After passage of the American Rescue Plan in March, President Joe Biden introduced the American Jobs Plan and American Families Plan. As proposed, they are more than $4 trillion spent over 10 years and would be paid for with an increase of the corporate tax rate from 21% to 28%.
The two packages separate traditional infrastructure in the American Jobs Plan – roads, bridges, water pipes, airports, and ports - and what the Biden Administration has termed “human infrastructure” – child care, paid family leave, education cost, and making permanent extensions of tax cuts and tax credits passed in the American Rescue Plan that will phase out in a few years.
President Biden has expressed a desire for these packages to have bipartisan support and has engaged in negotiations with Republican Senators. While Republicans they have expressed little support for the American Families Plan, they have expressed a desire to compromise on what they describe as traditional infrastructure though they have misgivings about raising the corporate tax rate.
Led by West Virginia Sen. Shelley Moore Capito, the initial counter proposal was $568 billion. The Biden Administration dismissed that proposal as inadequate to meet current needs and countered with a $1.7 trillion proposal.
This morning, Senate Republicans countered with a $928 billion proposal. This Republican proposals, as the previous one did, keeps the corporate tax rate at the current level, and relies on user fees such as an increase in the gasoline tax to fund the proposal. This new proposal also includes reallocating unspent COVID-19 relief funds including the recently enacted in the American Rescue Plan but not yet delivered state and local COVID-19 relief funding. After advocating for this funding, the League is troubled with the new proposal.
The Biden Administration has insisted that any proposals include an increase in the corporate tax rate to ensure Americans earning under $400,000 annually do not see a tax increase. It is unknown whether the Biden Administration will accept this latest republican proposal but public reports indicate it is unlikely.
Assuming these negotiations are unsuccessful, Senate Democrats will likely attempt to pass both of these proposals using the budget reconciliation process that only requires 51 votes for Senate passage. However, with only 50 Democrats in the Senate and Vice President Kamala Harris acting as the tie-breaking vote thus it is likely that the proposal will pass using the budget reconciliation process. Published reports have indicated because of the timeline involved that vote would not occur before September.
The League continues to monitor the situation and will keep you appraised as the situation warrants.
Contact: Paul Penna, Legislative Analyst, email@example.com or 609-695-3481 ext. 110