American Jobs Plan
On March 31, President Biden unveiled the American Jobs Plan (AJP), a $2.3 trillion investment in America’s infrastructure that funds sectors from transportation to drinking water to public schools.
Alongside the AJP, President Biden also released his Made in America Tax Plan, which outlines the revenue sources intended to fully offset the investment levels made in AJP over the next 15 years. The proposal is part of a two-pronged approach being taken by the White House, with the announcement of a second, “social infrastructure” package expected to follow later this month. While the U.S. Congress still needs to draft legislative text corresponding to the proposal, many of the recommendations in the AJP have the potential to impact county-owned or -supported infrastructure, including all modes of transportation, water systems, broadband, public schools, community development and affordable housing.
Following bold, but largely unsuccessful, infrastructure proposals by his two most immediate predecessors, President Biden has continued the recent White House tradition of promising to make major investments in America’s infrastructure during his time in office. This time, the President also has proposed a way to pay for this investment - mostly in the form of corporate tax hikes and new taxes on international commerce, as well as a repeal of the previous administration’s 2017 tax cuts, and other sources outlined later in this summary. By the end of the month, the Biden-Harris Administration is expected to release a infrastructure proposal that would invest nearly $4 trillion ($2.3 trillion of which is the American Jobs Plan discussed below) in federal funds across a wide range of areas, the majority of which Republicans argue is not actually infrastructure and should not be included in legislation deemed to be infrastructure investments.
Part one of the AJP includes funding for the following:
- Workforce development
- Manufacturing and small business
- Research and development and job training
- Home healthcare workers
- VA hospitals
- Public schools and community colleges
- Public housing
- Clean energy
- Broadband deployment
- Water systems
- Transportation and resiliency
The Made in America Tax Plan
In summary, the pay-for that would fully offset the spending in the AJP over 15 years through proposed changes to the federal tax code includes the following:
- Increasing the corporate tax rate from 21 percent to 28 percent
- Establishing a global minimum tax on U.S. multinational corporations
- Encouraging a global corporate minimum income tax through financial disincentives for countries who do not participate
- Requiring corporations located in America who have merged with a foreign company to pay federal income taxes
- Removing tax incentives for offshoring jobs and providing credits for onshoring
- Enacting a 15 percent minimum tax on profits from large corporations, likely defined as those with “book profits” of or in excess of $100 million
- Eliminating tax preferences for fossil fuels and reinstating the requirement that polluting industries make payments to the Superfund cover the cost of remediation
- Increasing enforcement of the tax code and audits for corporations and high-earning individuals
Congress is now tasked with developing legislation around the President’s proposal that may eventually be enacted into law. AJP provisions with the potential to impact America’s counties, parishes and boroughs through future legislative text include:
Workforce Development | $100 billion total
- $48 billion for workforce development infrastructure and worker protections, expanding registered apprenticeships and supporting community college partnerships that facilitate job training programs
- $12 billion for disadvantaged workers and job training for formerly incarcerated individuals and justice-involved youth, and establishing a new subsidized jobs program
Counties urge Congress and the Administration to support legislative and regulatory efforts that would provide additional resources to create, support the development of, and fund pilot/demonstration programs for innovative delivery of federal social services and workforce training programs that are offered through local governments.
Manufacturing and Small Businesses | $300 billion total
- $20 billion for regional innovation hubs and a Community Revitalization Fund to build social infrastructure
- $31 billion to create a national network of small business incubators and innovation hubs and to invest in programs that provide financial resources to small businesses
Counties encourage state and federal governments to provide incentives that support entrepreneurs and small business growth. Counties believe local governments should work to bolster the development of entrepreneurial and business talent within their communities and emphasize the expansion and retention of local businesses.
Home Health Workers | $400 billion
- $400 billion to expand access to quality, affordable home- or community-based care for aging relatives and people with disabilities and to expand access to Long Term Care services under Medicaid and increase wages and benefits for caregiving jobs
Since counties provide and otherwise support long term care and other community-based services for the elderly and disabled, state and federal regulations and funding programs should provide counties the flexibility to support the full continuum of home, community-based or institutional care for persons needing assistance with activities of daily living.
