Biden says his new infrastructure plan could create 19 million new jobs

joe biden amtrak
President Joe Biden.

  • President Joe Biden said Friday that his new infrastructure package could create 19 million jobs.
  • He was citing a Moody’s report that projected 16.3 million jobs from natural job growth and the $1.9 trillion stimulus.
  • He also commented on March’s jobs report, a strong sign of recovery, but still with far to go.
  • See more stories on Insider’s business page.

President Joe Biden said Friday that his new American Jobs Plan – the first of a two-part package – could lead to the creation of 19 million new jobs.

According to Bloomberg, Biden seemed to be citing a recent Moody’s Analytics report that projects 19 million jobs could be added over the next decade if the infrastructure plan passes; however, it also estimates that 16.3 million jobs would be added over the next decade from a combination of organic job growth jobs and the already-passed American Rescue Plan.

In his Friday remarks, Biden also said that almost 90% of the infrastructure jobs could be filled by people without a college degree.

A March analysis from Morning Consult found that, during the coronavirus pandemic, more educated Americans saw their confidence rebound and grow. The same could not be said for lower-wage, less-educated workers, who feared for their ability to hold onto a job. Higher-educated Americans felt confident enough to ask for pay increases, the analysis showed.

Biden’s remarks were tied to Friday’s jobs report, which saw the economy add 916,000 jobs, far outpacing economists’ expectations of 660,000.

While different unemployment measures dropped amidst the good jobs news, the country still has a long way to go before returning to pre-pandemic levels. In a blog post, Cecilia Rouse, the chair of the Council of Economic Advisers, said there were still 8.4 million fewer jobs in March 2021 than in February 2020.

Insider’s Andy Kiersz wrote that, if the March growth rate continues, employment could reach pre-pandemic levels by January 2022. Areas like movie theaters and hotels still have a long way to go, as they continue to lag in recovery.

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What Biden’s $2 trillion infrastructure plan means for you

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President Joe Biden speaking on an Amtrak train in February 2011.

  • President Joe Biden announced the first part of his infrastructure package on Wednesday.
  • It’s called the American Jobs Plan, and it would have wide-reaching impacts on millions of Americans.
  • Here’s how some of its provisions – like technology and transportation – could impact you.
  • See more stories on Insider’s business page.

President Joe Biden is willing to spend big.

Just the first part of his next sweeping economic package – focused on various types of infrastructure spending – has a price tag of $2 trillion. Taken together with the second part of the package, to be announced in coming weeks, it could result in around $4 trillion of spending.

In his Wednesday announcement of the American Jobs Plan, Biden emphasized the importance of rebuilding not just crumbling roads and bridges, but the middle class as a whole.

“Even before the crisis we’re now facing, those at the very top in America were doing very well, which is fine,” Biden said. “They were doing great. But everyone else was falling behind.”

He added: “We all will do better when we all do well. It’s time to build our economy from the bottom up and from the middle out, not the top down.”

The package certainly faces a long, rocky road before anything becomes law. But if all of its provisions get passed, here’s how the current plan could impact you.

Anyone who commutes – whether by train, bus, or car – could feel the impact of the infrastructure package

Broadly, transportation infrastructure would get a $621 billion investment. The biggest expenditures go towards modernizing roads, bridges, and highways; electric vehicles; public transit; and Amtrak.

“The American Jobs Plan will build new rail corridors and transit lines, easing congestion, cutting pollution, slashing commute times, and opening up investment in communities that can be connected to the cities, and cities to the outskirts, where a lot of jobs are these days,” Biden said. “It’ll reduce the bottlenecks of commerce at our ports and our airports.”

Electric-vehicle ports would see heavy investments, and Americans would have beefed-up incentives for buying clean-energy cars. They’ll be able to drive them on 20,000 modernized miles of roads and highways, or hop on a revamped Amtrak route.

“Imagine what we can do, what’s within our reach, when we modernize those highways,” Biden said. “You and your family could travel coast to coast without a single tank of gas onboard a high-speed train. “

Students of color and researchers would get more funding

Biden would allocate $180 billion to research and development. That includes yet more funding for climate causes, with $35 billion for climate research and development alone. It’s part of his efforts to reverse a long trend of declining federal money going to R&D.

“Decades ago, the United States government used to spend 2% of its GDP – its gross domestic product – on research and development,” Biden said. “Today, we spend less than 1%. I think it’s seven-tenths of 1%.”

