President Biden on Wednesday defended his $2.25 trillion infrastructure package as vital for America to compete with world superpowers such as China, saying that items like high-speed internet and clean energy should fall under an evolving definition of “infrastructure.”
“We will not be open to doing nothing. Inaction simply is not an option,” Mr. Biden said in a speech near the White House.
The president said he’s willing to compromise on the 28% corporate tax rate — an increase from 21% — that he included to pay for part of the spending.
“Debate is welcome. Compromise is inevitable. Changes are certain,” he said. “I am prepared to work — I really am. But to automatically say that the only thing that’s infrastructure is a highway, a bridge or whatever — that’s just not rational.”
Mr. Biden pointed out that trains and highways weren’t considered traditional infrastructure at various points in American history.
“We don’t just fix for today — we build for tomorrow,” Mr. Biden said, saying he’s willing to have a debate with lawmakers who want more money plowed into fixing roads and bridges. “The idea of infrastructure has always evolved to meet the aspirations of the American people and their needs. And it’s evolving again today.”
The spending side of the plan includes $620 billion for transportation infrastructure, $650 billion for universal broadband, clean water, upgrades to the electric grid and affordable housing, $400 billion for caregiving initiatives for seniors and the disabled, and $580 billion for research and development, manufacturing and training.
Republicans have criticized the proposal as too far-reaching, saying that traditional “infrastructure” sections — namely building and repairing roads and bridges — comprise closer to $100 billion of the spending.
The Treasury Department released more details on Mr. Biden’s tax proposals on Wednesday to pay for the plan, projecting that the changes would generate about $2.5 trillion in revenue over a 15-year period.
The bulk of the spending in the plan would go out the door over an eight-year period.
Mr. Biden wants to increase the U.S. corporate tax rate from 21% to 28%, impose new global minimum taxes on corporations, set a minimum 15% tax on income large corporations report to their shareholders, and cut tax breaks for fossil fuels, among other changes.
The Treasury report also called for a boost in IRS funding so agents can be more aggressive in trying to weed out tax cheats.
Mr. Biden re-upped his vow not to increase taxes on people earning less than $400,000 per year as part of his proposals.
“I’m not trying to punish anybody, but damn it — maybe it’s because I come from a middle-class neighborhood — I’m sick and tired of ordinary people being fleeced,” the president said.
Experts have cast doubt on whether increasing the corporate tax rate can avoid hitting middle-class families’ utility bills and retirement accounts, even if individuals aren’t seeing a direct hike in their marginal tax rates.
The overall plan would shrink the economy by about a percentage point in the long run – in large part due to the business tax changes, according to projections from the Penn Wharton Budget Model released on Wednesday.
Commerce Secretary Gina Raimondo had also signaled earlier Wednesday that the White House could be willing to compromise on the 28% corporate tax rate in Mr. Biden’s plan. The 2017 GOP tax law cut the U.S. corporate tax rate from 35%.
Sen. Joe Manchin III, West Virginia Democrat, has said he’d like to see a corporate tax rate of around 25%.
Mr. Manchin has outsize influence on whatever Democrats will ultimately be able to muscle through a 50-50 split Senate.
Republicans have already rejected Mr. Biden’s major tax hike proposals, and Democrats are preparing to pass the package without GOP support if necessary.