President Joe Biden’s $ 2 trillion infrastructure plan would invest $ 621 billion in transportation infrastructure and be funded by an increase in the corporate tax rate, among other measures.
Biden released the U.S. Jobs Plan on Wednesday morning as lawmakers begin efforts to legislate on an infrastructure package in the coming months. To pay for parts of the plan, Biden proposed a Made in America tax plan to set the corporate tax rate at 28% from 21%.
This is the first of two bills, the second focusing on free access to community colleges, universal preschool and others. Municipal bond provisions were not mentioned in Biden’s plan, but stakeholders expect those details to be considered in Congress and most expect there to be a protracted battle. between the two parties on how to pay all arrangements.
“We didn’t expect many financing details to be released in this project and this was confirmed today,” said Brett Bolton, vice president of federal legislative and regulatory policy at Bond Dealers of America. “What we’re looking for are our friends on Capitol Hill to take on this role and really start looking for financing options that include a strong effort to include municipal bond market priorities.
How the bill or bills reach Congress is also uncertain. Republicans are against raising taxes and Democrats want a massive new infrastructure package that demands it.
The possibility of a reconciliation bill still looms.
Reconciliation is a tool that allows lawmakers to bring levels of taxation and spending into line with levels set in a budget resolution. It can only be used twice this year and has already been used to pass COVID relief this month.
Raising the corporate tax rate to 28% from 21% – the rate set by the 2017 Tax Cuts and Jobs Act – like any tax increase, will face repression from the Republicans .
And this week, Three House Democrats have said they will not support any of Biden’s tax hikes unless the plan includes a repeal of the $ 10,000 cap on state and local tax deductions.
In a divided Congress, this could block legislation.
However, key players in the House and administration have expressed support for the municipal bond provisions.
House Ways and Means Committee Chairman Richard Neal, D-Mass., Told BDA he plans to push through an infrastructure package for his committee by late spring or early summer.
Neal also reiterated his support for specific provisions on municipal bonds such as tax-exempt prepayments, the expansion of PABs, the reinstatement of direct-payment bonds that would be exempt from sequestration and the increase in the cap for tax-free prepayments. small borrowers for the amount of tax exemption. bonds that they can issue in a year and remain eligible for sale to banks with favorable banking status.
U.S. Transportation Secretary Pete Buttigieg said many provisions on municipal bonds hold promise, such as increasing the federal cap on private activity bonds, returning a pay-out bond, and reinstating the tax-exempt early repayment.
“Having a leadership like that in administration, working with the leaders on the Hill, really helped point them in the right direction and really reassured that Bonds will get a good chance in the deliberations over the next few months. ”Bolton said.
Home Transportation and Infrastructure Committee Chairman Peter DeFazio, D-Ore., Backed Biden’s plan.
“In announcing this plan, President Biden took the conversations I had with him, Vice President Harris and Secretary Buttigieg, and he put those words into action,” DeFazio said. “The U.S. Jobs Plan will not only make bold and transformational investments in our nation’s transportation and infrastructure, it will do so with a focus on creating well-paying jobs, supporting U.S. manufacturing. , investing in rural and urban communities, and addressing the greatest challenge of our time, the climate crisis.
“I’m intrigued to see how the Hill reacts and I guess they’ll be looking to the fundraising part of that soon,” Bolton added.
The National Association of State Treasurers wants to discuss funding tools to support Biden’s infrastructure plans with the administration and Congress.
“We remain particularly focused on efforts to reinstate tax-exempt prepayment obligations as part of any infrastructure package going forward,” said Shaun Snyder, Executive Director of NAST.
Among the details of the plan, it would modernize 20,000 miles of highways, roads and streets, repairing thousands of small bridges along the way. Biden also wants to replace thousands of buses and rail cars, renew airports, and expand transit and rail to new communities. Biden proposed an increase of $ 115 billion to modernize highways, streets and bridges.
Biden’s plan also calls on Congress to invest $ 85 billion to modernize existing transit to meet passenger demand.
“This investment will double federal public transit funding, reduce the repair backlog and bring bus, bus rapid transit and rail services to communities and neighborhoods across the country,” they said. written.
Congress is also expected to invest $ 25 billion in airports, including funding for the Airport Improvement Program, or AIP, the Biden administration said, as well as $ 17 billion in inland waterways, coastal ports. , land ports of entry and ferries.
The American Association of Port Authorities supported Biden’s plan.
“Investments in port infrastructure support growing opportunities across the national economy and ensure continued global competitiveness,” AAPA said. “US ports look forward to working with President Biden and bipartisan leaders in Congress to advance significant investments in our nation’s infrastructure.
Airports Council International noted that the airports were underfunded, adding that this had created a backlog of $ 115 billion in projects.
“As we roll into the brighter days ahead, US airports are ready to take off,” said Kevin Burke, President and CEO of ACI-NA. “These much-needed funds will help America’s airports rebuild and create jobs that will support a vibrant 21st century economy.”
Clean water was another focal point of Biden’s sketch with a plan to phase out all lead pipes and service lines that can be paid for by investing $ 45 billion in the State Revolving Fund for the drinking water from the Environmental Protection Agency and in improving water infrastructure for the Nation Act.
State revolving funds act as infrastructure banks by providing low-interest loans for water infrastructure projects. As the money is returned to the state revolving credit fund, the state makes new loans for other projects. These recycled payments of loan principal and interest income allow the government fund to “spin” over time.
Biden wants to invest $ 100 billion to modernize and build new public schools, through direct grants and $ 50 billion in bonds.
The Government Finance Officers Association was encouraged by the fact that Biden’s proposal seeks to invest in public transit, water and broadband.
“We recognize that the process of turning this proposal into legislation has yet to happen. We therefore hope that as this effort begins, our federal partners recognize the importance of protecting tax-exempt municipal bonds given that this is a tool with a long history in infrastructure investments. . Said Michael Belarmino, senior policy adviser to GFOA.
Biden will speak more about his plan later Wednesday at an event in Pittsburgh. “The President looks forward to working with Congress and will come up with additional ideas in the coming weeks to reform our tax code so that it rewards work, not wealth, and ensures that the highest income earners pay their fair share, ”his administration wrote.