Notably, the plan has special carve-outs targeted at students of color. Half of the $40 billion allocated for upgrading research infrastructure would go to Historically Black College and Universities (HBCUs), as well as Minority Serving Institutions (MSIs). HBCUs and MSIs would also get $10 billion – and an additional $15 billion for creating over 200 centers at them to serve as research incubators.

“The American Jobs Plan is the biggest increase in our federal non-defense research and development spending on record,” Biden said.

Workers, especially in the care industries, would get new benefits (like childcare at work)

Care workers and the people who rely on them stand to see big infusions of cash. The package would direct $400 billion towards home and community care for the elderly and disabled, expanding both access to services and benefits for workers in the space.

“For too long, caregivers – who are disproportionately women, and women of color, and immigrants – have been unseen, underpaid, and undervalued,” Biden said.

Childcare facilities would get $25 billion for upgrades; there would also be a tax credit incentivizing employers to build childcare facilities.

Biden is also calling for an end to sub-minimum wage provisions, where employers can pay disabled workers less than the federal minimum wage.

Unions were also a big topic throughout his speech, with Biden self-identifying as a “union guy.” He called for the passage of the Protecting the Right to Organize (PRO) Act.

“Unions built the middle class,” Biden said. “It’s about time they start to get a piece of the action.”

Everyone would get access to (affordable) broadband Internet

Technology overhauls worth more than $300 billion could mean more affordable and equitable internet access across the country.

Biden proposed a $100 billion investment in broadband to ensure it reaches 100% coverage across the country while promoting price transparency.

In his speech on Wednesday, Biden said that more than 35% of rural Americans lack access to high-speed Internet, and the disparity has only worsened during the pandemic. His infrastructure plan would help with that.

“When I say ‘affordable,’ I mean it,” Biden said. “Americans pay too much for Internet service. We’re going to drive down the price for families who have service now, and make it easier for families who don’t have affordable service to be able to get it now.”

Small businesses and out-of-work Americans would benefit from new programs

On top of the aid for small businesses and American manufacturers in the stimulus package, Biden wants to invest $400 billion to strengthen and protect American businesses. The infrastructure bill builds on the president’s “buy American” executive order in January and would encourage and promote domestic production of goods.

“Not a contract will go out, that I control, that will not go to a company that is an American company with American products, all the way down the line, and American workers,” Biden said.

Workers can also expect to see investments in job creation and job training efforts, and workforce protections would be strengthened, as well, including efforts to prevent workplace discrimination and supporting the right to unionize.

More affordable housing would get built

The housing sector can expect massive improvements from Biden’s $300 billion investment to revamp homes, schools, and federal buildings across the country. 500,000 homes would be built and rehabilitated for low- and middle-income homebuyers, and jobs would be created to build 1 million affordable and accessible housing options.

“We’ll build, upgrade, and weatherize affordable, energy-efficient housing and commercial buildings for millions of Americans,” Biden said.

Along with building affordable housing, Biden’s plan would update community college infrastructure and invest $28 billion to modernize Veterans Affairs clinics and hospitals and promote more sustainable federal buildings.

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Mitch McConnell says the GOP won’t support the infrastructure plan, report says

McConnell Portrait
Senate Minority Leader Mitch McConnell.

  • Senate Minority Leader Mitch McConnell said the infrastructure package won’t get GOP votes, per Politico.
  • McConnell had already criticized the package, calling it a “missed opportunity.”
  • Lack of GOP support would mean that Democrats may have to use reconciliation to pass it.
  • See more stories on Insider’s business page.

Senate Minority Leader Mitch McConnell said President Joe Biden’s new infrastructure package won’t get any Republican votes in the Senate, Politico reports.

At a Kentucky event, McConnell reportedly criticized the package for the impact it could have on debt, and the accompanying proposal to hike taxes on corporations.

“That package that they’re putting together now, as much as we would like to address infrastructure, is not going to get support from our side,” McConnell said, per Politico. “Because I think the last thing the economy needs right now is a big, whopping tax increase.”

McConnell already released a statement slamming the package, calling it a “Trojan horse” for tax hikes.

“Our nation could use a serious, targeted infrastructure plan,” he said. “There would be bipartisan support for a smart proposal. Unfortunately, the latest liberal wish list the White House has decided to label ‘infrastructure’ is a major missed opportunity by this Administration.”

When reached for comment, McConnell’s team directed Insider to a series of statements from Senate Republicans as well as his prior statement.

Setting the stage for more reconciliation

If no GOP members vote for the bill – as happened with the $1.9 trillion American Rescue Plan – Democrats may have to try to pass it via party-line reconciliation yet again. That could get thorny, as moderate Democrat Sen. Joe Manchin has said he wants any infrastructure package to be bipartisan and not passed via reconciliation – yet he wanted it to include tax hikes.

