The transition to an electric-car future will be an uphill battle, with the president and Republicans in Congress at odds over his $4 trillion economic agenda.President Biden had toured a vehicle factory and delivered a policy speech, but he was not going to leave Michigan without taking a new electric pickup truck out for a spin. More
The president’s advisers are pushing their most detailed argument yet for the long-term benefits of a $4 trillion agenda to remake the American economy.WASHINGTON — President Biden and his economic team on Thursday made their most detailed case yet for trillions of dollars in new federal spending to rebuild public investment in workers, research and physical infrastructure, focusing on long-term ingredients of economic growth and equality as the current recovery from recession showed signs of distress.The president’s aides published what amounted to a deeper economic backbone for the argument that Mr. Biden is making publicly and privately to sell his plans to lawmakers, including the message he conveyed to a group of Republican senators he invited to the White House on Thursday to discuss an infrastructure package centered on roads, bridges, transit and broadband.That meeting ended with encouraging words from both sides. Republicans said Mr. Biden invited the senators, who had previously offered a nearly $570 billion, narrowly focused package, to return with an updated offer, including how to pay for new spending.Senator Shelley Moore Capito of West Virginia, who is leading the Republicans’ negotiations, said lawmakers would prepare an updated offer for the president to review by early next week, including a more detailed list of the kinds of projects they would be willing to fund and a set of proposals to cover the costs. The senators said they expected Mr. Biden would then respond with a counteroffer.“I made it clear that this was not a stagnant offer from us,” Ms. Capito said. “He made it clear that he is serious in wanting to pursue this.”She said Republican senators were open to raising the overall top-line price tag of their offer, which is a fraction of the new spending the president proposed. She also suggested that Republicans would be willing to cut a deal with Mr. Biden even if he decided to pursue a more progressive package, including priorities beyond traditional infrastructure, with only Democratic votes. Other senators predicted the sides would know by Memorial Day whether they could reach a deal.“It’s in nobody’s interest to draw this out beyond the time when you think it’s workable,” said Senator Roy Blunt, Republican of Missouri. “But I certainly left there thinking there’s a workable agreement to be had if we want to stretch a little both ways.”Shortly before the meeting, the White House Council of Economic Advisers posted a document to its website that cast Mr. Biden’s $4 trillion economic agenda as a way to correct decades of tax-cutting policies that had failed to bolster the middle class. In its place, the administration is pushing a rebuilding of public investment, like infrastructure, research and education, as the best way to fuel economic growth and improve families’ lives.The so-called issue brief reflects the administration’s longer-term thinking on economic policy when conservatives have ramped up criticism of the president over slowing job growth and accelerating inflation.Administration officials express confidence that recent price surges in used cars, airfare and other sectors of the economy will prove temporary, and that job growth will speed up again as more working-aged Americans are vaccinated against Covid-19 and regain access to child care during work hours. They say Mr. Biden’s $1.9 trillion economic aid package, which he signed in March, will lift job growth in the coming months, noting that new claims for unemployment fell to a pandemic-era low on Thursday.The officials also said it was appropriate for the president to look past the current crisis and push efforts to strengthen the economy long term.The two halves of Mr. Biden’s $4 trillion agenda, the American Jobs Plan and the American Families Plan, are premised on the economy returning to a low unemployment rate where essentially every American who wants to work is able to find a job, Cecilia Rouse, the chair of the Council of Economic Advisers, said in an interview.“The American Rescue Plan was rescue,” Dr. Rouse said. “It was meant as stimulus as we work through this hopefully once-in-a-century, if not longer, pandemic. The American Jobs Plan, American Families Plan are saying, look, that’s behind us, but we knew going into the pandemic that there were structural problems in our country and in our economy.”Mr. Biden’s plans would raise taxes on high earners and corporations to fund new federal spending on physical infrastructure, care for children and older Americans, expanded access to education, an accelerated transition to low-carbon energy and more.Those efforts “reflect the empirical evidence that a strong economy depends on a solid foundation of public investment, and that investments in workers, families and communities can pay off for decades to come,” Mr. Biden’s advisers wrote. “These plans are not emergency legislation; they address longstanding challenges.”The five-page brief focuses on arguments about what drives productivity, wage growth, innovation and equity in the economy. The issues predate the coronavirus recession and recovery, and Democrats in particular have pledged for years to address them.The brief begins by attacking the “old orthodoxy” of tax-cutting policies by presidents and Congress, including the 2017 tax cut passed by Republicans under President Donald J. Trump. A driving rationale behind that law was an effort to encourage more investment by private companies, bolstering what economists call the nation’s capital stock. The brief faults those policies for not producing the rapid gains in economic growth that champions of those policies promised, and it says that raising taxes on high earners “will help ensure that the gains from economic growth are more broadly shared.”Republicans continue to insist that tax cuts, particularly for businesses, are the key to economic competitiveness