President Joe Biden’s infrastructure proposal, called the American Jobs Plan, is projected to add 2.7 million jobs over 10 years, according to an analysis by Moody’s Analytics.
Biden and members of his administration have cited the Moody’s analysis to leave the misleading impression that the nearly $2.3 trillion plan would add 19 million jobs to the U.S. economy. But that includes 16.3 million jobs that Moody’s projects would be added even if the president’s infrastructure proposal never comes to pass.
“Independent analysis shows that if we pass this plan, the economy will create 19 million jobs — good jobs, blue-collar jobs, jobs that pay well,” Biden said in remarks at the White House on April 2.
“The American Jobs Plan is about a generational investment,” Transportation Secretary Pete Buttigieg said on NBC’s “Meet the Press” on April 4. “It’s going to create 19 million jobs.”
The American Jobs Plan builds on Biden’s campaign promise to invest $1.3 trillion over 10 years on American infrastructure.
The $2.3 trillion plan includes:
- $621 billion in transportation infrastructure such as roads, bridges, airports, public transit, rail and electric vehicles;
- $689 billion in community infrastructure such as expanding broadband access, clean drinking water, upgrades to the electric grid and housing;
- $580 billion in research and development, manufacturing, workforce development, and elder care.
It would be paid for, Biden says, mostly by increasing the top corporate tax rate from 21% to 28%. (The Tax Cuts and Jobs Act championed by President Donald Trump in 2017 lowered the top corporate tax rate from 35% to 21%.)
Biden’s infrastructure plan comes just weeks after the American Rescue Plan Act, a $1.9 trillion COVID-19 relief package signed into law by Biden on March 12.
A Moody’s analysis of the proposal, “The Macroeconomic Consequences of the American Jobs Plan,” considered three scenarios: neither the American Rescue Plan nor American Jobs Plan would become law; only the American Rescue Plan becomes law (which as we said it already has); and both become law.
The analysis offers a positive assessment of the impact of the infrastructure plan, concluding that over the long term it “results in a stronger economy over the coming decade, with higher GDP, more jobs and lower unemployment.”
But to claim it would result in the creation of 19 million new jobs is misleading. The analysis concluded that even if the American Jobs Plan does not pass, the U.S. economy would add 16.3 million jobs over the next decade. If passed, the Moody’s analysis concluded the American Jobs Plan would provide an additional 2.7 million jobs for a total of 19 million.
In his remarks on April 2, Biden also stated, “Asking corporate America just to pay their fair share will not slow the economy at all.”
That may be true in the long run, but according to the Moody’s analysis, there would be some short-term pain.
“Employment is 23,000 jobs lower in calendar year 2022 as a result of the plan, as the higher corporate taxes take effect at the start of the year, and the infrastructure spending doesn’t kick-in until later in the year,” Mark Zandi, chief economist of Moody’s Analytics, told us via email.
Despite resulting in some job losses in 2022, the economy would add jobs in the ensuing years as a result of the plan, even with the higher corporate tax rate, according to the Moody’s analysis.
Moody’s Analytics, April: The infrastructure plan results in a stronger economy over the coming decade, with higher GDP, more jobs and lower unemployment. However, the most immediate impact in early 2022 is to marginally reduce growth, as the higher corporate taxes take effect right away while the increased infrastructure spending does not get going in earnest until later in the year. This changes quickly. By 2023 and throughout much of the midpart of the decade the ramp-up in infrastructure spending significantly lifts growth.
We should note that this is not the first time Biden has cherry-picked an economic analysis from Moody’s. In February, when Biden was pitching the American Rescue Plan, he repeatedly cited a Moody’s analysis that he said estimated if the COVID-19 relief package passed, “the economy will create 7 million jobs this year.”
But the Jan. 15 analysis from Moody’s didn’t say Biden’s economic plan alone would be responsible for the addition of all those jobs, as the president’s statements suggested.
As Zandi explained to us at the time, Moody’s estimated that the economy would add 3.5 million jobs in 2021, even if the relief bill did not pass, and 4 million additional jobs if the relief bill did pass.
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