Democrats are also limited in how many times they can use reconciliation to pass bills ina given fiscal year, but that may be more flexible than previously assumed.

Senate Majority Leader Chuck Schumer has been looking into a potential loophole that would trigger multiple reconciliation bills in a given year, leaving Democrats with potentially multiple opportunities to pass one. And this week’s infrastructure package will be followed by another in mid-April, and Republicans’ track record indicates they won’t support that one, either.

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AOC says Biden’s infrastructure plan is way too small – she wants a $10 trillion package

alexandria ocasio-cortez aoc
Rep. Alexandria Ocasio-Cortez (D-NY).

  • An ideal infrastructure plan would spend $10 trillion, Rep. Alexandria Ocasio-Cortez said.
  • The plan Biden unveiled Wednesday is “encouraging” in scope but can be bigger, she said on MSNBC’s “Rachel Maddow Show.”
  • A larger plan could create tens of millions of jobs and vastly improve housing and health care, she said.
  • See more stories on Insider’s business page.

President Joe Biden has repeatedly said he aims to “go big” with plans to revitalize the US economy. For Rep. Alexandria Ocasio-Cortez, the administration’s $2 trillion infrastructure plan isn’t big enough.

The president unveiled the American Jobs Plan on Wednesday as a follow-up to the $1.9 trillion stimulus approved in March. The package includes spending on traditional infrastructure projects like roads and bridges as well as measures to cut down on carbon emissions and address the country’s housing shortage. The bill’s massive price tag is meant to be spread out over eight years, completely paid for over 15 years by tax hikes for corporations.

“It’s big, yes. It’s bold, yes. And we can get it done,” Biden said in a speech announcing the plan.

More progressive members of the Democratic party see room to be even more ambitious. The package’s scope is “really encouraging,” she said, but to really get to a plan that tackles America’s challenges, “we’re talking about realistically $10 trillion over 10 years.” That would cover the “ideals” sought by progressive lawmakers, Ocasio-Cortez said Wednesday on MSNBC’s The Rachel Maddow Show.

“I know that may be an eye-popping figure for some people, but we need to understand that we are in a devastating economic moment,” she said. “We have a truly crippled health-care system and a planetary crisis on our hands, and we’re the wealthiest nation in the history of the world.”

Such a plan would create tens of millions of “good union jobs,” improve the country’s health care, revamp infrastructure, shore up housing supply, and bring carbon emissions in line with standards set by the Intergovernmental Panel on Climate Change, the representative from New York added.

To be sure, the American Jobs Plan is only half of Biden’s latest spending push. The White House plans to unveil a package aimed at upgrading care facilities and education, named the American Families Plan. The proposal will likely include measures for universal pre-K, free community college, and extending child tax credits included in the March stimulus bill.

The White House is reportedly willing to spend $4 trillion across the two packages, a sum that would bring recovery spending under his term to nearly $6 trillion. Democrats so far have accepted the plan.

Democratic Sen. Joe Manchin of West Virginia – a moderate member of the party with a huge influence on Senate agenda – backed $4 trillion in infrastructure spending in January, saying such spending is necessary to bring back the nearly 10 million jobs still lost to the pandemic.

Manchin’s support marks a shift from the intraparty disagreements seen just years ago. More moderate members of the party increasingly support economic policy that centers working-class Americans, Ocasio-Cortez said.

“People really are starting to understand that these issues are no longer fringe progressive demands, but they are consensus builders,” she added.

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Here’s exactly how Biden’s $2 trillion of infrastructure spending breaks down

AP President Joe Biden Amtrak Train Boarding
President Joe Biden and his wife, First Lady Jill Biden, board an Amtrak train during the 2020 presidential campaign.

  • President Joe Biden will officially announce his $2 trillion American Jobs Plan today.
  • The bill contains major investments in transportation, housing, and climate change policies.
  • Biden plans to offset the spending in the plan with a corporate tax increase.
  • See more stories on Insider’s business page.

President Joe Biden is set to announce the first part of his two-part infrastructure package this afternoon. It’s called the American Jobs Plan, and it will cost about $2 trillion.

The package is focused on job creation, traditional infrastructure spending, and investment in many other things that stand to redefine infrastructure as a political issue, such as funding for care workers, as well as incentives for childcare to be provided at American workplaces. Biden plans to couple it with a tax increase for corporations, meant to offset the bill’s spending over 15 years.

Here’s how the spending will break down.