and middle-class prosperity. They have refused to negotiate any changes to their party’s signature 2017 tax law as part of an infrastructure agreement, even as they concede some need for a limited version of the new public investments Mr. Biden is calling for.Republicans used the meeting on Thursday to reiterate that they would be unwilling to raise corporate or personal taxes lowered by their 2017 law. Instead, they pitched the president on the use of zero-interest loans and public-private partnerships, in addition to existing gasoline taxes and other government savings.Mr. Biden would raise taxes to reverse what his economic team calls the federal government’s underinvestment in policies that help educate children and adults, facilitate the development of new technologies and industries and support parents so they are able to work and earn more. His team cites the wave of quickly developed coronavirus vaccines from Pfizer and Moderna, which grew out of publicly funded research, as an example of public investments yielding private-sector innovation.“Those started with ideas that were funded by the public sector decades ago,” Dr. Rouse said. “And then the private sector built on top of that, so it’s really, the private sector needs to work with the public sector. We are all very grateful that the public sector was willing to take that risk, and it didn’t pay off right away.”“In many ways, the federal government should be patient,” she said. “We are a kind of entity, we should be patient. So I’m not saying we have to wait a million years for something to pay off, but we don’t need to have the kind of immediate payoff that a private company might need to see.”That argument is in many ways a departure from how administrations typically pitch economic policies during a crisis. There is no focus in the brief on immediate job creation or a quick bump in economic growth.Weeks after Mr. Biden detailed both halves of his plan, the administration has offered no projections about the effects of his policies on jobs or growth. Instead, Dr. Rouse and other administration officials cited forecasts by the Moody’s Analytics economist Mark Zandi, which are among the more favorable outside analyses of the president’s agenda.Administration officials say there is no need for their economic team to produce such forecasts. Congressional Republicans have repeatedly called for the White House to produce an estimate of how many jobs would be created by Mr. Biden’s plans. More
One key economic goal is to create the virtuous cycles of innovation and jobs that already occur in many coastal cities.Last week, the Census Bureau said that the last decade’s population growth was the slowest in generations. Also last week, President Biden addressed Congress and laid out a wide-ranging, multi-trillion dollar economic agenda.The two developments are tightly related.For much of the United States, a demographic crisis and an economic crisis are two sides of the same coin. In many cities and regions, a shrinking population reduces the tax base, leading to underinvestment and deterioration of the physical environment and public services, causing even more jobs and people to go elsewhere.Part of the aspiration of Bidenism — a through-line in the pandemic rescue plan already enacted, and in major proposals for spending on infrastructure and family support — is to break that cycle. Mayors and others focused on the development of places that have experienced economic and demographic languishing see a distinct opportunity to use federal money to fix problems long in the making.There are inherent tensions. Spending money in places with a fast-growing population typically offers a surer economic return than spending it in those that are contracting.The economic case for investing in places that have lagged in the modern economy relies on the possibility of reversing those negative trends and unlocking new growth. Many of those directly involved in that effort are downright giddy with the possibility that they can seize this moment to prepare their cities and towns for the future.Downtown Huntington, W.Va., last year. “The growth is going to occur where there is a community that is functional,” Mayor Steve Williams said.Andrew Spear for The New York Times“If you spend hundreds of billions of dollars over the next 10 years, it sounds like an awful lot of money,” said Steve Williams, the mayor of Huntington, W.Va., a city of 45,000 people — down from 50,000 in 2010. But after what he views as decades of underinvestment, and considering the potential long-term payoff, “it’s just a pittance,” he said.“We’re talking about investments that will last for 50 years and prove to be transformative to our communities,” Mayor Williams said. He is particularly enthusiastic about efforts to invest in highways, clean water infrastructure, and broadband in Huntington and across Appalachia.Even assuming the Biden proposals make it through a narrowly divided Congress, there is no assurance of success. The long-declining communities face a complex web of problems, some of them a result of powerful economic forces — like outsize rewards for technologically savvy workers who congregate in large cities — that aren’t going away.“I’m going to give the Biden administration high marks for a lot of the individual tactical things they’re proposing,” said John Lettieri, president of the Economic Innovation Group, a Washington think tank that aims to encourage more economic dynamism in lagging parts of the country. “I worry that everything they’re doing will be helpful incidentally and on the margins, but that we need more aggressive and robust strategy and not tactics.”Moreover, there is a risk that even with trillions of dollars being spent, bureaucratic kludge makes the dollars less effective than they might be. Dozens of agencies are involved, and there is no certainty that the money will be spent efficiently and in ways that maximize the chances that struggling places can stabilize themselves.