Biden's $2T infrastructure and jobs package proposes billions for electrification

Riley Beggin
The Detroit News

Washington — President Joe Biden's $2 trillion infrastructure and jobs proposal would include $174 billion to "win" the global electric vehicle race against China and Europe, reflecting a growing symbiosis between Democratic policy goals and the bottom lines of Detroit automakers.

The plan, detailed Wednesday, dovetails with the administration's hopes to make the U.S. economy carbon neutral by 2050 — in part by cutting pollution from the transportation sector, which still makes up the lion's share of greenhouse gas emissions in the country.

President Joe Biden delivers a speech on infrastructure spending at Carpenters Pittsburgh Training Center, Wednesday in Pittsburgh.

While EVs are just a sliver of sales right now, analysts predict that share will skyrocket in the coming years. Speeding the switch to electric vehicles is increasingly part of companies' business goals: Every new EV announcement tends to be rewarded with a bump in market valuation, so an amenable administration seeking to dole out taxpayer dollars to pursue greener transportation has companies licking their lips. 

It could be quite a meal: Biden proposes subsidizing domestic supply chains for electric vehicles, providing grant programs to state and local governments to install 500,000 charging stations nationwide by 2030, increasing tax incentives and point-of-sale rebates for people who buy electric vehicles, and replacing tens of thousands of federal vehicles and school buses with electric ones. 

"It's time to rebuild" from the coronavirus crisis, Biden said during a speech in Pittsburgh. "Today, I'm proposing a plan that rewards work, not just rewards wealth. It builds a fair economy that gives everybody a chance to succeed. It's going to create the strongest, most resilient, innovative economy in the world."

The American Jobs Plan, as the administration has dubbed it, also includes massive investment in roads, bridges, broadband expansion, drinking water systems, housing, public transportation and care for seniors and people with disabilities. Administration officials say a state-by-state breakdown of funding will be available in the coming days.

Biden called it a "once-in-a-generation investment" that would be the largest investment in American jobs since World War II. "It's big, yes. It's bold, yes," he said. "And we can get it done."

The proposal would also invest $180 billion in research and development of new technologies, including semiconductors, and $15 billion for climate-related research and development, including electric vehicles and battery technology, a market Biden said Wednesday is "up for grabs."

Sam Abuelsamid, an industry analyst with Guidehouse Insights, said the proposal is "directionally correct" in helping increase electric vehicle adoption. EV charging availability, charging time and vehicle cost are the three biggest barriers to people buying EVs, according to the company's annual consumer survey, and "this proposal should help all of those."

Companies will surely be pushing for even more incentives and support as the package moves through Congress, Abuelsamid said: "I don't think they necessarily need it. If the resources go to various support elements like charging, that will help stimulate demand for the EVs they intend to build."

John Bozzella, CEO of the Alliance for Automotive Innovation that represents automakers in Washington, said: "A bold, comprehensive strategy is required to establish the U.S. as a leader in the next generation of clean transportation innovation. Efforts that incentivize wider-scale EV adoption, build out the necessary infrastructure, and facilitate consumer awareness are essential components to EV market expansion."

A tough road in Congress

Wednesday's announcement, however, is just the jumping-off point for negotiations as the package moves through Congress. There, it faces a steep uphill climb.

Biden's proposed way to pay for the upgrades is to raise the corporate income tax rate to 28% from 21%, to eliminate some tax rules that allow companies to benefit from investing in foreign countries and to institute a 15% minimum tax on the income corporations use to report profits to investors.

The administration says if passed together, the tax plan would pay for the infrastructure project within the next 15 years and reduce deficits in the years after, investing around 1% of GDP every year over the next eight years.

Republicans have roundly rejected the idea of raising the corporate income tax rate and argue any policy to win GOP support would have to be more narrowly focused on traditional infrastructure like roads, bridges and highways.

"You have to pare this down. This can't be a grand Christmas tree bill that you put all sorts of things in and call it infrastructure," said U.S. Rep. Tim Walberg, R-Tipton. The government has spent trillions on COVID relief over the last year. "When do we draw the line and say, we can't continue doing this for the future of our country not to flounder?"

It also shouldn't be on taxpayers to pay to transition the economy to electric vehicles, he added. Reducing "unnecessary regulations" and "giving the opportunity for businesses to advance like we did in the last four years" is effective.

Public charging stations along highways is one thing, "but to tax more, the same industries that are going to provide us with these enhancements in infrastructure doesn't make much sense to me except it gives the government the inside track on controlling what goes on there," he said.

U.S. Rep. Marcy Kaptur, D-Ohio, co-chair of the House Auto Caucus, said while automakers claim to want to combat climate change, the scope of the threat merits government help to get them there. Climate change is too great of a risk to leave up to market forces, she said. 

"A healthy atmosphere is a public good, it's not a private good," she said. Companies are important players, but their stockholders aren't thinking about saving the world from climate dangers. "The survival of humankind is not in their perspective. That's not in their mandate."

Beating China in the EV race is "a big hurdle" that is too much for individual companies to tackle, Kaptur said. "This is a new type of moonshot, to surpass the competition and command the best technology and innovation. And that's going to take all of us leaning in together."

Detroit's fears, opportunity

Republicans, however, are not the only ones raising concerns: While environmental and labor groups both praised the package, some on the left in and out of Congress fear it doesn't go far enough. And worker advocates remain concerned the switch to EVs will leave some jobless. 

Democrat U.S. Rep. Debbie Dingell of Dearborn, a former General Motors Co. executive whose district is home to the Ford Motor Co.'s world headquarters, convened a meeting with major stakeholders over the weekend to help the two camps find common ground. Both groups understand the importance of combating climate change and protecting jobs, she said.

"Every participant sees this vision of an America winning the race to be a leading supplier of the cars, buses and trucks that increasingly the whole world wants, and while doing that creating good high paying jobs, cleaning the air in American cities and reducing the country's climate pollution," Fred Krupp, president of the Environmental Defense Fund, told The Detroit News. 

In a statement, United Auto Workers President Rory Gamble said the package will help the economy for decades to come, but he cautioned the union is "cognizant that workers will disproportionately suffer if we do not make the transition to a green economy in the right way."

The industry has a long way to go in developing battery tech, charging infrastructure and "importantly, market demand in order to successfully make this transition," he said. "We also need to ensure that this transition is stable, reliable and creates quality union-wage jobs and flexible to market demand not relying on a one-size-fits-all solution."

To pass with bipartisan support, at least 10 Republican votes and all 50 Democratic votes would be needed in the Senate. Even passing the package without it, through the controversial reconciliation process that was used to pass Biden's COVID-relief bill, would require unanimity in the Democratic caucus.

Republicans have raised concerns that a big funding package on the heels of the $1.9 trillion COVID relief bill could hurt the economy and that an increased corporate income tax would push businesses to move overseas. 

"If people have other ideas of how to pay for it, that's what this process is going to be about," a senior administration official told reporters Tuesday evening, but said the plan is intended to "invest in critical areas where we know that our productive capacity as a country is being set back."

The administration says the package contains bipartisan proposals that should bring Republicans on board. But few in and around Congress envision it remaining as-is.

"I'm sure there will be changes to this package, that's the way the legislative process works," Krupp of the Environmental Defense Fund said. "But I think this package of modernizing our infrastructure and our manufacturing capacity and cleaning our communities is going to be tremendously popular. I expect something very much like this package has an excellent chance of passing."

Twitter: @rbeggin