Analyzing the Scale and Structure of the American Jobs Plan
April 1, 2021
By Felicia Wong
The American Jobs Plan is “not a plan that tinkers around the edges,” as President Biden said while introducing his $2.3 trillion infrastructure proposal yesterday.
After generations of policymaking constrained by a failed neoliberal paradigm, following a decade of needlessly prolonged joblessness, and amid a pandemic that has further revealed the fragility and inequality of our economy, that’s a welcome development. And it’s a marked shift toward the kind of policymaking the Roosevelt Institute has long advocated.
For nearly a decade, we have urged policymakers not to tinker around the edges but to rewrite the rules of our economy—to make our society fairer, more inclusive, and more innovative and to ensure that women and people of color have the dignity, power, and equality they deserve. As Roosevelt experts have said during this pandemic and after the 2008–2009 financial crisis, we can drive long-term and equitable prosperity by investing in our future now. And how we do so matters.
The American Jobs Plan is a bold and major step toward realizing all of these goals, though by itself it still falls far short of meeting our economic and climate needs in the coming years.
As in any big economic package, we must focus on both the scale and structure of funding—how much we’re spending, how we’re spending the money, and who’s deciding where and how to spend it.
The American Jobs Plan seeks to use public power to tackle the intertwined crises of our time: climate, care, supply chains, and racial and economic inequality. So how does the proposal look based on our two key criteria—scale and structure?
Let’s start with structure.
Structure: A Powerful Vision
Policy structure—where and how funds are spent—is critical to rectifying racial and economic inequalities throughout our society. This has emerged as a key goal of the Biden administration, for good reason. Thoughtful, intentional policy design can help build real democratic accountability, giving power and agency to the people these funds are meant to benefit—the people most likely to understand how that money would be best spent, and for whom building and earning trust in government is essential to our societal health.
The American Jobs Plan is strong on structure. Here’s where the AJP should be celebrated.
Care Work and Worker Empowerment
- $25 billion direct investment (through states) in building childcare centers in high-need areas.
- $400 billion toward expanding access to quality, affordable home- or community-based elder care, accompanied by a structure to allow for unionization and raise pay among care workers. This could raise the wages, and change the lives, of millions of low-income women of color and their families.
- An emphasis on training programs that are set up along the sectoral training model with union involvement and subsidized jobs, which could be a step toward a public jobs program.
- Support for the PRO Act, a bill to modernize our country’s labor laws by removing barriers to organizing, increasing worker protections, and repealing so-called “right to work laws.”
- Standards for labor conditions, including a requirement for “neutrality” in union elections, for employers getting the benefits of federal investment through the AJP.
Climate and Economic Transformation
While the plan’s climate proposals certainly don’t match the scope of our needs, there is still a lot to commend here.
- Plenty of new—and sometimes unprecedented—investments in environmental justice: removing all lead pipes; cleaning up drinking water systems; investing to reduce redlining in public transit; boosting climate resilience for essential infrastructure systems; and building and expanding affordable housing.
- Significant investment (~$400 billion) in the grid and renewable energy, including making the Production Tax Credit and the Investment Tax Credit fully refundable (as we’ve advocated in the past).
- The end and ban of subsidies, tax credits, and loopholes for fossil fuel companies.
For many of us, the THRIVE Agenda is an important climate baseline. Several sectors in the AJP proposal would receive more investment than in THRIVE, including manufacturing, research and development, and workforce development. Again, these are all positive signs.
Feedback Loops: Building for Positive Civic Returns
An important structural opportunity here is feedback loops. It’s vital that people actually know and understand these funds are benefiting them so they can be further inspired and empowered to engage civically. Aspects of the American Rescue Plan did this well, with relief checks and refundable, advanced child tax credits that essentially functioned as child allowances—direct, unhidden benefits.
The AJP presents even greater opportunities for virtuous feedback loops: New federally funded childcare centers, for example, can offer a visible government benefit parents use every day. Furthermore, the AJP could not only make the benefits visible but seed civic engagement from the beginning, with disadvantaged and frontline communities getting decision-making power over climate funds, as President Biden has promised.