“This administration may be more concerned about declining cities and places than any since the Great Society, maybe the Great Depression,” said Mark Muro, senior fellow at the Brookings Institution’s Metropolitan Policy Program. “At some point they will need to braid all of this together and manage how these programs interact with each other.”The administration’s emphasis partly reflects President Biden’s own longstanding instincts. He often invokes growing up in Scranton, Pa.— where the population was in steep decline throughout the second half of the 20th century — as formative in his economic thinking.But it also reflects evolution among economists and development specialists. Once the predominant thinking was that economically lagging regions and more successful ones would converge over time, and that the government should focus on helping people navigate a changing economy rather than try to save faltering communities.At right, President Biden’s childhood home in Scranton.Mark Makela for The New York TimesIt has become increasingly apparent that there are big problems when a handful of superstar cities thrive and much of the country struggles. It means vast human potential goes untapped and lots of capital — existing cities and towns — goes underutilized. And it can fuel political polarization and damage democracy, as people in declining regions feel less connected to their more prosperous countrymen.The debate is often framed as between “people” (policies to help individuals affected by economic change) and “places” (policies aimed at communities that are languishing).“I don’t think we can ignore the role of place in public policy any longer and just allocate investments to people,” said Ross DeVol, president of Heartland Forward, a think tank based in Bentonville, Ark. “Because that creates a hollowing out in places that affects the entire country negatively.“We can’t as a nation continue to advance our competitive position by concentrating more knowledge-based industries and research just on the coasts,” Mr. DeVol added, saying this results in soaring real estate prices in those coastal markets, as well as underused physical infrastructure and a lack of opportunity in the places left behind.Federal policy in recent decades has arguably reinforced the disparity.The federal government itself is based in one of the high-growth coastal metropolises. Nearly half of federal research and development spending in 2018 went to five states — California, Maryland, Massachusetts, New York and Virginia — and Washington, D.C., according to analysis of federal data by Brookings.The Biden administration’s American Jobs Plan incorporates ideas from the bipartisan “Endless Frontier Act,” which, among other things, seeks to spend billions to create regional innovation hubs. The idea is to invest in cutting-edge research with potential for commercial spinoffs, worker training and other steps to create the kinds of virtuous cycles of innovation and jobs that already occur in places like Boston.That could be a boon to places like Lincoln, Neb.Its population has grown slowly but steadily in recent years; investments in things like high-speed internet have helped it avoid the cycle of decline affecting many other smaller cities in the Midwest. It is home to the University of Nebraska, which has strong programs in computer science and engineering, and it has a vibrant agribusiness sector.The Southpointe Pavilions shopping center in Lincoln, Neb.Walker Pickering for The New York TimesBut Mayor Leirion Gaylor Baird says the city still loses young talent to opportunities in bigger cities. She says several elements of the Biden plans could improve things.A proposed $12 billion in community college spending should help ensure the city has the work force employers are looking for, she said. Plans to build broadband across rural communities could better connect Lincoln and its job opportunities with the rest of Nebraska.And the financial help for cities and states included in the American Rescue Plan, enacted in March, should allow more basic investments to make the city appealing to young families.The city has been slowly replacing lead water lines so residents can be confident of safe drinking water, she said, and it now has the prospect of being able to complete that work faster. “I think there was a sigh of collective relief among mayors of cities this size you could hear around the country” when the American Rescue Plan passed with money for local governments, Mayor Gaylor Baird said. “Everything about this moment feels like it has the potential to be transformational.”Mr. Williams, the Huntington mayor, also cast this as a moment with long-lasting implications. His city, a onetime industrial hub, features a low cost of living and lots of natural beauty, and is the home of Marshall University. It could appeal to workers who see an opportunity to work remotely and are tired of the stresses of bigger cities.Mayor Williams of Huntington, W.Va., is particularly enthusiastic about efforts to invest in highways, clean water infrastructure and broadband.Andrew Spear for The New York Times“The growth is going to occur where there is a community that is functional,” Mayor Williams said. “Covid was a once-in-a-lifetime pandemic, but it’s also a once-in-a-lifetime opportunity as people realize they can work remotely if they have access to broadband and clean water and a safe and solid community.”The infrastructure legislation, he said, could be the jolt that assures people that the city can offer both jobs and amenities — and that it is reversing population loss and economic decline.“Sadly, when you look at our population losses, individuals have left just because they haven’t felt like they had a lot of choice,” he said. “My job is to give them a choice.” More
