Biden announced the plan during a speech in Pittsburgh, the traditional industrial town that is transitioning to health care and technology, where his 2019 presidential campaign began, according to Chinese media outlet Wall Street Journal on April 1. Biden said the infrastructure plan includes both jobs and families, also known as the American Jobs Initiative.
“The American Jobs Plan will improve America’s position and competitiveness in chips, biotechnology and energy, and no federal taxes will be raised on people earning less than $400,000 a year, and “no one should complain that America has raised corporate taxes to 28 percent. He also said he plans to build 500,000 electric vehicle charging stations across the United States.
Biden’s speech that day was short, and the main proposals of his infrastructure plan were revealed to the media by anonymous White House officials on the evening of March 30.
The plan, which aims to revitalize U.S. transportation infrastructure, water systems, network broadband and manufacturing, among other goals, will fund infrastructure spending over 15 years by raising the statutory tax rate for U.S. domestic companies from 21 percent to 28 percent and by taking measures to prevent profit outflows.
It is reported that this $2.25 trillion infrastructure plan consists of four parts, lasting eight years, is signed into effect this month, the $1.9 trillion economic bailout bill follow-up. Biden believes it will “reinvigorate the American imagination” and “put millions of Americans to work right away.
Some of the details of the infrastructure plan, as revealed in the media earlier, are as follows.
$621 billion in transportation infrastructure, including bridges, roads, mass transit, ports, airports and electric vehicle development.
400 billion in direct funding to improve care for seniors and people with disabilities
Over $300 billion invested in improving drinking water infrastructure, expanding broadband access, and upgrading the electric grid.
Over $300 billion invested in building and renovating affordable housing, building and upgrading schools.
Investing $580 billion in U.S. manufacturing, research and development and job training, including $180 billion in non-defense research programs, the largest in the country’s history, and $50 billion dedicated to domestic semiconductor manufacturing.
How much will it cost to rebuild the infrastructure?
According to the New York Times, Biden’s first infrastructure plan would set aside about $1 trillion to strengthen basic infrastructure such as roads and bridges, rail lines and the power grid. But even if Biden can convince Republicans to support his plan, will $1 trillion be enough?
A report released in March by the American Society of Civil Engineers (ASCE) recently estimated that the U.S. will face a $2.59 trillion infrastructure funding gap over the next decade, while the U.S. “underspends nearly $260 billion annually on infrastructure “.
Thus, during Biden’s four-year presidency, according to ASCE, a trillion dollar plan would only just meet America’s infrastructure needs.
The reason such a huge amount of money is needed to meet America’s infrastructure needs is that the U.S. has been too comfortable with the status quo when it comes to infrastructure.
The ASCE report is published every four years to provide an overall grade for U.S. infrastructure development. This year, the U.S. received a grade of “C-,” which is equivalent to a “poor” (mediocre) assessment. This grade reflects the fact that the U.S. has spent only about half of what is necessary on infrastructure in recent years.
The problem is that authorities have been ignoring the profound impact of depreciation on U.S. infrastructure. the ASCE report found that 43 percent of public roads in the U.S. are in “poor” or “unsatisfactory” condition, and an estimated one water main break every two minutes, resulting in an estimated loss of 22.7 billion liters of treated water per day. An estimated 22.7 billion liters of treated water are lost each day.
Data from the U.S. Bureau of Economic Analysis confirms these findings. According to their study, unlike other developed countries such as Canada, “the average age of most types of infrastructure in the United States has been rising, and the remaining useful Life has been declining.”
Who should settle the bill: businesses, local authorities, or the federal government?
As the United States has neglected its aging infrastructure for years, the Biden Administration faces a dual challenge: on the one hand, it needs to increase investment to meet new challenges, such as developing new digital infrastructure or meeting new environmental goals, and on the other hand, it needs to make up for past neglect in infrastructure investment.
This problem cannot be accomplished by the federal government alone: expensive assets, such as highways, air transportation, and water and sewer infrastructure, are largely or entirely owned by state and local governments.
Thus, we can expect that Biden’s plan will not be a direct federal investment, but will more likely rely on incentives for state and local governments and private companies. And with infrastructure spending varying widely from state to state, Biden’s federal plan could help align state spending while also promoting private investment.
“Public-private partnerships” (PPPs) were a popular means of financing infrastructure in the past, but today, most U.S. companies are shunning this long-term and expensive type of investment. The burden of infrastructure has shifted to state and local governments in recent decades as the share of private company investment has declined and the federal share has remained low.
As the chart below shows, in 2017, U.S. state and local governments owned 62 percent of basic infrastructure, while private companies owned 34 percent and the federal government owned 4 percent.
As the Biden administration prepares to roll out its first plan on infrastructure this week, the success of the administration’s initiative will depend in large part on its ability to reverse this trend and mobilize federal and private company funds to support infrastructure investments in the states.
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