Transportation

  • $621 billion for transportation includes:
    • $115 billion for modernizing roads, highways, and bridges
    • $20 billion for road safety
    • $85 billion for public transit
    • $80 billion for Amtrak and freight rail service
    • $174 billion for electric vehicles
    • $25 billion for airports
    • $17 billion for ports
    • $20 billion for neighborhoods historically excluded from transportation investments
    • $25 billion to fund new projects
    • $50 billion for infrastructure resilience, with a special emphasis on more vulnerable areas

Water

  • $111 billion for water infrastructure includes:
    • $45 billion towards fully eliminating lead pipes through various programs
    • $56 billion in loans and grants to help modernize water systems around the country
    • $10 billion for monitoring and fixing substances in drinking water

Broadband and power

  • $100 billion for broadband
    • This would build out infrastructure for 100% coverage and would specifically allocate funds for tribal lands
    • It would also seek to reduce broadband pricing
  • $100 billion for power infrastructure includes:
    • $16 billion towards plugging old wells and cleaning up abandoned mines
    • $5 billion towards revamping former industrial and energy sites
    • $10 billion for the creation of a Civilian Climate Corps

Housing and education

  • $213 billion for creating and retrofitting over 2 million housing units, with a $40 billion investment in public housing infrastructure
  • $100 billion for upgrading and building public schools
  • $12 billion for community college infrastructure
  • $25 billion for upgrading childcare facilities and making it more widely accessible
    • This is accompanied by a tax credit to incentivize building childcare at Americans’ places of work
  • $18 billion to modernize Veterans Affairs hospitals, as well as $10 billion for federal buildings
  • $400 billion towards home/community care for the elderly and disabled
    • This would expand access, and seek to improve wages, benefits, and unionization for workers in the industry.

Research and development

  • $180 billion towards R&D includes:
    • $50 billion for the National Science Foundation
    • $30 billion for innovation and job creation R&D
    • $40 billion in upgrading research infrastructure, with half allocated to Historically Black College and Universities (HBCUs) as well as “Minority Serving Institutions” (MSIs)
    • $10 billion for those HBCUs and MSIs, as well as $15 billion to create over 200 centers at them to serve as research incubators
    • $35 billion in climate research and development

Manufacturing and labor

  • $300 billion for American manufacturing and small business
    • $50 billion for a new office for a new office focused on domestic industry
    • $50 billion for research and manufacturing for semiconductors
    • $30 billion to create new jobs and fend off losses during future pandemics
    • $46 billion for federal buying, with an emphasis on various clean technologies
    • $20 billion for regional innovation hubs
    • $14 billion towards increasing competitiveness through technological advances
    • $52 billion to domestic manufacturers
    • $31 billion for programs providing credit, R&D funding, and venture capital to small businesses
    • $5 billion to create a new “Rural Partnership Program,” aimed at supporting local rural efforts
  • $100 billion for workforce development includes:
    • $40 billion towards career services and training for workers who have lost jobs
    • $12 billion in targeted funding towards “workers facing some of the greatest challenges,” prioritizing underserved and hard hit communities, with $5 billion towards “evidence-based community violence prevention programs”
    • $48 billion towards worker protection and development infrastructure, including an expansion of apprenticeships, with a particular emphasis on women and people of color
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What to expect in Biden’s $2 trillion infrastructure package

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President Joe Biden.

  • The first part of President Joe Biden’s infrastructure bill is set to be announced this afternoon.
  • It will contain substantial investments in transportation, broadband, care workers, and research.
  • The bill will cost around $2 trillion, and is set to be offset with tax hikes for corporations.
  • See more stories on Insider’s business page.

President Joe Biden is set to announce his first infrastructure bill this afternoon, with a price tag of around $2 trillion, principally spent out over eight years. The bill will include major investments in everything from broadband to elder care workers – to be paid for with tax hikes on corporations.

Here’s what to expect.

Transportation

The first area to see a historic investment would be transportation, according to an administration official. That includes modernizing 20,000 miles of roads and funding for important bridges. Significantly, federal funding for public transit would double.

More climate-friendly forms of transit would also see a boost, with funding for electric-vehicle-charging stations and affordability measures for electric vehicles. Bus fleets would also undergo an electric overhaul.

Broadband and water

The plan would bring universal – and affordable – broadband in the next decade, a need that the virtual work- and school-life required by the pandemic threw into stark relief.

It will also focus on the living conditions of Americans. The bill seeks to ensure that every American has access to clean water, which would be accomplished through the upgrading and replacing of pipes. It would also revamp electric infrastructure in a move towards a carbon-free future.