The lopsided vote was a reminder that bipartisan cooperation on public works projects is possible, but lawmakers in both parties said the spirit of compromise could be fleeting.WASHINGTON — The Senate on Thursday overwhelmingly approved a $35 billion measure to clean up the nation’s water systems, offering a brief moment of bipartisan cooperation amid deep divisions between the two parties over President Biden’s much larger ambitions for a multitrillion-dollar infrastructure package.Republicans and Democrats alike hailed passage of the bill on an 89-to-2 vote as evidence that bipartisan compromise is possible on infrastructure initiatives, but lawmakers in both parties suggested that the spirit of deal-making could be fleeting.Mr. Biden and Democratic leaders have said they want Republican support for a broad infrastructure package that aims to improve the nation’s aging public works system and address economic and racial inequities, after pushing a nearly $1.9 trillion pandemic relief bill into law with just Democratic votes. But Republicans have panned those proposals, which are to be financed with tax increases on high earners and corporations, and Democrats have said they may have to move them unilaterally if no compromise can be reached.“We’re trying to work in a bipartisan way whenever we can — and this bill is a classic example,” Senator Chuck Schumer of New York, the majority leader, said of the water bill. “It doesn’t mean that we’ll be able to do the whole thing bipartisan, but we’ll do as much as we can.”The legislation approved on Thursday would authorize funding to shore up the nation’s water systems, particularly in rural and tribal communities that have long been neglected and suffer from poor sanitation and unclean drinking water. A House Democratic aide, speaking on the condition of anonymity, said House committees had their own substantial proposals and looked forward to negotiations.“I don’t want to overplay it, but I think it’s definitely a major positive,” Senator Shelley Moore Capito, Republican of West Virginia, said of the lopsided vote on the water infrastructure bill, which she helped spearhead. Yet Ms. Capito cautioned that the moment of cooperation might not last long if negotiations faltered.Republicans have “made it clear that we don’t see the definition of infrastructure — physical core infrastructure — the same way” that Mr. Biden does, she said. The two spoke on Thursday afternoon in what the White House described as a friendly conversation in which both sides reiterated a desire to negotiate.In his speech before a joint session on Congress on Wednesday, Mr. Biden applauded an infrastructure counteroffer put forward by Senate Republicans and called on lawmakers to “get to work.” Ms. Capito and other Republicans have been in touch with the White House over their $568 billion framework for roads, bridges, airports, ports and broadband.But that plan, which Republicans have said is the largest infrastructure proposal they have offered, is a fraction of the spending Mr. Biden outlined, even before he unveiled a $1.8 trillion plan for investing in workers, child care and schools on Wednesday. It notably excluded all of Mr. Biden’s suggestions for how to pay for the spending — including tax increases on corporations — and did not provide clear alternatives.It remains unclear whether Democrats will agree to winnowing down the scope of the economic platform or plans to pay for it by undoing key elements of the 2017 tax plan in order to win a handful of Republican votes. Some Democrats, including Senator Joe Manchin III of West Virginia, a key moderate, have urged their colleagues to negotiate with Republicans.“I think there is a good reason for us to proceed with sincere bipartisan negotiations in the next few weeks — not indefinitely,” Senator Chris Coons, Democrat of Delaware, told reporters on Thursday. He said that making the attempt would be crucial for getting the requisite 50 Democratic votes to pass something unilaterally if those talks stalled.Senator Rob Portman, Republican of Ohio, said he was optimistic, after conversations with Mr. Biden and White House staff members, that Senate Republicans and the administration could hatch a deal around a “narrower” definition of infrastructure, leaving other liberal proposals in Mr. Biden’s plans for a separate bill.“I don’t know where the White House ends up on it,” Mr. Portman said. “The president last night said the right things, both in his speech and private conversations. I think they want to do an infrastructure package. They also want to do the other things. They understand that they don’t work together.”Republican leaders, however, were more skeptical. Senator Mitch McConnell of Kentucky, the minority leader, said on Thursday that Mr. Biden had rattled off a “multitrillion-dollar shopping list that was neither designed nor intended to earn bipartisan buy-in.”With the nearly $1.9 trillion stimulus plan still popular with a majority of voters, some Democrats are eager to wield their slim majorities in both chambers to push as many liberal priorities into law as possible.Senator Bernie Sanders, the Vermont independent who is the chairman of the Budget Committee, said he and his panel had begun work on a budget resolution, legislation needed to unlock the reconciliation process that would allow them to circumvent a filibuster and push through a fiscal package without Republican votes. (Democrats have not yet committed to using the maneuver.)“The calculus is, we get a lot more than we would if we chase our tail around and hope for this bipartisan mirage that is just over the horizon and keeps moving over the horizon,” said Senator Richard Blumenthal, Democrat of Connecticut.Using reconciliation, Mr. Blumenthal acknowledged, could curtail certain provisions because of the strict rules that govern the process, and would not allow for any defections in the Senate. Even before Democrats try to muscle any legislation through that gantlet of parliamentary restrictions, they would have to ensure that the entire caucus in both chambers was united behind the contents.That prospect already appears charged, with several Democrats cautioning reporters in recent days that Congress, not Mr. Biden, is ultimately responsible for shaping the fine details of any legislative plan. Some Democrats are pushing to make certain provisions permanent, including an expanded monthly benefit to families with children that Mr. Biden has suggested extending through 2025.Other Democrats are advocating additional changes to the tax code, while several progressive lawmakers, including Mr. Sanders, are pushing to expand Medicare and include provisions to help lower the cost of prescription drugs.“What is going to happen is there is going to be a major, major piece of legislation that is going to go a long way to improving life for the American people,” Mr. Sanders said. “All of us are going to have to take a deep breath and understand that we have to go forward right now to address the crises facing the country even if the bill is not 100 percent of what we want.”Nicholas Fandos More
