On Wednesday, March 31, the Biden administration released its U.S. Jobs Plan (AJP), a detailed plan to spend more than $ 2 trillion over eight years on a wide range of infrastructure-related initiatives, including including “basic” or “traditional” infrastructure. programs as well as “non-essential” and welfare proposals. The administration has signaled that the AJP is the first of two major legislative packages it intends to present in the coming weeks, the second focusing on other issues such as health and education.
The AJP covers a broad and ambitious set of spending initiatives, and several themes are highlighted throughout the plan. In particular, the focus is on clean and renewable energy underlying several of the proposals to mitigate and adapt to climate change and a stated goal of achieving 100% carbon-free energy. by 2035. AJP is also focusing on programs. help disadvantaged communities, in particular by rectifying historical and persistent inequalities. Finally, the plan emphasizes that the programs will require goods and materials to be made in America, although it does not provide details on the parameters of any changes to Buy America regulations.
As part of the AJP release, the Biden administration also released its Made in America tax plan, which administration officials said would fully offset the full cost of the AJP over 15 years. In particular, this plan does not include frequently discussed proposals for “pay-for” infrastructure spending adhering to the user-pays principle, such as an increase in the federal excise tax on gasoline or fuel. ‘introduction of a charge per vehicle-mile traveled. Instead, it relies on a set of corporate tax code changes, including an increase in the corporate tax rate from 21% to 28% and changes in the tax treatment of multinational company income.
The AJP says its implementation will require a partnership between government, labor and industry to deliver meaningful results for the American people. However, it does not include specific proposals relating to the participation of private industry in the efforts described in the plan or to the financing of these efforts. In his testimony on March 25 before the House Committee on Transport and Infrastructure, Transport Secretary Pete Buttigieg indicated that the creation of a national infrastructure bank remains an option to fill funding gaps. He also acknowledged that the $ 15 billion cap on tax-exempt private activity bonds (which have been used to leverage private investments in public-private partnerships (PPPs) in particular) has been almost reached. and suggested that an increase in the cap might be a simple way to stimulate private investment in infrastructure projects.
According to a White House briefing, the AJP is intended to complement, rather than replace, the funding and policy-making process for the reauthorization of surface transportation programs that expire on September 30, 2021. This procedural element is important because the AJP will not be tied to the must-see bipartisan reauthorization legislation, which requires at least 60 Senate votes to overcome legislative obstruction, signaling that the Biden administration may consider the use of the 50- vote budget threshold reconciliation process if the AJP cannot garner sufficient Republican support. However, since budget reconciliation restricts non-budget legislative changes, changes to existing programs through normal legislation may be necessary in order to pass the AJP through reconciliation.
The AJP presents congressional leaders with the Biden administration’s preferred route for infrastructure spending and corporate tax reform, but does not include the proposed legislation. As a result, the plan will be the subject of extended negotiations and substantial revisions by House and Senate leaders and relevant committees of Congress. We expect the final legislative text may differ significantly from the AJP presented by the administration this week and will provide further updates as a legislative proposal takes shape.
Below, we provide a brief summary of the main “core” infrastructure spending proposals set out in the AJP and some of the “non-core” spending elements of the plan that may be of interest to our clients and other stakeholders in the industry. infrastructure sector.
Transportation infrastructure – $ 621 billion
- $ 174 billion for a range of electric vehicle initiatives, including the electrification of the federal fleet, the establishment of grant and incentive programs to build a nationwide network of 500,000 electric vehicle chargers. ‘by 2030, and the replacement of 50,000 diesel transit vehicles and the electrification of at least 20 percent of the country’s yellow school bus fleet
- $ 115 billion to modernize and repair more than 10,000 bridges and 20,000 miles of highways and roads, in particular to improve air quality, limit greenhouse gas emissions and reduce congestion
- $ 85 billion to modernize existing transit facilities and fund expansion of the transit system
- $ 80 billion for passenger and freight rail service, including reducing Amtrak’s repair backlog and upgrading the northeast corridor
- $ 25 billion for airports, including funding for the Airport Improvement Program (which provides grants for the planning and development of airports for public use) and a new program to support terminal renovations and connections multimodal
- $ 25 billion to support projects that are too large or complex for existing funding programs
- $ 20 billion for road safety initiatives
- $ 20 billion for projects that correct historic transportation inequalities, including reconnecting neighborhoods cut off by previous transportation projects
- $ 17 billion for inland waterways, coastal ports, land ports of entry and ferries
Water infrastructure – $ 111 billion
- $ 56 billion in grants and low-cost loans to upgrade and modernize drinking water, wastewater and stormwater systems. No details were provided as to whether the vehicle for such loans would be the Environmental Protection Agency (EPA) Water Infrastructure Financing and Innovation Act (WIFIA) program, which has actively supported these types of investments since 2018, or some other government program.
- $ 45 billion in grants from the State Revolving Fund for Drinking Water (DWSRF) and the Improvement of Water Infrastructure for the Nation (WIIN) to remove all lead pipes and lines service in the country, estimated by the EPA between six and 10 million nationally
- $ 10 billion to clean up chemicals in drinking water and invest in rural systems
Electrical infrastructure: $ 100 billion
- Creation of an investment tax credit to support the construction of at least 20 gigawatts of high voltage power lines and creation of a network deployment authority at the Ministry of Energy
- Ten-year extension of the investment tax credit and the production tax credit for clean energy production and storage, further mobilizing private investment to modernize the electricity sector. The AJP suggests that these tax credits would include a direct payment option, which would allow developers to treat tax credits as an overpayment of taxes and monetize them directly in the form of cash refunds from the Department of Government. Treasury on an annual basis.
- Establishment of a federal standard for energy efficiency and clean electricity
- Reclamation and reclamation of old mines and oil and gas wells
- Remediation and redevelopment of industrial and energy sites Brownfield and Superfund and investments in grant programs for environmental justice
- Next-generation technology investments in struggling communities, including the deployment and storage of hydrogen fuel and carbon capture
- New Civilian Climate Corps to Employ Americans in Conservation and Resilience Programs
Digital infrastructure – $ 100 billion
- Build broadband infrastructure to achieve 100% coverage nationwide, including the over 35% of rural Americans who currently do not have broadband access at minimally acceptable speeds
- Reduce costs and increase adoption of broadband internet service, especially in rural areas
Climate resilience infrastructure – $ 50 billion
- Investments supporting a range of programs, including FEMA’s Building Resilient Infrastructure and Communities program, HUD’s Community Development Block Grant, new initiatives at the Department of Transportation, tax credits and community transition assistance vulnerable
- Protection against climate-related meteorological events and major land and water resources
Social and non-essential infrastructure
- $ 400 billion to expand access to home and community care for seniors and people with disabilities
- $ 300 billion to strengthen manufacturing and small businesses, including through investments in the supply chain, semiconductor research, pandemic initiatives, clean energy procurement and an investment of $ 20 billion in regional innovation hubs to mobilize additional private investment across the country
- $ 213 billion to produce, preserve and renovate more than two million homes, including the creation of a $ 27 billion clean energy and sustainability accelerator to leverage more private investment
- $ 180 billion to invest in research and development in technology, climate science and other innovations
- $ 100 billion to modernize and build new public schools, thanks to $ 50 billion in grants and an additional $ 50 billion through bonds
- $ 100 billion in workforce development programs
- $ 25 billion to modernize child care centers and increase the supply of child care services
- $ 18 billion to modernize Veterans Affairs hospitals and clinics
- $ 12 billion to invest in community college facilities and technology
- $ 10 billion for the modernization, sustainability and resilience of federal buildings, including through a federal revolving fund