Less than a month after the passage of the revolutionary covid-19 relief bill, the Biden White House has already begun pitching its next big plan for America: infrastructure.
The proposed $2.2 trillion mega-package provides serious public investments for roads and bridges, public transportation, affordable housing, green energy, electric grids, broadband, schools, and so much more. It is easily the most ambitious infrastructure push since the 1950s. This can all be very good for the Biden presidency and Congressional Democrats.
It is no secret that America has a crumbling infrastructure that has been in urgent need of an upgrade and expansion. Although one of his less popular policy proposals, Congressional progressives such as Bernie Sanders have long been fighting for a major Federal investment in infrastructure (don’t want to give progressives too much credit here, it is still Biden’s plan, but the progressive push for an ambitious infrastructure bill certainly existed).
Now, let’s break down the content of the bill and some of its critiques from both sides of the aisle. It is important to remember that as of now the plan is merely a proposal, criticisms (even from Democrats) are to be expected early on until they ease out heading into a final vote.
Since there are already plenty of detailed articles from professional news sources about the content of the Biden bill, I will only briefly summarize here. Biden’s infrastructure plan can be boiled down into three main categories: direct relief that will be felt by almost every American across the country, major investment in caregivers for the elderly and disabled, and public investment in new research and technology.
The first category is perhaps the most important — it is what Americans will keep in mind when they head to the polls for years to come. Investments and policies geared towards retrofitting millions of homes and commercial properties, expanding internet availability, public education, affordable housing, and much more are very likely to significantly impact the lives of at least a majority of Americans.
The second category expands Medicaid by building new, affordable care for the elderly and disabled while providing a significant raise for caretakers who only earn around $12 an hour despite the emotionally and physically demanding nature of their job. This would be one of the first major investments towards supporting our aging population that many economists are becoming increasingly worried about.
And last but not least we have investments for research focused around a variety of scientific research. Much of the R&D is focused on discovering clean alternatives to fossil fuels while also discovering new technology that could help fight the climate crisis.
But who’s paying for it?
Biden plans to squeeze a corporate tax rate hike back up to what it was before the Trump era tax cut (from 21% back to 28%). This is a relatively safe move and most economists did not buy into the justifications for Trump’s 2017 tax cut.
In a perhaps unexpected move, Biden also plans to end (or at least limit) profit-shifting to international tax havens that have allowed large corporations to dodge taxes in the United States. This is easier said than done, given the fact that large multinationals have been able to use their lobbying power and sneaky legal loopholes to store trillions of untaxed dollars.
However, Biden is not bluffing. He plans to double the GILTI (Global Intangible Low-Taxed Income) tax rate, introduce a minimum 15% tax on book income of corporations of at least $100 million in net income, and finally provide additional funding for the IRS so that it has the resources it needs to bust tax cheats.
So, will all of this pay for the entirety of the infrastructure bill? No, and it shouldn’t.
First, the US government should borrow while interest rates are low. Second, America has been in need of infrastructure investment for decades, Biden’s plan will likely provide powerful, long-term economic growth and, with the current spending and tax proposals, is projected to pay for itself within just 15 years.
There are two large public misconceptions that economists and politicians struggle with when proposing new deficit spending: 1) Government spending is the equivalent of throwing money in a fire. 2) That the government should handle its budget as a household would (minimum debt). These two misconceptions would take an article of their own to debunk, but here is a video of Greece’s former finance minister Yanis Varoufakis briefly debunking them on live television in case you are curious.
Now let’s get into the general reception and criticisms of the proposed bill.
Despite deceptive Republican attacks amplified by right-wing propaganda, the public demonstrates overwhelming support for almost all of the policies within the bill. In all honesty, almost all right-wing criticisms of this bill are not even worth going over, but in case you are bloodthirsty, here is a video of Secretary of Transportation Pete Buttigieg destroying a Fox News anchor live on television when attacked about the content of the bill.
Democrats have demonstrated general support for the bill, but given the very slim majorities in both the House and Senate, moderates and progressives have much more influence over legislation.
Moderates, such as Joe Manchin, have demonstrated support for a large infrastructure bill and might be willing to go above and beyond Biden’s $2.2 trillion price tag. AOC went live on MSNBC to advocate for a significantly larger package with more money specifically towards fighting climate change and expanding affordable housing. The number $10 trillion dollars was tossed around during the interview, but I believe it is pretty clear that progressives are shooting for the moon to get as much as they can out of moderates.
There has also been some bickering about the SALT (State And Local Taxes) deduction cap amongst Democrats. Although the repeal of the cap would overwhelmingly benefit the top 1%, I am confident that most Democrats would grudgingly let it slip through in order to pass the final infrastructure bill.
Overall, there is more unity amongst progressives and moderates on this bill as opposed to covid relief bill, which could help ease some political tensions between the two. Unlike with the covid relief bill, Biden’s original proposal seems to be a starting point, not a cap. And with the power of budget reconciliation, Democrats do not need a single Republican to pass this legislation.
It is clear that Biden and Congressional Democrats are playing it safe by pushing for legislation that is supported by an overwhelming majority of Americans while also being monumental.
As for myself, I only have two main concerns: 1) Although the bill is widely popular, its impact will not be felt immediately like with the covid stimulus, which means the quality of life improvements stemming from this legislation may not translate to political gain. 2) The bill does address the housing and climate change crises, but it needs to go much further if it actually plans to adequately deal with both of these issues.
Despite these two grievances with the proposed plan, I would be very happy if this version of the bill passed today. Biden’s proposal is easily the most ambitious infrastructure plan since the 1950s and the tax proposals are bold yet reasonable. It is clear that through the passage of this bill, Biden keeps his promise for progressive change that he made to voters along the campaign trail and in Georgia. Hence, this bill would not only repair our crumbling infrastructure but our democracy as well.
Title Image: Jim Watson / AFP via Getty Images