If Joe Biden successfully launches two of his favourite multi-trillion dollar infrastructure projects, in and out of America, he may well go down in history as one of the most successful American Presidents.
In March, he proposed two highly-ambitious infrastructure projects: the first one will challenge China’s mammoth $3.7 trillion dollar Belt and Road Initiative (BRI) to commercially connect over 100 countries across three continents; and the other aims to revamp the USA’s ageing infrastructure, pegged at $2.3 billion, in the next eight years.
On the foreign policy front, Biden proposed a ‘democratic’ rival to BRI during a telephonic conversation with British Prime Minister Boris Johnson last week. He suggested founding an initiative from democratic countries to rival China’s BRI at a time tensions spike between Beijing and the West.
Recently, the US President had declared that he would prevent China from passing the US to emerge the world’s most powerful nation, and he vowed to invest heavily to ensure America prevailed in the ever-growing rivalry between the world’s two largest economies.
“I suggested that we should have, essentially, a similar initiative coming from the democratic states, helping those communities around the world that, in fact, need help”, Biden told reporters, referring to BRI.
Since President-for-Life Xi Jinping came to power in 2013, China has been trying to increase influence by ‘debt-trapping’ some countries, raising concerns among regional powers and the West.
The BRI has, in fact, come as a major geopolitical challenge to the West as China has helped many countries to build infrastructure. China has enrolled over 100 countries for cooperation in the BRI projects like railways, ports, highways and other infrastructure.
As of mid-2020, more than 2,600 projects were linked to the BRI, but 20 percent of them had been “seriously affected” by the global pandemic. Some countries have also pushed back their BRI projects as costly and unnecessary. They forced Beijing to scale back some plans by asking it to review, cancel or scale down commitments, citing concerns over costs, erosion of sovereignty, and corruption. Even the BRI’s flagship project, the $60 billion China-Pakistan Economic Corridor (CPAC) has virtually stopped mid-way.
While Biden’s ‘BRI-II’ plan is yet to take wings, he has also proposed another, multi-trillion dollar plan to revamp ageing infrastructure of the USA itself, and position Washington to out-compete Beijing.
The proposed $2.3 trillion American Jobs Plan is expected to create millions of ‘good paying’ jobs and rebuild the American infrastructure in what officials deem as a “once-in-a-century capital investment” in America. “By this investment, over the next eight years, we can transform our current and future infrastructure and fundamentally change life for Americans”, officials said.
“If passed alongside President Biden’s Made in America corporate tax plan, it would be fully paid for within the next 15 years and reduce deficits in the years after. This plan will bring public investment as a share of the economy back to where it was in the 1960s, the last time we made transformative investments in our nation’s infrastructure,” they said.
Currently, the US ranks 13th in global infrastructure. Delays caused by traffic congestion alone cost over $160 billion per annum, and motorists are forced to pay over $ 1,000 every year in wasted time and fuel.
The Biden plan proposes to invest $620 billion in transportation infrastructure, which will modernise 20,000 miles of highways, roads and main streets. It will also fix the 10 most economically-significant bridges in need of reconstruction, and repair the worst 10,000 smaller bridges, reconnecting communities across the country.
Also, it will spark the electric vehicle revolution, building a network of 500,000 Electric Vehicles (EV) chargers, replace 50,000 diesel transit vehicles, electrify at least 20 per cent of the yellow bus fleet, and help consumers purchase the vehicles of tomorrow, media reports quoting the White House said.
The plan will make the new infrastructure more resilient to climate change. Some 40 per cent of the benefits of the climate and clean infrastructure investments will flow back to the disadvantaged communities.
As part of the plan, investments of $650 billion will reconnect communities and transform the way Americans live.
The plan will deliver universal broadband access, including to the more than 35 per cent of rural Americans who currently lack access, in addition to the underserved communities that cannot afford it. It will entirely replace the nation’s lead pipes and service lines and reduce lead exposure in 400,000 schools and childcare centers. It will also lay thousands of miles of transmission lines, making the electric grid more resilient. It will build, renovate, and retrofit more than 2 million homes and housing units.
The plan will also repair schools, community colleges, childcare facilities, and federal buildings, including the veterans’ hospitals. It will cap hundreds of thousands of orphan oil and gas wells and abandoned mines, putting many people to work in communities that have been affected by the market-based transition to clean energy.
The American Jobs Plan will invest $400 billion in the care economy. The plan will support well-paying caregiving jobs that include benefits and the ability to collectively bargain.
Besides, the plan invests $580 billion in Research and Development (R&D), manufacturing and training, and $50 billion in domestic semiconductor manufacturing, securing the US leadership in a global market that supplies critical inputs for almost all goods — from cars to refrigerators to computers.
The US also proposed to fundamentally reform the corporate tax code so that it incentivises job creation and investment in the United States, stops unfair and wasteful profit shifting to tax havens, and ensures that large corporations are paying their fair share, the officials said.
One key element of the plan is to raise the corporate tax rate to 28 percent. The rate will remain lower than at any point since World War II other than the years since the 2017 tax act.