Biden’s infrastructure proposal supports $300B in scattered manufacturing aid

President Joe Biden’s $2 trillion American Jobs Plan, also known as his infrastructure proposal, includes $300 billion to upgrade American manufacturing supply chains. Getty Images

Although the multiple elements of President Joe Biden’s $300 billion manufacturing plan are vague, many of the programs seem to be connected to efforts to address the world’s changing climate. That is good news for metal fabricators that serve or are thinking about pursuing work in the solar, battery, and other clean energy industries.

Donnie Blatt, the district director for United Steelworkers District 1, which covers the state of Ohio and is the largest industrial union in North America, hinted at the positive prospects for metal fabricators in his testimony to the Senate Finance Committee on March 16, 2021. The hearing, entitled “Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing,” was held before Biden announced his infrastructure proposal. Blatt ticked off companies such as Sharon Tube and Thomas Strip Steel, which make products for solar energy and battery casings, respectively. He underlined the need for steel fabricators transitioning to energy-efficiency products to invest in research, development, and facilities.

President Biden’s $2 trillion American Jobs Plan, also known as his infrastructure proposal, includes $300 billion to upgrade American manufacturing supply chains. But despite that mega-sized funding, which is allocated in small amounts to numerous programs, some new and some old, the manufacturing community is not thrilled with the government spending. This is because all that spending, including tax credits, would be paid for by raising corporate taxes.

National Association of Manufacturers President/CEO Jay Timmons said, “One thing is clear for our industry, though. Raising taxes on manufacturers would fundamentally undermine our ability to lead this recovery.”

Rather than raising the corporate tax rate from 21% to 28% as Biden wants to do, manufacturers want to reinstate tax credits that have either elapsed or will end soon. That was one of the points Blatt made when he appeared before the Senate Finance Committee. He emphasized the union’s support for the American Jobs in Energy Manufacturing Act of 2021, introduced by Sen. Joe Manchin, D-W.V. and Sen. Debbie Stabenow, D-Mich.. That bill revives and expands the 48C tax credit. It was part of the Barack Obama recovery plan following the 2008 recession and provided a credit of up to 30% for investments in building new manufacturing facilities or expanding existing facilities to produce clean energy technologies.

Another pro-manufacturing piece of Senate tax legislation referenced in the Senate Finance hearing would allow companies to continue to immediately deduct research costs rather than amortizing them. Section 174 of the Internal Revenue Code has allowed companies to do that for six decades. The 2017 Tax Cuts and Jobs Act phases out Section 174 in 2022.

“This modification of the tax treatment of R&D expenses will negatively impact U.S. jobs, wages, and investment,” said NAM’s Timmons.

Biden’s $300 billion for manufacturing is spread over numerous different programs. He endorses new spending on R&D at various agencies, such as through the National Science Foundation, almost all of it focused on climate change. He would use some of the money to revive the 48C tax credit. He also mentions, without specifics, creation of a new financing program to support debt and equity investments for manufacturing to strengthen the resilience of America’s supply chains and a second, unspecified tranche of funding for community-based small-business incubators and innovation hubs to support the growth of entrepreneurship in communities of color and underserved communities. Among the long list of manufacturing funding requests is quadrupling support for the National Institute of Standards and Technology’s Manufacturing Extension Partnership, which has received about $140 million a year.

Aluminum Import License Requirement Delayed

Implementation of the Aluminum Import Monitoring (AIM) system authorized under the previous presidential administration has been delayed again, this time by the Biden administration. Designed as a cousin to the existing steel import monitoring system, the aluminum analog was to have gone into effect March 29. The Biden administration has delayed one aspect of it—the key requirement for importers to get licenses—until June 28.

However, the monitor did open on March 29 on the AIM website. It includes publicly available aluminum import data for now and will cover the licensing information when it is finalized at what is expected to be the end of June.

Once the license collection begins, and the Department of Commerce has had sufficient time to review the license data, the public AIM will report certain aggregate information on imports of aluminum product categories using both publicly available import data and data obtained from the aluminum licenses.