President Biden Releases Infrastructure Plan and Previews FY22

April 9, 2021

In March, Congress enacted President Biden’s $1.9 trillion American Rescue Plan Act, building on earlier emergency COVID funding provided in the CARES Act and 2020 year-end spending package. As those relief funds are being disbursed, the Administration has pivoted to an ambitious infrastructure plan and Fiscal Year 2022 federal funding. Last week, President Biden unveiled “the American Jobs Plan” (AJP) with a focus on infrastructure investments and total spending of $2.2 trillion offset with increases in taxes. Although infrastructure spending is a bipartisan priority, the scale and breadth of President Biden’s proposal has excited Democrats but has generated significant pushback from Congressional Republicans, raising the likelihood that the White House and Congressional Democrats will once again look to advance this bill through reconciliation and with only Democratic votes.

Earlier today, the White House previewed the President’s FY22 budget request, with a full plan expected in May. The request includes major new investments in research, student aid, and climate change, including $9 billion increase for NIH. While the request has a long way to go, this release today does signal the start of the process and congressional hearings are expected to get underway this next week.

Below is some additional detail in each of these areas with a focus on Harvard’s institutional priorities.

American Jobs Plan (AJP)

President’s plan is being developed and released as two legislative packages: the first, the AJP totaling $2.2 trillion, will cover traditional infrastructure projects like roads, bridges, and ports as well as investments in research, clean energy, water and air, broadband, K-16 school construction and modernization, workforce development, and housing. The second package, expected to total $1 trillion, is expected to focus on human infrastructure, with new investments in childcare, universal pre-K, and education, among others, although the timing for the release of this package is uncertain. Importantly, included in the AJP are changes to corporate and other taxes that will offset a significant portion of these costs; changes proposed include raising the corporate tax rate to 28 percent, establishing a new global minimum tax for U.S. multilateral companies, and ending corporate inversion, as well as closing other loopholes.

The traditional infrastructure proposal is estimated to cost $2.2 trillion over eight years, with an emphasis on safeguarding and making the infrastructure more accessible and resilient. Of particular importance to universities, this plan includes $180 billion to advance U.S. leadership in critical technologies and upgrade the research infrastructure. Of that amount, $40 billion would be available to renovate and improve the research infrastructure in labs across the country, including brick and mortal facilities and computing capabilities and networks, and $35 billion would support climate science and innovation, including a focus on biofuels, carbon capture and storage, electric vehicles and quantum computing. It also will invest $100 billion in high speed broadband to achieve 100 percent coverage, $356 billion to build and modernize low- and middle-income homes, K-16 schools, childcare facilities, and VA facilities and hospitals. And it will provide $50 billion to strengthen supply chains for critical components, like semiconductor chips, $40 billion to prepare for the next pandemic, including resupplying the strategic national stockpile, supporting the research and development of medical countermeasures, accelerating clinical trials, and providing additional training in pandemic preparedness and response, among other investments.

With a 50-50 Senate, the path forward for AJP is uncertain. Splitting the proposal into multiple legislative packages is an attempt to recruit bipartisan support, particularly given that infrastructure funding has often enjoyed strong support from both parties, but Republicans in Congress have largely reacted with skepticism to cost and broad definition of infrastructure. While President Biden has indicated an openness to negotiation and compromise, he (along with most Congressional Democrats) seem unwilling to abandon significant pieces of this expansive agenda. Given this dynamic, another reconciliation bill seems likely but, as with the American Rescue Plan, that will require unanimous Democratic support in the Senate and nearly unanimous support in the House. Although reconciliation offers a legislative fast track, reporting indicates that the President and Congress will pursue a version of regular order, with hearings and member input solicited later this spring and the full legislation moving in June and July.

FY22 President’s Budget Request

Earlier today, the White House released a preview of the President’s plan for FY22 discretionary spending. A full detailed budget request with agency and program detail is expected in May. With a decade of statutory budgets caps over, the President set his topline spending at $753 billion for defense and $769 billion non-defense spending; compared to FY21, this is a modest (1.7%) increase for defense and a strong, 16 percent, increase for non-defense spending.

For research, the President set a bold agenda across the agencies, but offered a particularly strong vision for biomedical innovation. His budget proposal calls for a $9 billion increase for NIH, bringing total agency funding to $51 billion. Included in that funding, the proposal earmarks $6.5 billion for the creation of Advanced Research Projects Agency – Health (ARPA-H), which will fund transformative, high-risk research and speed application of medical breakthroughs , with an initial focus on cancer and Alzheimer’s. The proposal also for increases to the National Science Foundation ($10.2 billion total or a 20% increase), $14 billion in cross-agency support for climate priorities, significant increases for Energy’s Office of Science, NIST, NOAA, and NASA.

The President also proposes strong new funding for the Department of Education. Overall funding would grow by 41%, including a $3 billion boost for the Pell Grant program to raise the maximum grant by $400.

We anticipate the full request from the Administration will provide additional important details on the balance between new initiatives and existing accounts, but these early numbers are promising. Congress is expected to begin its work on crafting the 12 appropriations bills for FY22 when they return next week. While always difficult, this work will be particularly complicated this year as members work to advance regular funding as they consider the roughly $2 trillion infrastructure package at the same time and in some of the same areas. The House also has announced that this year’s appropriations measures will include directed congressional spending (formerly known as earmarks, now dubbed community projects); this will allow members to seek funding for their individual projects and priorities. Some theorize this will help smooth passage, giving members a direct stake in the passage of a bill, but it could also distract from attention to investments in core agencies and their programs.

American Rescue Plan Act

Last month, Congress enacted the ARP, the President’s $1.9 trillion COVID relief package. Since March 2020, six COVID relief packages have been signed into law, totaling $5.3 trillion. The top-billed components of the ARP were a scaled-up federal vaccination effort, an extension of expanded unemployment benefits, aid to employers, $1,400 direct payments to individuals, and assistance for state and local governments.

The ARP, among those many other provisions, included roughly $40 billion to colleges and universities through the Higher Education Emergency Relief Fund (HEERF), with a requirement that at least half of an institution’s allocation is dedicated to emergency grants to students. The latest round of HEERF funding eliminated the December relief package’s restrictions on schools that paid the endowment tax, and made the emergency aid available to non-Title IV eligible recipients, although the Department of Justice will need to determine if other statutes prohibit federal awards to students who are undocumented or international. With this infusion of funding for the HEERF program, the total amount of direct relief to higher education institutions is approximately $75 billion.

Next Steps

Over the next several months, Congress will move forward on a FY22 budget resolution to establish topline spending levels and, likely, unlock reconciliation procedures for the American Jobs Plan. This will begin an intense period of fiscally-focused work – as many committees put together full proposals on infrastructure and House and Senate Appropriations committees begin drafting and advancing individual funding bills. In addition, the House and Senate transportation committees have also begun work identifying priorities for a reauthorization of the surface transportation bill, which is set to expire at the end of September and could cost roughly $500 million. All the while, both chambers continue to work to bring forward other non-budgetary issues, including immigration, voting rights, and gun control.