Gov. Bill Lee isn’t prepared to turn away federal funding, but he blasted President Joe Biden’s infrastructure plan Tuesday, saying the proposal to pay for it with a corporate tax increase will hurt jobs.
During a speech to the Tennessee Chamber of Commerce, the governor reiterated criticism of the president’s American Recovery Act that passed most recently along party lines, noting again he disagrees with basing federal funding to states on unemployment rates rather than population.
States with higher unemployment rates that shut down their economies longer than Tennessee will receive a greater share of funding than the Volunteer State. Tennessee’s rate was 5.1% in January, after it hit more than 15% in the worst parts of the COVID-19 pandemic nearly a year ago.
Lee was even more pointed, though, in his comments on Biden’s infrastructure plan, a $2.1 trillion proposal to rebuild the nation’s roads, bridges and pipes, along with Medicaid, schools and Internet service.
The nation would pay for most of the plan by raising the corporate tax rate to 28% from 21%, dialing back the Trump tax cuts, and instituting an international tax rate designed to stop companies from going offshore to escape U.S. tax rates.
Conservative groups contend the tax rate will be closer to 32%, and that raising taxes on corporate America will hurt job creation. Lee echoes those arguments.
“I believe that federal funding that’s touted as an infrastructure plan that has 5% committed to roads and bridges is not a best strategy for federal funding,” Lee said in his speech.
U.S. Sen. Marsha Blackburn, a Tennessee Republican, similarly blasted Biden’s infrastructure plan. She said less than 6% would go toward roads and bridges but would require the nation’s biggest tax increase in nearly 30 years while “coastal elites will have their taxes slashed.”
Despite panning the Biden proposal, Lee told reporters after his Tuesday speech he will not turn down the federal funds, either $8.56 billion the state is to receive through the COVID relief plan or proposed funds for infrastructure projects. He said otherwise the money would go toward states such as California and Michigan.
Lee noted in the Chamber of Commerce speech his administration would continue to be “conservative, fiscally responsible managers” of those funds to target Tennesseans who need them most.
Yet the governor also said he remains troubled by an “enormous spending package that takes 15 years to pay back,” mainly by increasing corporate and business taxes by 30%.
“To tax businesses significantly on the tail end of an economic crisis is not a common-sense approach to me to pay for the things that need to be done in this country,” Lee said.
The conservative Tax Foundation put together a report showing Biden’s infrastructure plan would cost the nation 159,000 jobs over 10 to 30 years and reduce wages by 0.7% while raising the combined federal-state tax rate to 32.3%. Congressional Republicans used that report to criticize Biden’s plan.
In contrast, S&P Global estimates a $2.1 trillion jolt to the nation’s infrastructure system could bring $5.7 trillion more to the economy over 10 years, adding 2.3 million jobs in just three years and 713,000 more jobs by 2029 after most of the work is complete.
It's ludicrous to suggest a plan to invest in infrastructure will kill jobs in Tennessee. If he'd rather focus on low taxes for Wells Fargo than build roads, bridges and elementary schools in Tennessee, maybe he should consider another line of work. – Sen. Jeff Yarbro, D-Nashville, on Lee's reaction to the infrastructure plan
Biden’s plan reportedly includes $621 billion for transportation, $400 billion for homecare services, $300 billion for manufacturing and $180 billion for research and development. In addition to upgrading highways, main streets, airports, inland waterways, ports and ferries, the Biden plan would spend money on public transit and Amtrak, as well as protecting infrastructure and improving road safety.
Congressional Democrats are standing behind the president’s plan, likely setting up a Senate vote that could sidestep a filibuster and enable Vice President Kamala Harris to break a 50-50 tie.
“Everybody knows that American roads, bridges, Internet, electricity, sewers, airports, etc., are falling behind the developed world,” Congressman Jim Cooper, D-Nashville, said in a statement. “Engineers give us a C or D for our infrastructure. Other countries have trains that go 200 mph and we can’t. Our children still fear drinking lead in our water. For American to be No. 1 we must invest in rebuilding America. That not only creates tons of jobs, but a better future for all.”
State Sen. Jeff Yarbro, a Nashville Democrat, was incredulous Tuesday that Gov. Lee said the infrastructure plan would hurt job creation.
“Statements like that make you wonder if the governor can pass Economics 101. It’s ludicrous to suggest a plan to invest in infrastructure will kill jobs in Tennessee,” Yarbro said. “If he’d rather focus on low taxes for Wells Fargo than build roads, bridges and elementary schools in Tennessee, maybe he should consider another line of work.”
The latest data show Tennessee will need about $50 billion in infrastructure building over the next 20 years, according to Yarbro, who said Biden’s plan is the only “realistic” way to get close to meeting that goal.