The president’s speech laying out trillions of dollars in new economic proposals plays to voters’ warm feelings toward federal aid in the coronavirus pandemic. More
The proposed American Families Plan would expand access to education and child care. It would be financed partly through higher taxes on the wealthiest Americans.WASHINGTON — The Biden administration on Wednesday detailed a $1.8 trillion collection of spending increases and tax cuts that seeks to expand access to education, reduce the cost of child care and support women in the work force, financed by additional taxes on high earners.The American Families Plan, as the White House calls it, follows the $2.3 trillion infrastructure package President Biden introduced last month, bringing his two-part package of economic proposals to just over $4 trillion. He will present the details to a joint session of Congress on Wednesday evening.The proposal includes $1 trillion in new spending and $800 billion in tax credits, much of which is aimed at expanding access to education and child care. The package includes financing for universal prekindergarten, a federal paid leave program, efforts to make child care more affordable, free community college for all, aid for students at colleges that historically serve nonwhite communities, expanded subsidies under the Affordable Care Act and an extension of new federal efforts to fight poverty.Administration officials cast the plan as investing in an inclusive economy that would help millions of Americans gain the skills and the work flexibility they need to build middle-class lifestyles. They cited research on the benefits of government spending to help young children learn. In a 15-page briefing document, they said the package would help close racial and gender opportunity gaps across the economy.Many of the provisions, like tax credits to help families afford child care and a landmark expansion of a tax credit meant to fight child poverty, build on measures in the $1.9 trillion economic rescue plan Mr. Biden signed into law last month. The package would make many of those temporary measures permanent.But the plan also includes a maze of complicated formulas for who would benefit from certain provisions — and how much of the tab state governments would need to pick up.The package could face even more challenges than the American Jobs Plan, Mr. Biden’s physical infrastructure proposal, did in Congress. The president has said repeatedly that he hopes to move his agenda with bipartisan support. But his administration remains far from reaching a consensus with Republican negotiators in the Senate.Republicans have expressed much less interest in additional spending for education, child care and paid leave than they have for building roads and bridges. They have also chafed at the tax increases Mr. Biden has proposed, including the ones that will help pay for his latest package.The president is proposing an increase in the marginal income tax rate for the top 1 percent of American income earners, to 39.6 percent from 37 percent. He would increase capital gains and dividend tax rates for those who earn more than $1 million a year. And he would eliminate a provision in the tax code that reduces capital gains on some inherited assets, like vacation homes, that largely benefits the wealthy.Mr. Biden would also invest $80 billion in personnel and technology enhancements for the I.R.S., in hopes of netting $700 billion in additional revenues from high earners, wealthy individuals and corporations that evade taxes.Republicans and conservative activists have criticized all those measures. Administration officials told reporters that the president would be open to financing the spending and tax credits in his plan through alternative means, essentially challenging Republicans to name their own offsets, as Mr. Biden did with his physical infrastructure proposal.Still, many of the details in his new proposal poll well with voters across the political spectrum. Much of the package could win the support of the full Democratic caucus in Congress, which would need to band together to pass all or part of the plan through the fast-track process known as budget reconciliation, which bypasses a Senate filibuster.Expanded access to government-subsidized preschool and community college may have broad appeal. Workers with only high school degrees are often stuck in low-wage jobs, and two-thirds of mothers with young children are employed, and thus need reliable child care. The high cost of quality day care and pre-K puts these services out of reach for many families, who may rely on informal networks of relatives and neighbors who are untrained in early education.Expanding access to pre-K has been particularly popular over the past decade in states and cities, including some with Republican governors. A large body of research shows that achievement gaps between poor and middle-class children emerge in the earliest years of childhood and are present on the first day of kindergarten. Administration officials contend that free, quality early childhood education can both help cash-strapped parents and build students’ skills in ways that will help them become more productive workers.Still, there are major disagreements about how generous any expansion of pre-K should be. President Barack Obama’s administration generally favored a centrist approach in which new seats were geared toward lower-income families.Mr. Biden’s plan differs in that it calls for universal preschool for all 3- and 4-year-olds, including those from affluent families. That is the same approach pioneered in recent years by city programs in New York and Washington, which expanded quickly to serve a diverse swath of families, but not without some evidence that they replicated the segregation and inequities of the broader K-12 education system.Bruce Fuller, a professor of education at the University of California, Berkeley, has been a critic of the universal approach, instead favoring more targeted programs. He questioned whether states would do their part to fund the expansion and said the goal of paying all early childhood workers $15 per hour was too modest to broadly improve the quality and stability of the work force.