Public Schools and Community Colleges | $137 billion
- $100 billion to build new and upgrade existing public schools, with $50 billion distributed through direct grants and $50 billion leveraged through bonds
- $12 billion to address physical and technological infrastructure needs at community colleges and develop strategies to improve access in education “deserts”
- $25 billion for a new Child Care Growth and Innovation Fund that would increase the availability of childcare services for infants and toddlers through facility improvements and new construction in high need areas
- Expanding tax credits for employers that would refund 50 percent of the first $1 million of construction costs for on-site childcare facilities
Local education systems affect all segments of the community and are critical to the success of many programs operated by counties. Regardless of the specific funding arrangements between counties and school districts, they share a common tax base and are both faced with limited resources. Further, according to the American Association of Community Colleges, there are 986 public community colleges nationwide and local funds provide 17 percent of their revenues. Several local governments also fund four-year colleges.
Public Housing | $213 billion total
- $40 billion for public housing capital upgrade projects
- $27 billion to establish a Clean Energy and Sustainability Accelerator to mobilize private investment into retrofits of residential, commercial and municipal buildings
- Establishing a new competitive grant program that awards flexible funding to jurisdictions taking steps to eliminate exclusionary zoning and/or land use policies that create barriers to affordable housing
- Producing and retrofitting over one million affordable, electrified housing units through targeted tax credits, formula funding, grants and project-based rental assistance
Counties support legislation that makes funding available to state and local governments to address affordable and workforce housing needs.
Clean Energy | $100 billion total
- $5 billion to remediate and redevelop Brownfield and Superfund sites
- Establishing clean energy block grants for local governments
- Transitioning to a 100 percent carbon-free power sector by 2035
Counties support the redevelopment of abandoned or under-utilized industrial and commercial sites, which are frequently contaminated due to past practices, through programs designed to allow these sites to once again be economically viable. Counties also support federal funding for environmental cleanup of these areas.
Broadband | $100 billion total
- Building out broadband infrastructure in unserved and underserved areas to reach 100 percent national coverage
- Providing support for locally owned broadband networks
- Lifting barriers that prevent locally owned or affiliated providers from competing with private companies
Counties support congressional and administrative action that hastens the deployment of high-speed broadband technology in rural America.
Water Systems | $111 billion
- $56 billion through grants and loans to upgrade and modernize America’s drinking water, wastewater and stormwater systems, tackle new contaminants and support clean water infrastructure across rural America, including $10 billion to remediate PFAS contaminants
- $45 billion to eliminate lead pipes through the Environmental Protection Agency Drinking Water State Revolving Fund and Water Infrastructure Improvements for the Nation Act (WIIN) grants
As major owners, users and regulators of water resources and systems, state and local governments are responsible for 95 percent of the total public spending on water infrastructure each year.
Transportation and Resilience | $621 billion total
- $115 billion to repair, rehabilitate and upgrade 20,000 miles of highways and roads and 10,000 small bridges across the county
- $20 billion to improve safety through increases to existing programs and a new Safe Streets for All Programs to fund local Vision Zero plans
- Establishing a new competitive grant program to repair the nation’s top ten most economically significant bridges
- $85 billion to upgrade and expand public transit systems
- $80 billion to address Amtrak’s repair backlog
- Enhancing federal rail grant and loan programs to support improved rail safety, efficiency and electrification of the network
- $25 billion for airports through the Airport Improvement Program and a new program that will support “ground-side” development projects
- $17 billion for coastal and inland ports, inland waterways, land ports of entry and ferries
- $174 billion to deploy electric vehicle (EV) infrastructure and to support Buy American rules in manufacturing EV chargers
- Creating grant and incentives programs for local governments to build a national network or EV chargers by 2030
- $20 billion for a new program to resolve racial and social inequities created by transportation assets, and to advance environmental justice and enhance accessibility
- $25 billion for “shovel ready’ projects that have the potential to significantly impact the regional or national economy, but are too large or complex to be carried out through existing program funding structures
- $50 billion to empower local communities to improve disaster resilience and protect critical infrastructure, including funding for FEMA’s Building Resilient Infrastructure and Communities (BRIC) Program
- Providing technical assistance, training and procurement best practices to local governments to support the best possible outcome of AJP’s transportation initiatives
- Coordinating the federal permitting process to expedite federal decisions while ensuring stakeholder engagement and positive environmental and health benefits
Counties own and operate 45 percent of public roads and 38 percent of bridges in addition to directly supporting 78 percent of public transit systems and 34 percent of public airports that keep Americans connected in every part of the county. Annually, counties invest $134 billion in the construction of infrastructure and the operation and maintenance of public works.
