April Washington D.C. Preview

Americans are beginning to get a detailed look at just how President Joe Biden plans to fulfill his campaign promises to restart the U.S. economy with the release of his $2 trillion American Jobs Plan, the biggest infrastructure package in at least five decades.

For this month’s CEO Report, our POLITICO policy teams took a deep dive into what’s ahead for Biden’s economic agenda as Congress starts to debate exactly what goes into the infrastructure package and how to pay for it:

QUICK FIX

— There’s bipartisan interest in issues tackled by the American Jobs Plan. But Democrats and Republicans are divided on how to pay for it, and on some of Biden’s efforts to use the package to enact Democratic priorities that go beyond building projects.

— Biden is taking aim at the heart of Trump's signature economic achievement. To pay for a chunk of the massive plan, Biden would increase the top corporate tax rate to 28 percent, up from the 21 percent enacted in the 2017 Tax Cuts and Jobs Act under President Donald Trump.

— Budget reconciliation is still on the table. Senate Majority Leader Chuck Schumer has expressed interest in reusing the procedural tool that would enable Democrats to pass the infrastructure package without any Republican votes. Democrats already used it once this year to pass the $1.9 trillon pandemic relief bill in March.

Welcome to the April edition of the CEO Report, POLITICO Pro’s high-level outlook on the policy issues driving the month … and beyond.

AGRICULTURE

More relief coming for farmers: The farming industry is well poised for an upswing: The federal government is set to give it billions of more dollars through pandemic recovery at the same time that China is buying large amounts of U.S. farm goods, which is pushing many commodity prices to their highest level in years.

Biden inherited a farm economy that was starting to bounce back from the pandemic, and the next stage of his economic agenda would deliver another boost to agriculture. His infrastructure plan includes some of the industry’s long-sought priorities, like the proposals for expanding high-speed internet access throughout rural America and rebuilding roads, bridges and ports.

Separately, the Agriculture Department is starting another sprawling farm relief program with a focus on giving money to sectors of the industry that were left out of previous aid packages, like organic producers, timber harvesters and farmers of color.

USDA officials are also continuing to craft their climate change strategy. That’s likely to include an expansion of financial incentives for farmers and ranchers who implement climate-friendly practices — another potential source of agricultural income. But the industry is also fearful of new climate regulations that could affect their profits. — Ryan McCrimmon

TRADE

Biden to take a U.S.-centric trade approach: Biden has promised to invest in the domestic economy before negotiating new trade deals, and his new infrastructure plan reflects that pledge: The trade-related provisions largely involve bringing manufacturing back to American shores.

The plan calls for $300 billion to boost domestic manufacturing, including incentives to produce medical supplies, computer chips and batteries at home. The goal is to avoid shortages of semiconductors like the one that has bedeviled global manufacturers for months, as well as reduce reliance on Chinese suppliers. Biden singled those industries out in an executive order for strategic supply chain reviews earlier this year.

Whether those provisions survive congressional scrutiny is uncertain, but major trade action seems unlikely before lawmakers take it up. The White House has shown little interest in rushing to renew expired trade programs like the Generalized System of Preferences and Miscellaneous Tariff Bill. There’s also no game plan to renew Trade Promotion Authority, which allows the president to fast-track votes on trade deals, before it expires at the end of June, despite a call for renewal from Agriculture Secretary Tom Vilsack.

In the coming months, U.S. Trade Representative Katherine Tai hopes to strike a deal with the EU to end a 17-year dispute over aircraft subsidies, but other action on tariffs is not likely in the short term. Tai said recently she would not lift duties on Chinese goods for now, despite pressure from U.S. importers, saying she couldn’t walk away from that leverage. — Gavin Bade

TECHNOLOGY

Congress weighs Biden's $100-billion plan to close the digital divide: On the springtime agenda for lawmakers: digesting the president's proposals for bringing broadband internet connectivity to remote and under-served parts of the country.