“How governors weigh these competing priorities, ethically and politically, remains an open question,” he said.The proposed investment from Washington comes at a precarious time. Preschool enrollment declined by nearly 25 percent over the past year, largely because of the coronavirus pandemic. As of December, about half of 4-year-olds and 40 percent of 3-year-olds attended pre-K, including in remote programs. And only 13 percent of children in poverty were receiving an in-person preschool education in December, according to the National Institute for Early Education Research.Unlike the preschool proposal, the child care plan is not universal. It would offer subsidies to families earning up to 1.5 times their state’s median income, which could be in the low six figures in some locations. It would also continue tax credits approved in the pandemic relief bill this year that offer benefits to people earning up to $400,000 a year.As with Mr. Biden’s previous policy proposals, the American Families Plan offers something to many traditional Democratic Party constituencies. The administration is closely tied to teachers’ unions, and while many early childhood educators are not unionized, the proposal also calls for investments in K-12 teacher education, training and pay, which are all union priorities. One goal is to bring more teachers of color into a public education system where a majority of students are nonwhite.The expansion of free community college would apply to all students, regardless of income. It would require states to contribute to meet the goal of universal access, senior administration officials said on Tuesday. Mr. Biden would also expand Pell grants for low-income students and subsidize two years of tuition at historically Black colleges and universities, as well as at institutions that serve members of Native American tribes and other minority groups.Mr. Fuller said he expected the community college proposal to effectively target spending to the neediest students. About one-third of all undergraduates attend public two-year colleges, which serve a disproportionate number of students from low-income families.The paid leave program will phase in over time. The administration’s fact sheet says it will guarantee 12 weeks of paid “parental, family and personal illness/safe leave” by its 10th year in existence. Workers on leave will earn up to $4,000 a month, with as little as two-thirds or as much as 80 percent of their incomes replaced, depending on how much they earn.Other provisions include late concessions to key Democratic constituencies. Administration officials had removed the health care credits last week but added them back under pressure from Speaker Nancy Pelosi of California and others. They bucked pressure from House and Senate Democrats to make permanent an expanded child tax credit created by the pandemic relief bill, extending it through 2025. But the plan would make permanent one aspect of the expanded credit, which allows parents with little or no income to reap its benefits regardless of how much they earn. More
U.S. factories are humming again. But the recovery’s speed has left many employers scrambling for workers or for parts.Matt Guse would hire a dozen machinists — if only he could find them.The owner of MRS Machining, a maker of precision metal parts in rural Augusta, Wis., Mr. Guse finds business is rebounding so quickly as the pandemic’s effect eases that his 47-worker shop is short-handed.“I’ve turned down a million dollars’ worth of work in the last two weeks,” he said. “Doing that, it’s hard to go to bed at night when you put your head to the pillow. I have open capacity, but I need more people.”After a sharp downturn when the pandemic hit last year, factories are humming again. But the recovery’s speed has left employers scrambling. Despite huge layoffs — manufacturing employment initially dropped by 1.4 million — some companies find themselves desperate for workers.In other cases, shortages of parts like semiconductors and supply chain disruptions have made orders hard to fill and created fresh uncertainty.“It was a lot easier to turn the lights out than to ramp up,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “Manufacturers weren’t prepared for a surge of demand in goods. They’ve been caught a bit flat-footed.”The manufacturing recovery signals a turning point, with the Biden administration putting a fresh focus on increasing factory jobs, especially in areas like semiconductors and electric vehicles. That growth will be crucial if the overall economy is to expand rapidly in the months ahead.The Commerce Department reported Monday that orders for durable goods — like cars and appliances — rose half a percentage point in March, prompting Barclays to lift its tracking estimate of economic growth for the first quarter to 1.4 percent, or 5.6 percent at an annualized rate.On Thursday, the government will release its initial reading on economic growth in the first three months of the year, and manufacturing is expected to be among the bright spots. The consensus of analysts polled by Bloomberg is that the report will show gross domestic product expanded by 1.7 percent, up from 1.3 percent.At one point, factory production was down substantially because of the pandemic, but it should return to pre-Covid-19 levels by the third quarter of this year, according to Chad Moutray, chief economist for the National Association of Manufacturers.“We’re seeing gangbuster levels of orders,” he said. “But the sector has a lot of challenges, like a rise in raw material costs, supply chain disruptions, logistics bottlenecks and worker shortages.”At MRS Machining, Mr. Guse said, spot shortages of items like steel and metal plate are a constant issue. “Quotes for material goods from suppliers are usually good for three to six months,” he said. “Now it’s a matter of hours.”As at many factories, the work pays well, starting at $18 to $20 an hour and rising to around $30. But the most skilled workers, like machinists, remain hard to find, according to Mr. Guse.