Biden’s Build Back Better Bill Hangs in the Balance
President Biden’s $1 trillion infrastructure bill has received bipartisan support after a lengthy negotiation period and has been signed into law. His complimentary ‘Build Back Better’ bill, costing a further $1.17 trillion still hangs in limbo.
The infrastructure bill was originally estimated to cost $2 trillion, before being cut down to (just) $1 trillion after negotiations with Republicans. The final bill is mostly uncontroversial, considering the price tag, as most experts agree that the policies included are needed to improve America’s infrastructure, which has been falling behind on the developed world stage. President Biden described the bill as a “once-in-a-generation investment in America”.
The bill includes 20,000 miles of roads being built and repaired as well as financing the repairs of 10 of the most significant bridges for the US economy. Furthermore, the bill includes replacing lead pipes for drinking water; improving internet services across the country; and improving commute times for citizens. In the short term the plan is anticipated to help the US economic recovery post-Covid by creating millions of jobs and improving wages, although there are critics who say otherwise. However, the bill is intended to be long term investment into the country, by making the US more competitive. The Biden administration also claim that it will promote racial equality by improving infrastructure in predominantly minority communities. The incentives for new cleaner energy sources are also intended to help the US transition toward net zero carbon emissions.
Spending for the bill is intended to take place over an 8-year period. The government plans to finance the bill over a 15 year period by increasing corporate tax rates from 21% to 26%, and capital gains tax from 20% to 25%. On top of this, tax incentives will target multination firms to increase production in the US.
The second part of Biden’s ambitious post-Covid plan faces a harder battle to become a reality. The ‘Build Back Better’ plan, which counterintuitively focuses less on construction and more on human capital and social safety nets, is opposed by all Republicans. The more progressive plan has created a rift within the Democratic party as Senators Joe Manchin and Krysten Sinema oppose the bill, citing the huge deficit the government already has. The original $3.5 trillion cost has now been negotiated down to $1.75 trillion, leading the progressive wing of the Democrats to argue they have already compromised enough. Most significantly, the Green New Deal has been left out.
The extensive bill includes universal preschool for ages 3 and 4 as well as two years of free community college. The path this creates to enter a 4 year college course is predicted to help low income and minority students the most. Medicaid and Medicare are also planned to receive increased funding, with Medicare to expand to include vision, hearing and dental. Medicare will also be permitted to negotiate with pharmaceutical companies to reduce prescription drug prices. Tax cuts for families with children will increase to $3600 maximum child tax credit for children over 6 years old. Climate action is a large part of the bill, amongst other things, including a maximum of $12,500 tax credit for electric vehicles. The bill aims for net zero carbon emissions by 2050, while the Green New Deal aimed for 2030.
The bill passed the house of representatives on 19th November and now awaits to be voted on in the Senate. The narrow Democratic control on the Senate should allow the bill to pass on party line, however, with two democratic senators will in opposition it might take further negotiation for the bill to be passed into law.