Joe Biden unveiled an ambitious public infrastructure investment program proposing approximately US$1.7 trillion over 10 years in physical capital and R&D investment. An additional US$500 billion would be allocated to workforce incentives and Medicaid benefits.

The plan represents a major philosophical shift in U.S. economic policy. After decades in which the U.S. government largely allowed the market to allocate resources, the Biden administration has decided that not all growth and profits are equal. In the coming years, it will direct public procurement, research and development grants, direct investment, and tax credits. Its goal is to reward industries that create jobs in the country, support U.S. manufacturing, maintain U.S. technological leadership over China, reduce carbon emissions, and improve the standard of living for the disadvantaged. 

Much of the spending will involve investments to improve conventional infrastructure, such as roads, bridges, public transportation systems, and waterways. These "shovel-ready" projects have been a proven remedy for recessions since the New Deal of the 1930s, as spending can quickly boost aggregate demand and generate domestic, outsourcing-proof jobs, while in the long term, they can improve productivity. Biden's spending plan also calls for investments in research and development in semiconductors, batteries, and broadband technology, areas where the United States faces fierce competition from China.

According to the plan, the expenditure will be spread over the rest of the decade and paid over more than 15 years by raising the corporate tax rate from 21% to 28%.  Each percentage point increase in the corporate tax rate would raise just over US$100 billion in tax revenue over ten years, so this proposal would raise between US$700-800 billion over that period.

The plan also proposes increasing the effective tax rate on Global Intangible Low Tax Income (GILTI) to 21% from the current effective rate of 10.5%, moving the system to a country-by-country basis that would prevent companies from using tax credits from high-tax jurisdictions to offset GILTI earnings in low-tax jurisdictions.

While higher taxes may affect corporate profits, the effect should not be exaggerated. The proposed increase in the corporate tax rate from 21% to 28% (negotiations in Congress could end up capping that number) is only a partial reversal of Trump's 2017 tax cut, which reduced the rate from 35% to ​​21%. Otherwise, the infrastructure plan would add 1.6% to U.S. GDP by 2024, putting an upward bias on consensus earnings growth.