THE BIDEN INFRASTRUCTURE PLAN: LET THE BATTLE BEGIN

 

Elected officials have talked about it for years, but the Democratic-controlled Congress appears on the verge of tackling the country’s infrastructure problems.  President Biden unveiled a plan for

putting over $2 trillion into upgrading the nation’s crumbling bridges, roads, seaports, airports, transportation facilities, housing, broadband, power grid deficiencies, and school construction. Biden wants a good part of the money

allocated to clean energy projects, like  support for electrical vehicles, wind generated power, and solar energy.  He called his plan a “once-in-a-generation investment” in the United States.

 

A Festering Problem

Only the most uninformed would suggest the nation doesn’t have an infrastructure problem. The

problem developed over a long period, as the federal, state, and local governments neglected maintenance and replacement of facilities, especially transportation-related, built years ago. Donald Trump claimed he’d do something about the problem and promised numerous “infrastructure weeks” during his time in the White House. It never happened because (1)Trump cared

much more about tax cuts for the wealthy and (2) his only ideas about infrastructure involved tax credit schemes that would benefit his wealthy donors. He did not propose injecting significant government resources into real projects. Biden has a different idea.

Objective observers of the American socio-economic and political scene have been warning about dangers inherent in the failure to address this

problem for years. Thomas Friedman and Michael Mandelbaum, in their acclaimed 2011 book, That Used to be Us: How America Fell Behind in the World It Invented and How We Can Come Back, wrote that living off our reputation produced a “dangerous complacency” that led to “the potholes, loose door handles, and protracted escalator outages of twenty-first century America.”

The issue goes beyond repairs. Infrastructure

spending, as economist Joseph Stiglitz points out, can stave off “recession in the short run while spurring growth in the long run.”  In other words, a plan like Biden’s could spur long term economic growth as well as repair crumbling infrastructure. Biden, in fact, calls his proposal The American Jobs Plan. 

The Plan

Biden’s proposal allocates almost $600 billion for transportation related projects, including $115 billion for road and bridge work, $80 billion for railways, and $85 billion on public transit.  The

plan proposes investing $174 billion in projects related to electric vehicle development. This means building charging stations, creation of better batteries, retooling factories, and providing incentives that encourage automakers to shift production from fossil fuel vehicles.

The plan also emphasizes people-related investment, like workforce innovation, pandemic preparedness, and domestic manufacturing assistance.  It proposes, for example, allocating $400 billion for community-based care for the elderly and people with disabilities. It would inject $180 billion into research and development, an area in which the United States once excelled but has fallen behind other nations, especially China.

 

The Politics

Without congressional approval the plan goes nowhere. Battle lines formed quickly after the

president unveiled his proposal. Republicans immediately voiced opposition.  They claimed the plan is too big, spends too much money, and most of all, they object to rolling back the Trump tax cuts, an essential element of how Biden would finance  the plan.

Trump’s tax cuts reduced the corporate tax rate from 35% to 21%. Biden proposes increasing the rate to 28%, which supposedly would raise $2

trillion dollars over ten years. Democrats were not all on board, at least not initially.  The price tag exceeded the preferences of a few and others didn’t think there was enough emphasis on certain things. Some, like

New York Congresswoman Alexandria Ocasio Cortez, arguedthe plan isn’t big enough. She says the country needs a $10 trillion program over ten years.  Still, house Democrats said they hope they can pass the program during the summer. Things are dicey in the senate, where likely unified Republican opposition (already forecast by Mitch McConnell) could topple the plan when added to reluctance from a few conservative Democrats.

 

The Ideology

The fight is also ideological. On the one side are those who feel that government has a significant role to play in improving the quality of life for

Americans.  On the other side are those who want limited government and fear that if government is successful in a matter as important as infrastructure, there might be a “…kind of halo effect that links all forms of government activism…that we need public policies to reduce inequality…expand access to health care.”  See Paul Krugman’s 2021 book, Arguing With Zombies Economics, Politics, And The Fight For A Better Future.

Benefit/Detriment

The expected fight over the president’s plan sets up a classic benefit/detriment battle in which the combatants argue over what Americans want and need.   Advocates of the White House proposal will argue the United States simply can’t put off any longer doing something about the infrastructure problem. Things are going to hell in a handbasket (or already have). The needs are simply too great. In Houston, where one of us (Rob) lives, for example, five bridges along freeways are among the 250 most heavily-traveled, yet structurally deficient, bridges in the nation. Meantime, the

climate crisis continues as this winter’s storms demonstrated. Biden’s plan addresses that problem with an aggressive effort at promoting clean energy.

But, the opponents will argue government spending, and the tax increases needed to fund it, are not the way we should attack this.  While admitting the problem, they at least say they want a private, industry focused effort, perhaps with

limited public participation. Texas Congressman Kevin Brady, who was chairman of  the House Ways and Means Committee until Democrats took back the majority in 2018, argued that “Imposing $2 trillion taxes on U.S. job creators during recovery is a net loser for America.”

That’s the debate we’re certain to have. Hopefully

we can have it on the merits.