Housing would see a significant investment, with 2 million residences set to be built or renovated. The bill also allocates money to repairs for schools, federal buildings, childcare facilities, and veteran hospitals.

Care for the elderly and disabled

The plan would invest in one part of the care economy by creating more jobs caring for the elderly and disabled, and boosting pay for those workers. That workforce is disproportionately female, with women of color highly represented, and sees lower wages in general.

Innovation and R&D

The package will include incentives for domestic manufacturing, as well as clean-energy technology and other key supply-chain areas. That would be coupled with investments in the workforce and training.

Corporate tax increase

Biden’s proposed corporate tax reform is meant to offset the cost of this package over 15 years, an administration official said. Job creation would be incentivized, and the corporate tax rate would be set to 28%. The administration will also seek to establish a global minimum tax rate of 21% for multinational corporations.

What comes next

It’s unclear if this package will have to be passed through party-line reconciliation, as Biden’s $1.9 trillion stimulus was in early March. Moderate Democrat Sen. Joe Manchin has signaled he would like a bipartisan infrastructure plan, but Republicans have indicated that they won’t get onboard with any tax cuts.

This is the first part of a two-pronged infrastructure package. The second part, set to be announced in mid-April, will focus on education, childcare, and healthcare.

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Biden reportedly bumps infrastructure price tag to $4 trillion, with up to $3.5 trillion in tax hikes

Biden
President Joe Biden speaks to the press after disembarking from Airforce One after arriving in Wilmington, Delaware on March 26, 2021.

  • The new infrastructure bill could cost more, and have greater tax hikes, than originally anticipated.
  • The Washington Post reports the package could total $4 trillion, with up to $3.5 trillion in tax hikes.
  • Democrats have suggested various new tax hikes while Republicans have opposed all of them.
  • See more stories on Insider’s business page.

President Joe Biden is expected to unveil his massive infrastructure plan on Wednesday, but it could surprise to the upside.

While the plan was initially thought to have a $3 trillion price tag, it could now reportedly cost as much as $4 trillion, and could also include $3.5 trillion in tax hikes.

Last week, The New York Times first reported details of the upcoming infrastructure proposal. In that report, sources familiar with the plan said could cost up to $3 trillion, which was confirmed to Insider. According to documents obtained by the Times, the plan will be split into two separate legislative pieces: One focused on rebuilding infrastructure such as roads and bridges, and another focused on the care economy, with funding for things including universal pre-K and free community college.

But on Monday, three sources familiar with the matter told The Washington Post that the White House is expected to push for as much as $4 trillion in spending on infrastructure and for as much as $3.5 trillion in tax hikes.

The sources said that administration officials worried about the risk that the large gap between spending and revenue would widen the deficit so much could trigger a spike in interest rates, and increasing taxes would help mitigate that.

On Wednesday, Biden is expected to unveil the first legislative piece of the infrastructure plan, which would focus on rebuilding roads and bridges, expand clean energy investments, create infrastructure for electric vehicles, and more. This part of the plan would also include funding for disabled and elderly care.

As for the second part of the plan focused on the care economy, White House Press Secretary Jen Psaki said on Fox News Sunday that it will be released “in just a couple of weeks” and “will address a lot of issues that American people are struggling with.”

“The total package we’re still working out, but he’s [Biden] going to introduce some ways to pay for that, and he’s eager to hear ideas from both parties as well,” Psaki said.

Biden has already shown a historic willingness to go big with recovery packages, a contrast to the stimulus packages enacted during the Obama-era recovery during the Great Recession.

Tax hikes may be on their way – and Republicans don’t like that

As The Washington Post writes, the focus on the deficit could help appease critics who worry about spending – but it also lays out a big challenge for Biden. The White House would need to get Congress on its side to enact its reported tax increases, which “together would represent the largest tax hike in generations.”

Lawmakers have already begun floating a host of ideas to fund the infrastructure package, with tax hikes on the table. Moderate Democratic Sen. Joe Manchin of West Virginia told Axios in the beginning of March that an infrastructure bill could be as large as $4 trillion if it’s funded by tax hikes, but made it clear that he would not support using reconciliation to pass it, as the $1.9 trillion stimulus was.

Biden has been reportedly eyeing a tax increase, with wealthier Americans and corporations as the primary targets.

Biden said during his campaign that he would increase the corporate tax from 21% to 28% – still lower than its 35% rate prior to former President Donald Trump’s tax cuts. He’s also reportedly been looking at adjustments to the stepped-up basis, as well as expanding the capital gains tax. He may also raise income taxes to as high as 39% for Americans making over $400,000 a year.

