Innovation and new opportunity front and center in the American Jobs Plan

April 01, 2021
By: Mark Skinner

As noted in our separate overview, the 25-page American Jobs Plan provides goals, highlights and proposals, but also raises questions about how proposals would be implemented and even exactly how much money would be spent. Those details presumably will come in the near future when legislative language is submitted. The document and much of the news covering it is organized around six goals. For our readership, we have taken a slightly different approach. Major themes and key aspects of the proposal are below. All quoted text is from the AJP summary released by the White House on the morning of March 31, 2021.

Thematic issues addressed in the plan

Global competition, preparing for the increasing impacts of climate change, reversing human contributions to the climate crisis, and addressing disparities in wellbeing and opportunity experienced by Americans are the overlying thematic issues the plan addresses. The plan is designed so all future federal investments toward one of the thematic issues would not make another issue worse.  For example, in the transportation section, the plan includes this commitment: “Every dollar spent on rebuilding our infrastructure during the Biden administration will be used to prevent, reduce, and withstand the impacts of the climate crisis.” To help achieve this commitment, the plan requests $50 billion to help ensure infrastructure resiliency, some of which might be driven through the Community Development Block Grant (CDBG) program at the U.S. Department of Housing and Urban Development (HUD).

Research and development

R&D and innovation permeate most aspects of the plan. References appear in several sections, making it nearly impossible to provide even a ball park total of the R&D investment requested. (For instance, semiconductor research and medical countermeasures to future pandemics are part of two manufacturing proposals, while the plan’s total transportation investments and priorities are intended to “inspire basic research, like advanced pavements that recycle carbon dioxide, and ’future proof‘ investments that will last decades to leave coming generations with a safe, equitable, and sustainable transportation system.”) However, several of the areas where proposals exist for new R&D investments are highlighted below.

The AJP calls for the investment of $50 billion in the National Science Foundation, “creating a technology directorate that will collaborate with and build on existing programs across the government. It will focus on fields like semiconductors and advanced computing, advanced communications technology, advanced energy technologies, and biotechnology.”

In addition to those research priorities, the AJP wants $35 billion to be invested “in the full range of solutions needed to achieve technology breakthroughs that address the climate crisis and position America as the global leader in clean energy technology and clean energy jobs.” The proposal includes “launching ARPA-C to develop new methods for reducing emissions and building climate resilience.” It appears $15 billion l would be set aside for “demonstration projects for climate R&D priorities, including utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, rare earth element separations, floating offshore wind, biofuel/bioproducts, quantum computing, and electric vehicles.”

The plan requests $40 billion for research facility upgrades, half of which is reserved for Historically Black College and Universities (HBCUs) and other Minority Serving Institutions (MSIs). Within these funds will be a new national lab to be affiliated with an HBCU and focused on climate. 

HBCUs and MSIs also are pegged to receive $10 billion in R&D investments and “$15 billion in creating up to 200 centers of excellence that serve as research incubators at HBCUs and other MSIs to provide graduate fellowships and other opportunities for underserved populations, including through pre-college programs.”

There is also a proposal for “$30 billion in additional funding for R&D that spurs innovation and job creation, including in rural areas.” No additional detail is provided on this pool of funding.

In the housing section, the AJP includes one sentence calling for the creation of “a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation.” It is unclear whether “accelerator” in this instance is being used the way the tech-based economic development and innovation community would use it or in another manner.

Clean energy, clean water, clean tech deployment

The AJP includes a broad combination of investments, tax credits, regulatory changes and procurement priorities to move the country toward cleaner energy and 100 percent carbon-pollution free power by 2035.  As mentioned above, decisions about investments in other areas will have a clean energy/climate crises lens. Additionally, clean energy block grants are proposed that can be used to support clean energy, worker empowerment, and environmental justice.

On the development and demonstration end of R&D, the power section includes a proposal to “pair an investment in 15 decarbonized hydrogen demonstration projects in distressed communities with a new production tax credit,” to spur capital-project retrofits and installations that bolster and decarbonize industry.  Ten “pioneer” facilities are intended to “demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities.”

The manufacturing section of the plan includes a $46 billion proposal to commit federal purchasing power toward helping create demand for key clean energy manufacturing products such as “electric vehicles, charging ports, and electric heat pumps for residential heating and commercial buildings.”

Action on tax credits includes:

  • a 10-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage; and,
  • reform and expand the Section 45Q tax credit, making it direct pay and easier to use for hard-to-decarbonize industrial applications, direct air capture, and retrofits of existing power plants.

Technology-based economic development

The AJP observes, “Half the jobs in our high growth, high wage sectors are concentrated in just 41 counties, locking millions of Americans out of a shot at a middle-class job.”  In addition to other drivers of the innovation economy mentioned elsewhere in this article, the AJP includes the following proposals.

