Where Will The Money Come From To Pay For Biden Infrastructure Plan?
RACHEL MARTIN, HOST:
Repairing highways and bridges, expanding mass transit and high-speed broadband - infrastructure improvements like these are just part of President Biden's expansive plan, which he unveiled yesterday, and it carries a more than $2 trillion price tag. Biden spoke in Pittsburgh yesterday outlining what he's been calling the American Jobs Plan.
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PRESIDENT JOE BIDEN: It's a once-in-a-generation investment in America, unlike anything we've seen or done since we built the interstate highway system and the space race decades ago.
MARTIN: And that's just Part 1. Biden is expected to call for trillions of dollars in additional spending on American families in the next few weeks. The big question now - how do you pay for all of it? NPR's chief economics correspondent, Scott Horsley, is with us to help answer that question. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: Where is President Biden going to find more than $2 trillion?
HORSLEY: He wants to send the bill for Part 1 of his plan to corporate America in the shape of higher taxes on corporate profits. That's a turnaround from what we saw in the last administration, which cut corporate taxes from 35% down to just 21%. Biden's plan would reverse about half that tax cut, moving the corporate rate back up to 28%, while also making it harder for multinational corporations to avoid taxes by parking their profits in other countries. You know, the average multinational firm paid just 8% in federal taxes the year after that GOP tax cut was passed.
One other way to look at this - corporate taxes at both the state and federal level now add up to about 1% of the U.S. economy. Most of our G-7 competitors charge corporations two to three times that much.
MARTIN: So corporations are still going to be able to retain some of the benefit they got under the Trump tax cuts. But if their taxes go up at all, they're not going to be happy, right? I mean, what's the business community saying?
HORSLEY: Yeah, you're hearing some pushback already. Both the Business Roundtable and the Chamber of Commerce put out statements applauding the president for wanting to invest in infrastructure, but saying, you know, the people who use the roads and the pipelines and the power grid should pay for that, not corporate America. Republicans in Congress have a similar message. Take a listen to how GOP Congresswoman Ann Wagner of Missouri grilled Treasury Secretary Janet Yellen last week when Yellen mentioned the possibility of higher taxes.
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JANET YELLEN: We do need to raise revenues to support the spending that this economy needs to be competitive and productive and...
ANN WAGNER: Let me just say this. Secretary Yellen, we know that raising the corporate tax rate results in higher costs for small businesses, schools and American households.
HORSLEY: So for now at least, it looks as if Democrats might try to push this plan through on a straight party-line basis, as they did with the rescue package last month. And the next phase of the president's plan is likely to have even less GOP buy-in. Biden wants to finance that by raising taxes on wealthy folks making more than $400,000 a year.
MARTIN: I mean, as you just referred to, last month, Congress agreed to borrow nearly $2 trillion for that COVID relief aid. I mean - and now the White House wants to push through trillions more. I mean, why go so big so soon?
HORSLEY: Partly politics and partly practicality - Democrats have a limited window here while they control the House, the Senate and the White House, so they want to act while the opportunity is open to them. On a practical level, the U.S. is really behind in infrastructure investment. We're sort of like a homeowner who has put off fixing his roof and the crack in the driveway and the leak in the kitchen, and now they all need repair at one time. S&P Global says state and local government spending on infrastructure is about $1.5 trillion short of the path it was on before the last big recession. So that's a pretty big pothole that needs to be filled in before you could even start to talk about, as the president says, building back better.
MARTIN: NPR's chief economics correspondent, Scott Horsley.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.