But Republican lawmakers are unlikely to support tax hikes to fund infrastructure. In fact, some have been pushing for the opposite of Sanders’ proposed increase to an estate tax, instead calling for it to be repealed.

“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” Senate Minority Leader Mitch McConnell told reporters last week.

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Biden’s stimulus will lift US growth to 8% this year, Goldman Sachs says – without factoring in another $2 trillion spending package

Biden signs American Rescue Plan
US President Joe Biden signs the American Rescue Plan on March 11, 2021, in the Oval Office of the White House in Washington, DC.

  • Goldman Sachs lifted its 2021 US growth forecast to 8% from 7.7%, citing new stimulus for the boost.
  • The bank also expects Biden and Democrats to pass at least $2 trillion in infrastructure spending.
  • That sum could hit $4 trillion if the deal includes education, child-care, and health-care spending.
  • See more stories on Insider’s business page.

Goldman Sachs joined its Wall Street peers in revising its US economic outlook on Saturday, pegging an increasingly bullish forecast to Democrats’ latest stimulus package.

The team led by Jan Hatzius now expects US gross domestic product to grow 8% in 2021 on a fourth-quarter-to-fourth-quarter basis, according to a note published Saturday. That’s up from the previous estimate of 7.7%. The bank’s full-year growth estimate climbed to 7% from 6.9%.

The current-year projection largely hinges on President Joe Biden’s stimulus plan, as Goldman had initially expected a $1.5 trillion deal to reach Biden’s desk. The $1.9 trillion plan signed by the president on Thursday will accelerate the nation’s economic recovery through the middle of 2021 before tapering off into 2022, the bank’s economists said. Stimulus checks’ rollout over the coming months will concentrate the plan’s positive impact in the second quarter, they added.

Democrats’ stimulus package is probably the last major pandemic-era relief deal, but key tenets of the plan are set to be renewed as the economy climbs out of its virus-induced hole. The bill’s expansion of the child tax credit will probably be extended or made permanent by Democrats, according to Goldman.

The $300 supplement to federal unemployment benefits will expire as planned in September, but expanded eligibility and benefit duration policies included in Biden’s package could be prolonged, the team said.

Next stop: Infrastructure

Biden has said he aims to pass a massive infrastructure measure to further juice the US recovery. Such a plan will come with a price tag of at least $2 trillion, though details are scarce for now, Goldman said.Inclusion of funding for child care, health care, or education could push the sum to $4 trillion, though tax hikes would probably be needed to fund such a package, the bank added.

Biden campaigned on a $2 trillion package, though some Democratic senators indicate they favor even larger spending. Sen. Joe Manchin of West Virginia, an influential moderate member of the caucus, has said he could support up to $4 trillion, while Sen. Dick Durbin of Illinois, a member of party leadership, has said he could support $3 trillion.

Infrastructure spending would have a less pronounced impact on growth, but Goldman still sees the package driving a stronger expansion through 2022. The economy will expand 2.9% next year on a Q4-Q4 basis, up from the bank’s prior forecast of 2.4%.

House Democrats began planning their infrastructure push on Friday. House Speaker Nancy Pelosi said she hopes to hold bipartisan talks on improvements to broadband, energy, and education, among other sectors. Yet after passing the stimulus bill without a single Republican vote, garnering support across the aisle could be difficult.

Goldman’s update follows similarly optimistic changes elsewhere on Wall Street. Morgan Stanley lifted its forecast on Tuesday to 8.1% on a Q4-Q4 basis. US GDP will fully rebound to pre-pandemic highs by the end of the first quarter and trend higher in the coming months as the economy fully reopens, the team led by Ellen Zentner said.

Separately, UBS projected growth would reach 7.9% from Q4 2002 to Q4 2021 as stimulus, falling COVID-19 case counts, and continued vaccination opened the door for a strong recovery. The bank, like Goldman, had expected Republicans to water down the size of the latest relief package. Passage of the full bill can help consumer spending lift the ailing services industry into 2022, economists led by Seth Carpenter said in a note to clients.

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Key House Democrat opens the door to circumventing Republicans on multitrillion-dollar infrastructure package

Joe Biden
President Joe Biden.

  • Biden met with a bipartisan group of House members on Thursday to discuss infrastructure spending.
  • House Transportation Chair Peter DeFazio floated the idea of using reconciliation for the bill on CNBC.
  • Ranking member Sam Graves immediately pushed back on Democrats passing a bill without Republican support. 
  • Visit the Business section of Insider for more stories.

