Biden administration officials put together $US3 trillion economic plan

The President is expected to be briefed on the details of the multipart package this week.

US President Joe Biden returns to the White House from Camp David. Picture: AFP.

US officials are putting together a plan for a multi-part economic and jobs package that could cost as much as $US3 trillion ($3.889 trillion) as a way to enact key elements of President Joe Biden’s campaign agenda.

The first proposal would centre on roads, bridges and other infrastructure projects and include many of the climate change initiatives Mr Biden outlined in the Build Back Better plan he released during the 2020 campaign.

That package would be followed by measures focusing on education and other priorities, including extending the newly expanded child tax credit scheduled to expire at the end of the year and providing for universal pre-kindergarten and tuition-free community college, sources said.

The packages could face a difficult path through the narrowly divided congress, and Democrats aren’t all in agreement on how they should move forward with their spending and tax proposals. Mr Biden is expected to be briefed on the details of the proposals this week. He would need to sign off on the legislative strategy for it to move forward.

Some details of the strategy under consideration were reported earlier by the New York Times.

The White House declined to elaborate on the proposals under consideration.

“Those conversations are ongoing, so any speculation about future economic proposals is premature and not a reflection of the White House’s thinking,” White House press secretary Jen Psaki said.

The price tag of the next package is sure to draw objections from Republicans, who opposed the recently signed $US1.9 trillion coronavirus relief law as too costly.

Senate Minority Leader Mitch McConnell panned the idea of including other Democratic priorities in an infrastructure package.

“We’re hearing the next few months might bring a so-called ‘infrastructure’ proposal that may actually be a Trojan horse for massive tax hikes and other job-killing left-wing policies,” he said.

Senior administration officials have discussed raising taxes on companies, among other options, to offset the cost of the spending packages. If the proposals add up to $US3 trillion over a decade, that would represent 1 per cent of GDP and a 5 per cent increase in federal spending beyond current projections.

Democrats are also exploring raising the top marginal income-tax rate for high-income earners, increasing capital gains taxes and tightening international tax rules on companies.

During his presidential campaign, Mr Biden proposed more than $US3 trillion in gross tax increases over a decade. Progressives point to polling data showing that people think companies and wealthy people pay too little in taxes. But the President would need nearly every Democrat in the narrowly divided congress on board to advance them, given Republicans’ widespread opposition to raising taxes.

Mr Biden and his advisers must also decide how much of their proposal to finance with more borrowing that would add to the federal debt, which has risen nearly 25 per cent over the past year to $US21.8 trillion. The President has said he intends to pay for new permanent spending programs. However, his advisers have also argued that investments that boost the economy’s long-term growth potential may be worth financing through more deficits, especially with interest rates expected to remain near historic lows.

The economic and jobs proposals are being designed to form the centrepiece of Mr. Biden’s next legislative push in congress following the passage of his $1.9 trillion coronavirus relief law, which the administration has been promoting around the country.

Mr Biden is expected to discuss his agenda during his first formal news conference on Thursday and in his first address to a joint session of congress in the coming weeks.

The path forward for the proposals on Capitol Hill could depend on whether Democrats can win Republican support for either of the two packages. To pass a bill without the 60 votes typically needed to advance legislation in the Senate — which is currently split 50-50 — Democrats would need to use a process called reconciliation. They used that process to pass Mr Biden’s $US1.9 trillion coronavirus relief bill.

Some Democrats are pushing for the administration to reach a bipartisan agreement on infrastructure spending focused on roads, bridges, transit systems and more. That could mean later considering major tax measures through reconciliation, given the low chances Republicans would sign on to big tax increases.

Democrats passed a $US1.5 trillion infrastructure bill in the House last year without including any revenue increases. It went nowhere in the Senate, which was then controlled by Republicans.

Progressives want an expanded infrastructure proposal that will begin to fulfil some of Mr Biden’s promises on climate change.

The Sunrise Movement, a liberal organisation that worked closely with Mr Biden’s campaign, said $US3 trillion would be insufficient to address the nation’s renewable infrastructure needs and urged the Biden administration not to focus on trying to win GOP support.

“Biden must not cower to fears of losing bipartisanship — Republicans have already made clear they’re not interested in working with Democrats — and must deliver an infrastructure package that meets the scale of this moment,” said Ellen Sciales, a Sunrise Movement spokeswoman.

The Wall Street Journal