“We’re getting applicants because people are moving out of Minneapolis and Chicago and looking to live in a more rural environment,” he said.Despite the good news at MRS, rebuilding overall factory employment is a challenge, said Scott Paul, president of the Alliance for American Manufacturing, a policy group representing manufacturers and the United Steelworkers.President Biden is fighting a long-term trend. Nearly 12.3 million Americans work in factories. Two decades ago, that figure stood at just over 17 million.“We feed the companies whose products go into infrastructure,” said Kathie Leonard, the chief executive of Auburn Manufacturing, which makes heat- and fire-resistant fabrics.Yoon Byun for The New York TimesFiberglass fabric before it is processed in a vertical oven, where it will be heated at 1,300 degrees Fahrenheit to caramelize so it won’t smoke when reaching high temperatures.Yoon Byun for The New York TimesAfter the last few economic downturns — the falloff in growth following the Asian financial crisis of the late 1990s; the slump after the attacks of Sept. 11, 2001; and the Great Recession — manufacturing failed to recover the lost jobs.To be sure, the sector has made up a good amount of ground after losing nearly 1.4 million positions in the first months of the pandemic, but employment remains about 515,000 jobs short of where it was in February 2020.Some experts question why policymakers focus so much on production when most Americans work in service industries that have been gaining jobs over the years and offer better growth prospects. But manufacturing is one of the few paths to a middle-class life for the two-thirds of American adults who lack a college degree.The average hourly wage of manufacturing workers is $29.15, while workers in leisure and hospitality, another field that draws people with less education, earn $17.67 an hour.Mr. Paul hopes that Mr. Biden’s plan to revitalize American manufacturing as part of his larger infrastructure effort will bear fruit.“He’s pretty serious about some form of industrial policy,” Mr. Paul said, citing the administration’s call for action in making products like semiconductors and electric vehicles. “It may be possible for Biden to do what no president has since manufacturing began its job decline and reverse the losses.”The administration’s blueprint includes $50 billion in funding for investments in chip manufacturing and research as well as $174 billion in spending to advance electric vehicles.The $2 trillion plan, with its focus on rebuilding roads and bridges as well as the electric grid, could help companies like Auburn Manufacturing of Maine, said its chief executive, Kathie Leonard.“Customers are struggling to meet launch timelines and production targets,” said Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. Brittany Greeson for The New York TimesMacArthur makes labels and decals like those showing tire pressure or indicating vehicle identification numbers. Its business was hard hit a year ago when the pandemic forced auto plants to shut down.Brittany Greeson for The New York Times“We feed the companies whose products go into infrastructure,” said Ms. Leonard, describing the heat- and fire-resistant fabrics Auburn makes at two factories in central Maine, about a half-hour from Portland. “The infrastructure plan holds promise for companies like us.”“You have to work at being an optimist,” she said. “We’re not going to hire 25 people, but maybe five. We need to hire a technical director, fabricators, and we need staff to help with e-commerce.”The semiconductor shortages are a headache for Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. She said orders had been delayed by car companies — her major customers — that couldn’t find enough of the chips they needed to keep cars coming off the assembly lines.“Customers are struggling to meet launch timelines and production targets,” she said. “Orders are either reduced in volume or delayed. It trickles down to different suppliers, and we’re just getting a haircut across the board.”MacArthur’s business had already been damaged when auto plants closed a year ago amid the pandemic lockdowns, cutting off demand for labels and decals like those showing tire pressure or indicating vehicle identification numbers.Ms. Barrett was able to pivot and supply products for medical customers, averting all but a handful of layoffs for her work force of 50. She remains optimistic, despite the current logistical backups.“It’s a horrible disruption right now, but I’m anticipating a strong recovery,” she said. “We never made major cuts, and as automotive production starts to recover more, I expect to hire several more people in the coming months.” More
The American Family Plan, which the president wants to pay for by increasing the capital gains tax and the top marginal income tax rate, currently doesn’t include an effort to expand health coverage.WASHINGTON — President Biden will seek new taxes on the rich, including a near doubling of the capital gains tax for people earning more than $1 million a year, to pay for the next phase in his $4 trillion plan to reshape the American economy.Mr. Biden will also propose raising the top marginal income tax rate to 39.6 percent from 37 percent, the level it was cut to by President Donald J. Trump’s tax overhaul in 2017. The proposals are in line with Mr. Biden’s campaign promises to raise taxes on the wealthy but not on households earning less than $400,000.The president will lay out the full proposal, which he calls the American Family Plan, next week. It will include about $1.5 trillion in new spending and tax credits meant to fight poverty, reduce child care costs for families, make prekindergarten and community college free to all, and establish a national paid leave program, according to people familiar with the proposal. It is not yet final and could change before next week.The plan will not include an up to $700 billion effort to expand health coverage or reduce government spending on prescription drugs. Officials have decided to instead pursue health care as a separate initiative, a