After his $1.9 trillion stimulus package passes, President Joe Biden is setting his sights on what could be an even bigger bill: infrastructure. 

And Democrats are already considering ways to go about spending without Republican support.

The president began holding talks on the matter on February 11, when he met with a bipartisan group of four senators to discuss the future of infrastructure funding. On February 17, he called top labor leaders to the Oval Office to hear about their priorities in such a package. 

Infrastructure talks continued this Thursday as Biden was joined by Transportation Secretary Pete Buttigieg, Transportation and Infrastructure Committee Chair Peter DeFazio, ranking member Sam Graves, and seven other House members.

In a Thursday interview with CNBC before meeting with Biden, Democratic Rep. DeFazio said he planned to propose the idea of using reconciliation to fund an infrastructure bill and have specific projects within the bill be passed on a bipartisan basis.

“Clearly the president wants to try bipartisan, and I’m willing to try that,” DeFazio, a Democrat, said.

However, in a statement shortly afterward, the Republican Graves said legislation “cannot be a ‘my way or the highway’ approach like last Congress,” referring to previous Democratic legislation.

“First and foremost, a highway bill cannot grow into a multitrillion-dollar catch-all bill, or it will lose Republican support,” Graves said. “We have to be responsible, and a bill whose cost is not offset will lose Republican support.”

“The President, Vice President, Secretary, and Members of Congress discussed their shared commitment to working across the aisle to build modern and sustainable infrastructure in rural, suburban, and urban areas across the country that create good-paying, union jobs and support the economic recovery,” the White House said in a statement following the meeting. 

 

During his campaign, Biden proposed a $2 trillion infrastructure plan that would focus on job creation and climate progress, but Press Secretary Jen Psaki has declined to settle on an exact price tag and said in a February 25 briefing that would come after the stimulus plan is passed. 

DeFazio did not immediately respond to Insider’s request for comment.

Graves emphasized in his statement that he does not want “another Green New Deal disguising itself as a transportation bill.” Biden’s campaign proposal on infrastructure heavily focused on climate-related initiatives that would create jobs.

On Wednesday, the American Society of Civil Engineers gave the US a C-minus grade on its four year infrastructure report card and said the country needs $2.8 trillion in national road and rail transportation in the coming decade.

After the White House meeting, DeFazio declined to disclose specifics but told reporters the conversation topics included how to pay for the bill. 

“He [Biden] wants to move as quickly as possible,” DeFazio said. “He wants it to be very big and he feels that this is the key to the recovery package.”

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Democrats are planning at least another $2 trillion in stimulus spending, shrugging off fears of growing debt

Joe Biden
President Joe Biden meets with lawmakers in the Oval Office.

  • Democrats are planning at least another $2 trillion in stimulus spending, much of it on infrastructure.
  • Senior Democrats support new taxes on wealthy Americans and large businesses to finance part of a follow-up package.
  • Senate Republicans are likely to press for more targeted spending, and spark a clash in Congress.
  • Visit the Business section of Insider for more stories.

Democrats are on course to approve $1.9 trillion in emergency pandemic spending within the next month. It would be yet another large infusion of federal aid only months after Congress passed a $900 billion aid package in December.

But Democrats show few signs of hitting the brakes anytime soon on federal spending. Instead, President Joe Biden is indicating he may press his foot on the gas and shrug off the growing federal debt.

“In order to grow the economy a year or two, three, and four down the line, we can’t spend too much,” Biden said on Tuesday during a CNN town hall. “Now is the time we should be spending.  Now is the time to go big.” 

It’s a remarkable split for Democrats a decade after the Great Recession. Confronted with the worst economic downturn in generations, President Barack Obama enacted an $800 billion stimulus package in February 2009. Many economists and Democrats now say it was inadequate to address the fallout of the financial crisis.

Previous efforts in Congress on infrastructure legislation collapsed during President Donald Trump’s term. Now, Democrats are in the early stages of a sprawling effort that could encompass jobs, climate change, and energy. They appear emboldened by the Federal Reserve promising to keep borrowing costs low for the near future. Fed Chair Jerome Powell also recently called for a “society-wide commitment” to recover lost jobs.

Rep. Don Beyer (D-Md.), vice chair of the Joint Economic Committee, told Insider that House Democratic leaders discussed a follow-up package this week with at least $2 trillion in further spending.

“I think the number one priority for the White House and Congress will be to build the climate initiatives we’ve so much wanted into an infrastructure bill,” Beyer said in an interview. “The second big thing would be accessible, affordable broadband in rural America and lower-income, urban America.”

