President Biden’s advisers have sketched out a $3 trillion package to boost demand in the US economy, as well as reducing carbon emissions and economic inequality. The centrepiece of the plan is understood to be a programme of infrastructure work, partly funded by increases in taxes on corporations and American earning more than $400,000.
President Biden is set to discuss his proposals with Congressional and business leaders this week, although many of the details have yet to be finalised.
The president met with Senate Democrats yesterday to discuss the legislation, which is likely to be based on Biden’s "Build Back Better" campaign pledges about "mobilising American ingenuity to build a modern infrastructure and an equitable, clean energy future".
The US press speculated yesterday that the physical infrastructure element would amount to around $1 trillion, and would be spent on roads, bridges, rail lines, ports, electrical vehicle charging stations and the cellular network.
If this comes to pass, it would go some way to closing the $2.6 trillion investment gap that the American Society of Civil Engineers identified in its "report card" on US infrastructure, released earlier this month (see further reading).
It would also target high-tech areas such as 5G telecoms, where the US is lagging behind China, and sustainable housing.
There has been speculation that Biden will propose the construction of 1 million affordable, energy-efficient housing units.
The Biden plan would take a leaf out of China’s playbook by using federal spending on construction to boost demand in the domestic economy, while also improving America’s ability to compete with China in the future.
Seth Hanlon, a senior fellow at the liberal Centre for American Progress think tank, told The New York Times: "President Biden’s plan represents a stunning shift in priorities, addressing many of the nation’s most pressing challenges. As reported, the plan is very wide-ranging, reflecting the fact that we’ve underinvested in so many areas."
The Times adds that the plan is likely to be divided into an infrastructure component and a second package that would focus on "human infrastructure", including free community college, universal pre-kindergarten care and a national paid leave programme.
Officials are understood to be considering an increase in the 21% corporate income tax rate, as well as measures to multinationals to pay more US tax on income earned abroad.
The Democrats are hoping to gain some Republican support for the measures, although any tax increases would probably be a deal-breaker for most, if not all, Republican senators.
If the legislation is presented in conventional form, it would be vulnerable to a filibuster defence, unless at least 10 Republican senators backed it. The Democrats have the option of moving the bill using special rules, known as "the budget reconciliation process", that allow a simple majority to adopt it.
Image: Biden’s bill is set to double the $500bn infrastructure bill the Democrats proposed last June (Dramstime)