Now, let’s turn to scale.
Scale: Good First Step, Ultimately Need More
The amount the federal government spends to solve problems matters, especially during an ongoing crisis and at a time when the economy is badly structured—when it isn’t creating good jobs or clean jobs, or promoting societal health in the broadest sense.
On this score, the AJP is a good down payment. But the economic data says that we can and must go further than $2 trillion (or even further than the $4 trillion this plan could be said to spend, including tax credits).
On scale, we have long argued that the economy remains below its actual potential. Therefore, the larger the bill, the better. This should be a feature, not a bug, of our approach.
The economy needs more public investment to take up “slack”—around 15 million people not working or working less than they would prefer. We would all be better off with millions more jobs that “green” the economy and care for people, and with money spent long-term on key investments.
As our friend Josh Bivens said yesterday, “the case for undertaking another round of ambitious public investments rests simply on the fact that they will help provide a better and fairer society, and will address pressing social challenges and/or persistent market failures.”
Here is where we would like to see more. The scale of investment proposed is about one-third of the investment called for in the THRIVE Act, which is $10 trillion over 10 years, and also about one-third of the 5 percent of annual GDP investment goal the Roosevelt Institute proposed in 2019. This could have significant implications for job creation and for our ability to meet the Biden administration’s ambitious net zero decarbonization goals. Note that much of this depends on the scale and terms of private investment that public investment could catalyze, as well as a host of other factors—but it is something we will continue to watch carefully. Overall, we know that the climate crisis demands investments at a scale that far exceeds even this significant package.
The good news is that there is still a lot of money on the table.
We’re big proponents of debt financing some of the climate investments in particular, but more taxes are possible too. We applaud the increase on corporate taxation as a whole, but the 28 percent rate, while better than the 21 percent rate (the result of the disastrous Trump-driven 2017 Tax Cuts and Jobs Act), is still less than the 35 percent rate pre-TCJA.
Moreover, we know that trillions more are available, through taxing capital gains at the rate of ordinary income, or capping deductions from wealthy people, or simply raising the top rate on the wealthy. Candidate Joe Biden supported all of these taxes. They are good economics, in that they will rebalance power in our economy. And they also have the benefit of helping us meet the scale of spending we need.
Conclusion: Two Cheers, and the Fight for More
So, two cheers for a huge step forward—a vision worth fighting for, and a big down payment. For now, we’re reserving our third cheer, since the federal government will need to make regular, necessary investments beyond this overdue down payment.
While the 2009 American Recovery and Reinvestment Act allocated $357 billion in new spending (about $442 billion in current dollars), the 2021 American Jobs Plan allocates significantly more than that for *each* of the intertwining crises we face: climate, care, supply chains, and racial and economic inequality.
Instead of relying on markets, it invests $971 billion in greening our transportation, homes, water, and power systems.
Instead of leaving the quality of care jobs to markets, reinforcing and exacerbating generations of racism and sexism, it invests $637 billion in care, education, and training, and uses the power of government to raise wages and give home workers an opportunity to collectively bargain.
Instead of trusting multinational companies to keep in mind resilience, redundancy, and national security, it invests $654 billion in manufacturing capabilities and repeals incentives for offshoring jobs.
And the climate, care, and supply chain plans reinforce one another and make racial inclusion and support for unions a core, nonnegotiable principle.
Many things brought us here: a president who understands the politics of this Roosevelt moment, as Katrina vanden Heuvel calls it. A policy team that reads the data and listens to the needs of real people. And a movement that has been bold and never lost sight of what it will really take to build our inclusive, green American future.
There is much more to learn about the administration’s plans, and much more analysis to come as different stakeholders examine the details. We at Roosevelt are ready to work alongside all of our allies for the scale and structure of investment that our people—Black, brown, Asian, indigenous, and white—want, and for the health of the planet that sustains us.