President Biden’s American Jobs Plan will see the administration create a federal office to monitor U.S. industrial capacity, rebuild the nation’s crumbling infrastructure, create millions of jobs, and provide funding for critical goods and services.
It’s estimated that the $2.3 trillion plan will create 2.7 million new jobsin fields such as transportation, building construction, electrical work, and road revitalization with billions in grants, loans, and tax credits allocated to the manufacturing sector.
It’s expected that these sizeable investments will help the U.S. manufacturing industry to increase its competitiveness on the world stage, particularly when it comes to rivaling fast-growing economies like China’s.
The proposal is a somewhat natural extension of Biden’s Made In America plan, which was announced in September 2020 and pledged $400 billion to support U.S. manufacturing. This included a 10% credit to companies investing in domestic manufacturing, investment in research and development, and plans to restructure supply chains to reduce the country’s dependence on China for the production of essential goods.
How Is Biden Funding The American Jobs Plan?
To fund the plan, Biden has proposed a series of “once in a generation” measures, while promising not to raise taxes on those earning less than $400,000 per year.
Earlier this year, the Treasury Department reported that the administration’s Made In America Tax Plan would fund the American Jobs Plan. This will see corporate income tax being increased from 21% to 28% and impose a 15% book income minimum tax on corporations with incomes of $2 billion or more. In 2018, it was revealed that 91 Fortune 500 companies had paid $0 in federal taxes on U.S. income, but Biden is determined to make sure large corporations start paying their fair share in taxes.
As the administration moves ahead with the first of its infrastructure packages, some funding will come from redirected COVID-19 relief funds. This includes $205 billion in unspent COVID-19 relief money, $50 billion from fraudulently paid unemployment benefits during the pandemic, and $50 billion from unused federal unemployment funds.
A further $49 billion will come from reversing a pharmaceutical rebate implemented during the Trump administration.
How Will The American Jobs Plan Benefit Manufacturers?
In particular, the American Jobs Plan promises benefits for manufacturers in the auto and agricultural industries, semiconductor makers, fiber-optic companies, renewable energy producers, pharmaceutical developers, home builders, and construction firms. Here is how.
Addressing Supply Shortages by Ramping Up the Manufacturing of Core Products and Components
A core part of the American Jobs Plan is to reduce dependence on overseas manufacturers and stabilize U.S. supply chains. Significant funds will be invested to promote the manufacturing of crucial products, components, and services that were in short supply during the pandemic, including semiconductors, pandemic-related supplies, and skilled workers.
Repairing Roads and Bridges
The American Jobs Plan proposes a $50 billion investment to repair roads and bridges during Biden’s first year in office. This will include modernizing 20,000 miles of highways, roads, and main streets, rebuilding and repairing 10,000 bridges to provide critical linkages, and upgrading transit systems.
The trucking and agricultural industry will be a major beneficiary of these repair plans since smoother roads will reduce traffic accidents, make it easier to transport goods, and shorten delivery times.
Manufacturers that produce asphalt, concrete, and other road and building materials will also benefit from this investment.
The Adoption of Electric Vehicles
At present, the U.S. market share of plug-in electric vehicle (EV) sales is just one-third the size of the Chinese EV market, but addressing this is a top priority for Biden’s administration.
The proposed $174 billion investment will incentivize state and local governments to build a national network of 500,000 EV chargers by 2030 and replace 50,000 diesel transit vehicles. The federal government will also be required to invest in EVs, heat pumps, and charging points.
These measures will support significant job creation in the EV industry, with ON Semiconductor and NXP Semiconductor manufacturers poised to make a sizeable profit.
Investing In the Construction Industry
The American Jobs Plan intends to allocate around $1.3 trillion for construction projects, an investment that has one of the biggest multipliers of any federal investment. For every dollar put into infrastructure development approximately $1.50 is put back into the GDP.
Alongside the $621 billion being allocated to repair and develop transportation networks, $110 billion will go toward building the resilience of infrastructure, $111 on clean drinking water projects, $100 billion for broadband infrastructure, and $213 billion to preserve and retrofit homes and commercial buildings.
These projects will see a sharp uptick in demand for equipment, which is sure to delight component manufacturers who experienced a drop in business throughout 2020. Analysts at Citi, for example, predict that nearly all heavy machinery makers will benefit from this government spending. In addition, as business booms, manufacturers will need to hire additional employees, which will further boost the economy and drive growth in the manufacturing industry.
Funding Training Programs for Manufacturing Professionals
A $50 billion investment will fund high-quality training programs to help restore the manufacturing jobs lost during the pandemic, close the manufacturing skills gap, and award workers with industry-approved accreditations without the burden of debt.
This measure will see an expansion of college-business-union partnerships to aid the creation of effective training programs.
Biden wants to ensure that “the best, diverse minds in America are put to work creating the innovations of the future while creating hundreds of thousands of quality jobs today.”
