternatives to private transport. Other areas receiving support will include road safety, bridges, ports and airports.
In a major departure from the Trump administration’s ambivalent attitude towards climate mitigation, the plan also directs spending towards a range of decarbonisation projects.
However, it will also include generous funding ($174bn) to boost the EV industry. The White House said that the plan intends to boost US production of EV batteries and other components, fund consumer rebates and tax incentives to “buy American-made EVs”, and ensure that EVs can be made affordable for all households while being built by workers under good working conditions.
It aims to roll out a national network of 500,000 EV chargers by 2030. Other targets include replacing 50,000 diesel-powered transit vehicles electrifying at least 20 per cent of school buses. No explicit target has been set for a phase-out of new vehicles with internal combustion engines.
The second sustainable pillar of the plan focuses on decarbonising the US energy sector. $100bn will go towards measures to modernise the electricity grid. Tax credits will be extended for wind and solar energy storage facilities over ten years, in an effort to make renewable tariffs more competitive. Trials of emerging energy technologies such as carbon capture and storage, advanced nuclear, and hydrogen will receive $15bn if the plan is approved. It will also leverage the federal government’s mighty buying power, requiring all federal facilities are powered entirely by zero-carbon sources.
$213bn will be spent on making homes more energy efficient and $100bn will go towards similar measures for public schools. $650bn will go towards a range of initiatives tied to improving quality of home life, which will include clean water and high-speed broadband access.
In an effort to address fears of job losses due to climate mitigation, the plan includes $16bn in tax credits to help employ hundreds of thousands of workers to plug orphan oil and gas wells and clean abandoned wells.
Other areas supported by the plan include engineering and technology, in what will surely be considered a direct bid to compete with Chinese R&D. $180bn will go towards artificial intelligence, biotechnology, and other emerging technologies – including upgrading research capacity in laboratories – and $300bn will be set aside as manufacturing subsidies, with $50bn support for semiconductor manufacturing.
The Biden administration aims to do away with tax loopholes and public subsidies for fossil fuel companies as well as requiring polluters to contribute to a centralised fund for environmental projects. Biden proposes supporting his spending plans mainly through $2tn in higher corporate taxes (21 per cent to 28 per cent), in addition to a payroll tax increase on high-income households, setting a minimum tax on foreign earnings of US companies, and higher capital gains, income, and dividend taxes for ultra-wealthy individuals.
The plan must still be approved by Congress, where Democrats hold wafer-thin majorities in both chambers and will face pressure from within its own ranks to go further. Progressive representative Alexandria Ocasio-Cortez, for instance, has commented that the infrastructure plan is “not nearly enough” and called for further support.