move that sidesteps a fight among liberals on Capitol Hill but that risks upsetting some progressive groups.News of the tax provisions appeared to unnerve investors on Thursday, with stock markets giving up gains as investors absorbed details of Mr. Biden’s capital gains tax plans. The S&P 500 closed down 0.92 percent.The plan will set up a clash with Republicans and test how far Democrats in Congress want to go to rebalance an economy that has disproportionately benefited high-income Americans.Mr. Biden’s advisers are eyeing a wide range of possibilities for how to move the president’s economic agenda through Congress. They are holding out hope of reaching bipartisan agreement on at least some provisions, while preparing to bypass a Republican filibuster and pass much of the tax and spending agenda on a party-line vote using the parliamentary process known as budget reconciliation.The president has broken his economic plan into two parts. The first centers on physical infrastructure, like bridges and airports, along with other provisions such as home care for older and disabled Americans. The second part, details of which emerged on Thursday, focuses on what administration officials call “human infrastructure” — helping Americans gain skills and the flexibility to contribute more at work.The challenges for Mr. Biden are apparent. The administration has already disappointed key Democrats, including Speaker Nancy Pelosi of California. “Lowering health costs and prescription drug prices will be a top priority for House Democrats to be included” in the plan, she said.Republicans have shown some willingness to negotiate with Mr. Biden on the first part of his agenda, including spending on roads, waterways and broadband internet. But they have vowed to fight his tax plans, and they have shown little interest in the spending provisions contained in his latest proposal.Conservative groups criticized Mr. Biden’s plans to raise taxes on high-earning individuals, and Senate Republicans unveiled their own infrastructure proposal to spend $568 billion over five years.That contrasts with the president’s $2.3 trillion American Jobs Plan, which Mr. Biden outlined last month. Republicans cast Mr. Biden’s proposed increases as an attack on their party’s signature economic achievement under Mr. Trump, a sweeping collection of tax cuts passed at the end of 2017.Lawmakers should work together to improve the nation’s infrastructure “without damaging the tax reform that gave us the best economy of my lifetime,” said Senator Patrick J. Toomey of Pennsylvania, the top Republican on the banking committee.The president’s latest proposals call for hundreds of billions of dollars for universal prekindergarten, expanded subsidies for child care, a national paid leave program for workers and free community college tuition for all.A child care center in Queens last month. Mr. Biden’s plan will include about $1.5 trillion in new spending and tax credits, in part to reduce child care costs for families.Kirsten Luce for The New York TimesThe plan also seeks to extend through 2025 an expanded tax credit for parents — which is essentially a monthly payment for most families — that Mr. Biden signed into law last month.Democrats on Capitol Hill have urged Mr. Biden to make that credit permanent. Analysts say the credit would drastically cut child poverty this year. Those pushing Mr. Biden include Senators Michael Bennet of Colorado, Cory Booker of New Jersey and Sherrod Brown of Ohio, along with Representatives Rosa DeLauro of Connecticut, Suzan DelBene of Washington and Ritchie Torres of New York.“Expansion of the child tax credit is the most significant policy to come out of Washington in generations, and Congress has an historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis,” the lawmakers said this week in a joint statement. “No recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working families and children.”Mr. Biden also wants to incorporate some type of extension for an expanded earned-income tax credit, which was included in the earlier aid package on a one-year basis.The plan’s spending and tax credits will total around $1.5 trillion, according to administration estimates, in keeping with early versions of the two-step agenda first reported last month by The New York Times.To offset that cost, Mr. Biden will propose several tax increases he included in his campaign platform. That starts with raising the top marginal income tax and the tax on capital gains — the proceeds of selling an asset like a stock or a boat — for people earning more than $1 million. The plan would effectively increase the rate they pay on that income to 39.6 percent from 20 percent.Capital gains income would also still be subject to a 3.8 percent surtax that helps fund the Affordable Care Act. It was unclear if the tax increase would also apply to income earned from dividends.The president will also propose eliminating a provision of the tax code that reduces taxes for wealthy heirs when they sell assets they inherit, like art or property, that have gained value over time. And he would raise revenue by increasing enforcement at the Internal Revenue Service to bring in more money from wealthy Americans who evade taxes.Administration officials this week were debating other possible tax increases that could be included in the plan, like capping deductions for wealthy taxpayers or increasing the estate tax on wealthy heirs.Previous versions of Mr. Biden’s plan, circulated inside the White House, called for raising revenues by enacting measures to reduce the cost of prescription drugs bought using government health care programs. That money would have funded a continued expansion of health coverage subsidies for insurance bought through the Affordable Care Act, which were also temporarily expanded by the economic aid bill this year.Mr. Biden’s team was under pressure from Senator Bernie Sanders, independent of Vermont and the chairman of the Budget Committee, to instead focus his health care efforts on a plan to expand Medicare. Mr. Sanders has pushed the administration to lower Medicare’s eligibility age and expand it to cover vision, dental and hearing services.Emily Cochrane More