Surface Transportation Reauthorization
Even though Democrats require no Republican support to eventually pass the legislative text that results from the AJP proposal, pursuing a partisan strategy early may prove detrimental to the passage of a new, long-term surface transportation reauthorization once the current law expires on September 30. To date, the White House has called for a “flat” reauthorization, seemingly putting them at odds with U.S. House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.), who proposed a $2 billion increase over current levels in H.R. 2, the Moving Forward Act, which passed the House last summer but was not considered in the Senate. The AJP is viewed by many as similar to H.R. 2, which would have made a $1.5 trillion investment in many of the same sectors that are being proposed in AJP if it had been enacted, with one major difference being H.R. 2’s inclusion of a five-year reauthorization (view NACo’s H.R. 2 analysis here).
This is important because it appears that at least some portion of the AJP’s billions in transportation dollars have no way of being spent, as they would first require a new reauthorization bill that creates programs through which the funds could be distributed. Complicating this process for Democrats is the Senate rule requiring 60 votes to reauthorize the surface law, meaning the majority would have to either negotiate across the aisle if new programs to distribute funding prove necessary or take the “nuclear option” of changing or eliminating the Senate filibuster all together, which is viewed by most lawmakers, both Republican and Democratic, as an undesirable option that would have far-reaching implications on legislation well beyond the AJP.
Although candidate Joe Biden campaigned on fixing the ailing Highway Trust Fund (HTF), the AJP does not address its growing shortfall, and because it seems that Democrats are going to pursue its passage through a second reconciliation bill, it also cannot. Reconciliation legislation can only contain provisions that impact the federal deficit. Due to complex budget rules, general fund transfers into the HTF do not “score”, meaning they have no impact on the deficit. According to the Congressional Budget Office, the HTF highway account will reach a $120 billion shortfall by FY 2030 if left unaddressed. The mass transit account would follow, reaching a projected $54.6 billion shortfall over the same time period. Beginning in FY 2022, both accounts – and the entire HTF – will become officially insolvent.
Highway Trust Fund
Highway Account, FY 2020 – FY 2030 (in billions of dollars)
*FY 2020 is actual. **In FY 2022, the HTF is projected to officially become insolvent.
Source: Congressional Budget Office
Following the passage of the P.L. 117-2, the American Rescue Plan, via a budget reconciliation bill for FY 2021, Congressional Democrats look poised to use the tool once again to advance AJP legislation via a second FY 2022 reconciliation bill later this year. In the meantime, as Congress begins to negotiate towards a final package, exactly what “infrastructure” means is still up for debate. Republicans, who favor the traditional definition that mostly covers roads, bridges and water systems, have come out against the AJP, contending it could be passed with support from both sides of the aisle if it were narrowed in scope. In stark contrast, Democrats see this as perfect timing to make bold funding decisions in industries across the spectrum that have a nexus to a more broadly defined concept of infrastructure.
While Democrats do not require the support of any Republicans to pass a legislative package that corresponds to the AJP, their slim majority will require a bill that appeals to their entire conference, including more conservative Democrats, like Senator Joe Manchin (D-W.Va.), who has already said he will vote against the AJP if the final text contains the plan’s proposed corporate tax increase. As legislative text is developed and we await part two of the Administration’s infrastructure proposal, the National Association of Counties continues to work closely with both Congress and the White House to ensure county infrastructure priorities are included in a final package.