Despite bipartisan interest in hooking up parts of the country that don’t have fast internet service, the $100 billion White House plan contains plenty that may give Republicans (and perhaps even some moderate Democrats) pause. It would prioritize internet networks run by local governments, which many states currently restrict and congressional Republicans broadly oppose. They say government officials aren’t suited to running those types of networks and don’t want a government entity competing against private telecom providers. Other sticking points may include language Democrats want to include requiring broadband providers to disclose their monthly pricing and hiking the minimum acceptable speed for broadband internet service.

The Biden team is objecting to what it calls “overpriced” U.S. broadband bills and says bringing those down is a priority. This tough stance will likely please frustrated consumers but may stoke fights with the telecom industry. Such consumer-friendly rhetoric fits with broader Democratic messaging on broadband in recent years, invoking concerns about “digital equity” and the connectivity struggles not just in rural areas but in suburbs and big cities, too, with stakes for historically marginalized communities.

Watch for congressional hearings and markups in the coming weeks showcasing just how much appetite Democrats may have to compromise. — John Hendel

HEALTH CARE

Biden's health equity push hinges on broadband investment: The billions of dollars in broadband investment could connect millions of Americans to digital health services and be central to Health and Human Services Secretary Xavier Becerra's plan to address disparities in urban and rural health care.

Even though telehealth visits skyrocketed during the pandemic, broadband dead zones and the lack of video technology, smartphones and unlimited data plans put virtual appointments out of reach for many patients.

The investments in Biden's proposal would build off last year’s pandemic relief packages, in which bipartisan majorities provided billions in emergency subsidies to aid low-income households with broadband bills. The Federal Communications Commision's Covid-19 telehealth grant program has also doled out hundreds of millions of dollars to support internet service and devices for virtual care through a telehealth fund. — John Hendel and Mohana Ravindranath

EMPLOYMENT AND IMMIGRATION

Back to the workforce: Biden’s plan to revive the economy will aim to bring women, who were forced to leave their jobs at a disproportionate rate during the pandemic , back into the workplace by investing in child care. More than 2.3 million women have left the workforce during Covid-19, compared to 1.8 million men, according to the National Women’s Law Center. The White House plan would funnel $25 billion to a Child Care Growth and Innovation Fund for states to supply infant and toddler care in underserved areas and create an expanded credit to partially reimburse employers to build a child care facility at their place of work.

Long-term jobless: The plan also attempts to address long-term unemployment by building out job training as outlined in his campaign proposals on manufacturing and clean energy. The package Biden rolled out March 31 would spend $100 billion on workforce development programs, of which $40 billion would go to a new Dislocated Workers Program, with training aimed at placing workers in growing industries like clean energy, manufacturing and caregiving. Another $12 billion would target underserved communities, including by creating a new subsidized jobs program to address long-term unemployment and underemployment, and $48 billion would go to overhauling workforce development infrastructure. — Eleanor Mueller

TAX

Taxing corporations: Much of the infrastructure plan hinges on tax increases on corporations and the wealthy individuals.

For corporations, the administration wants to hike the top statutory tax rate of 21 percent to the 28 percent that Biden, which would push it closer to the 35 percent level it was at before the Republican-led 2017 tax overhaul legislation. But not all Senate Democrats want to raise it as high as Biden, with West Virginia’s Joe Manchin — a powerful swing vote in a body divided 50-50 along party lines — potentially limiting the increase to 25 percent.

Corporations also could see their taxes rise on income they derive from their operations abroad. Much talk has centered on recasting the way taxes get calculated on profits earned from intellectual property and other intangible assets that companies have registered overseas. Also in the crosshairs are the deductions some corporations get for their international facilities.

Wealthy individuals and couples filing jointly are also bracing for higher taxes, even though new levies on high-income earners didn't make it into Biden's American Jobs Plan. and his allies on Capitol Hill want a higher top income tax rate as well as higher rates on investment income. But there isn’t universal agreement among Democrats on how high to hike taxes on capital gains, dividends and other income streams that currently enjoy preferential rates. Higher estate taxes are also in the offing, and Biden’s deputies and Democrats in Congress have begun discussions on ending tax-free transfers of inherited assets passed on from owners to heirs at death.

