President Joe Biden has pitched his infrastructure package as a weapon essential to keeping pace with China, calling it a “blue-collar blueprint” that his administration says will create millions of jobs and better position the United States to compete with Beijing.
Justifying his $2.25 trillion proposal, Biden said Wednesday that “China and the rest of the world” are racing ahead of the U.S. All told, he mentioned the country six times.
“Do you think China is waiting around to invest in its digital infrastructure or research and development?” he asked.
“I promise you, they are not waiting. But they are counting on American democracy to be too slow, too limited, and too divided to keep pace.”
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His bill includes such things as universal broadband or filling potholes. One provision under fire is a push to raise wages for home healthcare workers.
“I couldn’t be going to work if I had to take care of my parents,” said Cecilia Rouse, the chairwoman of the White House Council of Economic Advisers. “How is that not infrastructure?”
Over eight years, the president’s pitch amounts to $280 billion annually. This amount, already facing significant pushback, is dwarfed by China’s infrastructure spending, or about double this amount.
“This is about outcompeting China,” Commerce Secretary Gina Raimondo said on CNBC ahead of Biden unveiling the plan. Raimondo said semiconductors, in particular, amid a global shortage, would be one focus.
Rob Atkinson, president of the Information Technology and Innovation Foundation, said while there are necessary components to the bill, it is unlikely to project the sort of power that Biden outlined in his speech.
“Repaving roads, it’s good to do, but it’s not going to materially affect our ability to compete with the Chinese,” Atkinson told the Washington Examiner. “Certainly, raising the pay of care workers, that’s not going to do anything to help compete with the Chinese, either.”
If Biden’s American Jobs Plan was confronting China seriously, it would expand bipartisan research and development tax credit, he said.
China’s infrastructure focus is on boosting smart cities and 5G deployment, “and we are looking at paving roads,” he said. “China is investing in the infrastructure of the future. This plan invests in the infrastructure of the past.”
He added, “Spending lots of money to pave roads … is certainly not going to help us with China.”
It also places little attention on second-order, dual-use commercial and defense technologies, such as semiconductors, as Raimondo discussed, lasers, or advanced materials.
Because infrastructure is such a broad concept, this should be easy to justify, and without them, the U.S. will eventually fall behind China on weapons capabilities, Atkinson said.
Among the provisions that could boost the U.S. competitively is a plan to develop advanced technology jobs in the heartland, in places such as Indianapolis or Pittsburgh.
Republicans have panned the bill as too broad, too expensive, and with tax increases they say will hurt American companies, criticism that some centrist Democrats have echoed.
On top of an increase in the corporate tax rate from 21% to 28%, Biden’s proposal alters how U.S. businesses are taxed on foreign profits.
Atkinson said the tax hike most hurts U.S. companies that export goods around the world and must compete with competitors in low-cost jurisdictions.
The U.S. has “to be competitive, and we’re not going to throw caution to the wind,” West Virginia Sen. Joe Manchin, a Democrat, told a local radio station this week.
Manchin said he supports a 25% corporate tax rate and said there are half a dozen more Democrats like him.
“Maybe there’s an opportunity for the Republicans and maybe some of the moderate Democrats, like Joe Manchin, to keep some of the really strong things in the bill but mitigate some of the some of the problematic and, frankly, harmful provisions,” Atkinson said.
Business groups are also pushing back against the plan, charging it would hurt American jobs.
A National Association of Manufacturers study released Thursday projects 1 million jobs lost and a decline in GDP as a result of the White House’s tax proposals to pay for the plan.
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While White House allies signal the bill could end up smaller and focused on hard infrastructure, as Delaware Sen. Chris Coons suggested this week, the White House still contends the bill is pitched adequately.
“Like the president, I don’t think Americans should settle for less than citizens in other countries,” Transportation Secretary Pete Buttigieg said Friday.
