The Feasibility of the American Jobs Plan

by Charlie Bennett

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When President Biden took office this January, the main issue on his plate was the COVID-19 pandemic and its associated economic implications for ordinary Americans. Since then, President Biden has signed the American Rescue Plan which delivered $1,400 to struggling Americans and oversaw the vaccination of millions per day [1,2]. While the effects of the pandemic will still be felt for years to come, President Biden has begun to look towards the future with his $2 trillion infrastructure plan—The American Jobs Plan.

The American Jobs Plan if passed would be one of the most ambitious public investments since the New Deal era. The bill not only aims to tackle infrastructure problems, but also a wide array of other issues that have long been overlooked in Washington, including provisions to fight climate change, invest in America’s manufacturing sector, and address historical inequalities felt by people of color [3].

One of the main ways that the American Jobs Plan is being marketed is as a bill aimed at revitalizing America’s infrastructure. Currently one in five miles of highways as well as 45,000 bridges are in poor condition [3]. To combat this, the plan aims to invest $115 billion for roads and bridges as well as hundreds of billions more on public transit, airports, waterways, water systems and the electric grid [4]. While the investment in infrastructure is a major selling point of the American Rescue plan, it is actually only a small part of the bill in terms of its total costs with billions of dollars being spent elsewhere.

In addition to infrastructure, the American Jobs Plan heavily focuses on addressing historic racial inequities. Per the plan’s fact sheet it “prioritizes addressing long-standing and persistent racial injustice [3]. One way the plan intends to begin solving this issue is by investing in home care workers. The plan allocates $400 billion to expanding access to home care and increasing the incentives for raising the wages of home care workers, which is a field primarily dominated by Black women [3]. The American Jobs Plan also helps people of color in academia by dedicating $25 billion dollars to research at Historically Black Colleges and Universities allowing them to create opportunities for Black Americans as well as other people of color[4]. Furthermore, it works to alleviate economic inequalities caused by redlining with  “$20 billion for a new program that will reconnect neighborhoods cut off by historic investments and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access [3].

One major portion of the American Jobs Plan is investment in America’s manufacturing sector. Over the last twenty five years, nearly five million manufacturing jobs have been lost with over 91,000 plants closing [5]. In an effort to reverse this trend, the American Jobs Plan contains $500 billion to support workforce development, clean energy manufacturing, and even R&D [4]. The aim of this section of the plan is not only motivated by revitalizing these long-ignored areas, but also to “position the United States to out-compete China” [3]. While the plan will address a wide range of issues, one of the driving factors behind it is “the ambitions of autocratic China [3]. This bill comes at a time when China is increasing its R&D spending to compete with the United States. Currently China spends 2.4% of its GDP, or $378 billion a year, on R&D and has committed to raise this by 7% per year for the next five years[6]. This comes at a time where the United States is spending less than $150 billion on R&D and has actually decreased federal R&D spending in recent years [7,8] Therefore, the bill massively emphasizes manufacturing in line with the government’s growing fear of losing out to China on key technological innovations such as semiconductors. In fact, the White House is so scared of the rise of China that in a press release it considers China to be one of the “great challenges of our time [3].” With hundreds of billions per year aimed at R&D and manufacturing, the American Jobs Plan aims to position the United States in the lead against China in the race to establish dominance in new and emerging technologies [4]. 

Another issue that is also heavily considered in the American Jobs plan is the climate crisis. Current estimates suggest that if the United States does not curb its greenhouse gas emissions, it may cost up to 10.5% of the GDP by 2100 [9]. The American Jobs Plan aims to solve this problem through the elimination of Fossil Fuel subsidies, incentivization of electric vehicles, and billions of dollars in research funding for clean energy [3]. While some may claim this portion of the bill does not go far enough, it is a stark reversal of policy considering the stances of the previous administration.

In addition to addressing climate change, the American Jobs Plan also takes aim at providing affordable housing to all who need it. Currently, in over half of the counties in the United States, the average wage earner cannot afford a median priced home [10]. To make homes more affordable, the plan allocates $20 billion to build and rehabilitate over 500,000 homes for lower- and middle-income homebuyers [3]. Furthering the aim to address housing affordability, one of the goals of the plan is to eliminate exclusionary zoning and prohibitions on multifamily zoning which would help reduce inflated housing costs [3]. Current zoning requirements in some U.S. cities such as New York and San Francisco are prohibitive in that many areas are only allowed to have single family homes which has pushed up the cost of apartments by about 50 percent [11]. In eliminating these requirements, the American Jobs Plan can open up areas that were once unaffordable to many Americans and can help in driving down the costs of housing throughout the country. 

The American Jobs Plan is undeniably audacious in its scope and aims to address numerous issues simultaneously; however, this may be one of its biggest weaknesses politically. With Democrats only holding a one vote majority in the Senate, the American Jobs Plan will require bipartisan support if it is to be passed. However, many Republicans have criticized how only a small portion of the bill is actually devoted to infrastructure. They “have cited that traditional infrastructure — meaning funds that go toward building or improving roads, highways, bridges, tunnels, ports, and airports — comprises under 7 percent, or $157 billion, of the plan’s total cost [12].” Republicans also stated concerns that the bill’s tax hikes would drive companies out of the US [13]. While the proposed corporate tax rate in the American Jobs Plan of 28% is still less than it was prior to the 2017 Republican tax cuts, the politics of taxes still proves quite powerful [14]. Without the support of Republicans, the bill will never pass and it is integral that the Biden Administration, as well as congressional Democrats, rework the bill to garner up bi-partisan support. One area of the bill that most certainly has bipartisan support is the portion on infrastructure. Infrastructure investment is supported by the Problem Solvers Caucus, a bipartisan caucus in the Senate composed of 23 Democrats and 23 Republicans [15]. While this may seem promising for the future of the bill, it would be difficult for Democrats to convince Republicans to look past the bill’s other provisions in favor of infrastructure.

The American Jobs Plan could be too ambitious for America’s current political climate, but the goals it aims to achieve should not be ignored in the near future. Although in its current form the bill likely will not pass, it can be broken down into smaller chunks that can be reengineered in a bipartisan manner. The issues raised in the bill should be tackled on an individual basis with separate bills targeting each issue that the American Jobs Plan currently includes. This will be crucial to achieve the plan’s policy goals because rather than taking an all or nothing approach with issues like infrastructure and racial inequities, separate bills allow for incremental progress. It can guarantee that  even if some of the plan’s issues are ignored, others will be passed. While the fate of the bill is currently unknown, it starts much needed policy discussions about investing in America’s infrastructure, addressing historic racial inequalities, the future of climate policy, and the stagnation of America’s manufacturing sector.

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