Using a portion of $20 billion, “at least 10 regional innovation hubs will leverage private investment to fuel technology development, link urban and rural economies, and create new businesses in regions beyond the current handful of high-growth centers.” The balance of the $20 billion would be used to create a Community Revitalization Fund to “support innovative, community-led redevelopment projects that can spark new economic activity, provide services and amenities, build community wealth, and close the current gaps in access to the innovation economy for communities of color and rural communities that have suffered from years of disinvestment.”

An additional $14 billion investment in NIST would “bring together industry, academia, and government to advance technologies and capabilities critical to future competitiveness.” The proposal discusses quadrupling the support for the Manufacturing Extension Partnership, and it appears that might be included in this total.

The plan calls for Congress “to invest $31 billion in programs that give small businesses access to credit, venture capital, and R&D dollars. The proposal includes funding for community-based small business incubators and innovation hubs to support the growth of entrepreneurship in communities of color and underserved communities.”

Traditional economic and community development

Commitments to address entrenched inequities in how the economy works run throughout the plan.

In the transportation infrastructure discussion, for instance, is a $20 billion proposal “for a new program that will reconnect neighborhoods cut off by historic [transportation] investments.”

The power/traditional energy section includes $5 billion for remediation and redevelopment of Brownfield and Superfund sites.  To encourage reuse of these sites, the administration proposes “investing in the Economic Development Agency’s (sic.) Public Works program (while lifting the cap of $3 million on projects) and in ’Main Street’ revitalization efforts through HUD and USDA.” Additional investments of unspecified amounts within the $5 billion are proposed for the Appalachian Regional Commission’s POWER grant program, Department of Energy retooling grants for idled factories (through the Section 132 program), and “dedicated funding to support community-driven environmental justice efforts – such as capacity and project grants to address legacy pollution and the cumulative impacts experienced by frontline and fenceline communities.”

On the local community development front, a $213 billion commitment to build two million affordable homes is paired with “an innovative approach to eliminate state and local exclusionary zoning laws that drive up construction costs and housing prices (such as minimum lot sizes, mandatory parking requirements, density limitations).”

A $5 billion proposal in the manufacturing section calls for a new Rural Partnership Program “to help rural regions, including Tribal Nations, build on their unique assets and realize their vision for inclusive community and economic development. This program will empower rural regions by supporting locally-led planning and capacity building efforts, and providing flexible funding to meet critical needs.”

Manufacturing

In addition to the already mentioned call to quadruple support for the Manufacturing Extension Partnership, the manufacturing section includes a total of $300 billion focused on the manufacturing sector of the U.S. economy.

The AJP calls for $50 billion in semiconductor manufacturing and research; $50 billion for a new office at the Department of Commerce “dedicated to monitoring domestic industrial capacity and funding investments to support production of critical goods.” Medical countermeasure manufacturing, related R&D, biopreparedness, and biosecurity would receive $30 billion over four years.

Existing, successful capital access programs would receive $52 billion to support domestic manufacturers, with emphasis on rural manufacturingand clean energy.  A new debt and equity finance program would be created to for strengthening and modernizing manufacturing supply chains. Additionally the 48c tax credit program would be extended.

Workforce and higher education

The AJP calls for $25 billion to upgrade and expand the number of child care facilities, $100 billion to upgrade public schools, $12 billion to invest in community college facilities and technology to help overcome “education deserts.”   

Proven workforce development programs targeting underserved groups would receive $100 billion to expand their capacity, reach and impact. Within this funding, a new Dislocated Workers Program and sector-based training in areas including clean energy and manufacturing are tagged for $40 billion combined.  Additionally, two million new registered apprenticeship and pre-apprenticeship slots would be created and emphasized to give women and people of color opportunities to participate. 

High-speed broadband availability

The goal is 100 percent coverage and greater affordability. The price tag is $100 billion. The plan promotes pricing transparency for service and competition among providers including lifting local and state-based restrictions on “municipally-owned or affiliated providers and rural electric co-ops from competing on an even playing field with private providers.” The AJP also “prioritizes support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives — providers with less pressure to turn profits and with a commitment to serving entire communities.”

Traditional infrastructure

Tucked within the AJP language how to spend $437 billion addressing road and bridge repair, Amtrak, public transit, port and airport renovations are phrases suggesting roles for innovation, science and new product development ranging from materials, construction processes, distribution logistics, big data, AI, automation, civictech, and Internet of Things.  

Financing the American Jobs Plan

Several of the proposed revenue options to pay for items above and more have already drawn opposition from Republicans in Congress, in part because the AJP calls for reversing elements of the 2017 tax law championed by former President Trump.  

Among the several revenue items included in the plan are: the corporate tax rate would be increased to 28 percent, offshoring jobs and credit expenses would no longer be deductible, and the global minimum tax rate for multinational corporations would increase as would taxes on certain foreign corporations. Also, tax preferences for fossil fuels would be eliminated and payments from polluters into the Superfund Trust would be restored.

federal spending, r&d, clean energy, tbed, economic development, manufacturing, workforce, broadband, infrastructure