President Biden on Wednesday was set to present a $2 trillion jobs plan for America that includes nearly $500 billion in proposed investments in spending on research and development and manufacturing, including for critical supply chain products, and also calls for increasing the corporate tax rate.
The president’s spending plan is over eight years and the White House said the increase in the corporate tax rate to 28 percent from the current 21 percent, along with closing of various tax loopholes and other changes, would raise $2 trillion over 15 years.
The American Jobs Plan calls for spending $180 million on research and development (R&D) and technologies in areas such as artificial intelligence, biotechnology, climate science and computing that would lead to new jobs and businesses, and allow the U.S. to “maintain our economic edge,” says a White House fact sheet.
A key part of the R&D plan would provide $50 billion to the National Science Foundation for a technology directorate focused on a number of high-technology fields such as semiconductors and advanced computing, advanced communications technology, advanced energy technologies, and biotechnology, the fact sheet says.
The proposed investments in R&D and manufacturing, which will require congressional appropriations, are being made in part with an eye on China and that country’s vision to dominate in future technologies and the desire of Biden to strengthen domestic capacity in a number of critical goods.
“We’re one of the few major economies where we’ve seen public investment, as a share of GDP, decline over the past 25 years,” a senior Biden administration official, said Tuesday night during a media background call to outline the American Jobs Plan. “And we have a moment of opportunity now, particularly as we lay bare the vulnerabilities in our own supply chains and technology infrastructure to do a transformational investment in R&D and in domestic incentives to manufacture the innovations that come from that R&D in the United States and all across America. So, the plan includes historic investments in R&D, in clean energy R&D, and providing incentives for domestic production for manufacture, for semiconductors, for batteries in clean energy technologies, and for other areas that we identified as important to American supply chains.”
Biden in February issued an executive order directing federal departments and agencies to assess the nation’s supply chains to boost resiliency and identify vulnerabilities. The directive also includes a focus on the defense industrial base, semiconductors, and the information and communications technology industrial base.
The new investment plan also calls for $40 billion to upgrade research infrastructure across the U.S., including laboratory facilities and computing capabilities and networks. This funding would be used by all R&D agencies in the federal government and half the funding would be preserved for minority serving institutions, including Historically Black Colleges.
For U.S. manufacturing, the jobs plan would provide $300 billion spread out over a number of areas, including a $50 billion investment in semiconductor manufacturing and research, in line with the bipartisan, bicameral CHIPS Act introduced in the last Congress to bring back semiconductor manufacturing to the U.S. Another $50 billion is proposed for a new Department of Commerce office “dedicated to monitoring domestic industrial capacity and funding investments to support production of critical goods,” the White House fact sheet says.
Biden also wants to spur innovation in new areas of the country by providing $20 billion for at least 10 regional innovation hubs and a Community Revitalization Fund. The new innovation hubs, which would be in addition to places like Silicon Valley, Austin, Texas, and Boston, Mass., “will leverage private investment to fuel technology development, link urban and rural economies, and create new businesses in regions beyond the current handful of high-growth centers,” the White House says.
The president is also recommending that Congress provide $14 billion to the Commerce Department’s National Institute of Standards and Technology to work with the private sector, academia and government “to advance technologies and capabilities critical to future competitiveness,” the fact sheet says.
Major parts of the plan to invest in domestic capabilities also include providing more access to capital for companies, $52 billion, and the creation of a national network of small business incubators and innovation hubs, $31 billion.
The spending plan also offers up $30 billion over four years for investments in the manufacture of medical countermeasures, R&D, bio-preparedness and biosecurity related to protecting the U.S. from future pandemics.
Former President Trump and the Republican-led Congress in 2017 successfully lowered the corporate tax rate from 35 percent to 21 percent. Biden now wants to bump the rate up to 28 percent.
The White House says that proposed changes to the corporate tax code will also incentivize job creation and domestic investment, and prevent shifting profits overseas.
Before the change to the tax law in 2017, the average rate that companies paid was 16 percent and that after the law was passed the average fell below 8 percent in 2018, the White House says. It also cites a “recent independent study” showing that 91 Fortune 500 companies paid no federal corporate tax on their income in 2018.