The mass blackouts in Texas caused by an Arctic winter storm may add momentum to Democrats urging a major plan to revamp the nation’s infrastructure. Some senior Democrats are starting to press for wide-ranging legislation that comes with tax increases on the wealthy and large businesses.

“The catastrophe in Texas has underscored the urgent need to address the climate crisis and rebuild our infrastructure,” Sen. Ron Wyden (D-Oregon), chair of the Senate Finance Committee, said in a statement to Insider. “In the recovery package, my priorities will be making these critical investments by ensuring the wealthy and mega-corporations pay their fair share.”

Wyden added he would introduce proposals next month to remake the energy tax code and boost clean-energy manufacturing. He also said it was an “an opportunity to undo years of neglect” of roads, highways, and bridges by putting people to work repairing them. 

“The past week has hopefully reminded all of my Republican colleagues that there’s no escaping the effects of climate change and broken infrastructure,” Wyden said.

“Historic investments in infrastructure”

texas storm
Pike Electric service trucks line up after a snow storm on February 16, 2021 in Fort Worth, Texas.

The follow-up economic proposal after the Democratic rescue package will differ in two significant ways. The first is instead of delivering immediate relief to families and struggling businesses, the plan will be directed at sparking long-term economic growth.

White House Press Secretary Jen Psaki said on Wednesday that Biden’s plan “will make historic investments in infrastructure – in the auto industry, in transit, in the power sector – creating millions of good union jobs, and in the process, also addressing the climate crisis head-on.”

The second is Democrats are expected to try and finance permanent parts of the initiative through new taxes instead of deficit spending to offset its addition to the national debt. Last year, Congress and President Trump approved $4 trillion in relief spending to put the economy on life-support and stem the rate of coronavirus infections.

Beyer, a member of the tax-writing House Ways and Means Committee, said he believed many Democratic members of the panel “would really prefer there be a pay-for.” The committee held a hearing early last year on funding infrastructure and one possible method under discussion at the time was raising the gas tax, a step not taken since 1993.

Biden administration officials say they are still hammering out the plan’s details. Treasury Secretary Janet Yellen said in a CNBC interview on Thursday that tax hikes on wealthy Americans and corporations would form part of the bill, though they would be gradually implemented.

It’s unclear how much of a package would be covered with new sources of revenue, though up to half is a possibility. During his presidential run, Biden signaled he was open to a 0.1% financial transactions tax on the selling and trading of stocks and bonds. The nonpartisan Congressional Budget Office estimates such a tax could raise $777 billion in revenue over ten years.

“We can’t have a repeat of their COVID bill”

Bill Cassidy
Sen. Bill Cassidy (R-LA) speaks to reporters on Capitol Hill.

Democrats are grappling with difficult math over the next two years. They control the evenly-divided Senate because Vice President Kamala Harris casts the tie-breaking vote.

Should they use reconciliation to bypass Republicans, Democrats cannot afford any defections – a steep climb given wide differences in views on how aggressively the federal government should move to tackle the climate crisis, create shovel-ready jobs, and levy taxes.

Sen. Joe Manchin (D-W.Va) last month said he supported up to $4 trillion in infrastructure spending. A conservative Democrat, Manchin’s support will likely prove critical to the success of Democratic legislation.

There are Republicans who support upgrading American infrastructure, making a path to a bipartisan deal possible. But drawing 10 Senate Republican votes could lead to difficult trade-offs some Democrats view as unacceptable.

Sen. Bill Cassidy (R-LA), part of a Republican working group that pitched a $618 billion stimulus plan to Biden last month, said any infrastructure measure must be restrained in size and scope.

“We can’t have a repeat of their COVID bill,” Cassidy said in a statement to Insider. “To be successful, any action on infrastructure must be targeted spending and focused on real needs like expanding access to broadband in rural areas and fixing our crumbling bridges.”

Other Republicans said they were reluctant to support a infrastructure plan carrying a major price tag.

“The main thing is that I want to be careful,” Sen. James Inhofe of Oklahoma told Capitol Hill reporters after a White House meeting with Biden on the issue earlier this month. “When you’re working on infrastructure, that’s high dollars.”

The hesitation from Republicans clashes with Democrats eager to embark on robust federal spending – and wield the full power of their control of Congress and the White House.

“We’re only going to get a limited amount of bites at the reconciliation apple,” Beyer told Insider. “Now that we have Chuck Schumer running the Senate, Joe Biden as president, and a 2022 election that will be very contested, we better use our legislative power while we have it.”

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