New, expanded or revived tax-advantaged bonds could also gain favor to help fund some infrastructure spending, which is also expected to be partly financed with government borrowing. — Aaron Lorenzo

FINANCIAL SERVICES

Biden seeks big housing boost: The White House will press Congress to direct $213 billion to the construction and preservation of affordable housing as part of its infrastructure package. The Biden administration has billed the proposal as a way to construct, preserve and upgrade over 2 million affordable housing units. It would rely on a mix of credits, grants and additional funding to existing housing programs. Democratic lawmakers will likely embrace the plan, after the House last year passed an infrastructure package with $100 billion for housing. — Katy O’Donnell

ENERGY

Democrats want billions for flood protection: Democrats in Congress are calling for billions of dollars to help shore up U.S. dams, levees and other infrastructure to help protect Americans against the dangers of flooding. In a March letter to Biden, 22 Democrats called for funding to help the U.S. Army Corps of Engineers carry out a backlog of projects, in line with a bill the House passed last year. In Biden's new proposal, the administration said every dollar spent on rebuilding would be used to safeguard against the impacts of climate change. Biden also wants $50 billion in dedicated investments to improve infrastructure resilience. — Zachary Warmbrodt

Biden's climate coming out party: Biden will convene a virtual climate summit on April 22, and he’s invited 40 world leaders to join him, including Chinese Premier Xi Jinping. The gathering — at which Biden is expected to discuss the new U.S. greenhouse gas emissions targets under its reentry to the Paris Climate Agreement — comes ahead of the United Nations gathering in November in Glasgow, Scotland, which could be the most important meeting since that Paris conference in 2015. Climate activists who have been frustrated for four years under former President Donald Trump are newly optimistic that Biden is taking the climate problem seriously, and they hope his climate envoy John Kerry can repeat his achievement and bring China, as well as India and Russia, on board to agree to the global effort to shrink pollution. — Matt Daily

DEFENSE

Pentagon budget battle heats up: Biden's plans for a flat Pentagon budget request has made both parties somewhat unhappy.

Republican defense hawks, who have pressed Biden to seek steady increases to military spending, panned the budget as not enough to meet other emerging threats. Progressive Democrats, meanwhile, argue Biden isn't going far enough to undo the runup in defense spending under the Trump administration and should redirect large swaths of that money toward domestic priorities.

The clash will likely come to a head when the House and Senate unveil annual spending legislation in the coming months. While Democrats control both the House and Senate, razor-thin majorities in both chambers mean Republican votes are needed to pass defense legislation and give GOP hawks some leverage.

Still waiting: Colin Kahl, Biden's embattled pick to lead the Pentagon's policy shop, will have to wait until at least the middle of the month to get on the job. The Senate Armed Services Committee tied on party lines in a vote on Kahl, whom Republicans oppose over policy differences on Iran and Israel as well as past partisan tweets.

Senate Democrats can confirm Kahl if they remain united on the floor, but doing so could require up to four rounds of voting.

Concerns on Capitol Hill, meanwhile, are building over vacancies at the Pentagon. The White House has not named any nominees beyond the top three Pentagon posts, and lawmakers are eager to hear who's in line for the civilian secretaries of the Army, Air Force and Navy. — Connor O’Brien

CANNABIS

Industry pushes banking bill: The top priority for the cannabis industry is getting legislation passed that would make it easier for marijuana companies to access banking . Advocates argue that making it easier to secure loans and access other financial services would fuel hiring in the booming $20 billion cannabis industry and help jump start the sputtering economy.

There’s broad bipartisan support for the issue: Cannabis banking legislation passed the House by a 321-103 margin in 2019, with nearly half of Republicans backing the bill. The SAFE Banking Act has been reintroduced in both chambers in recent weeks.

Complicating the prospects for passing cannabis banking legislation are demands from advocates that any marijuana legislation include changes to criminal justice policies designed to redress the harm from the War on Drugs. Democrats are wary of being seen as embracing the agenda of big marijuana companies over proposals aimed at addressing racial injustice. — Paul Demko

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