Thursday, April 1, 2021

And now, a few thoughts on the Biden infrastructure plan

Wanted to give my overview on President Biden's infrastructure plan. You can dig into all the details in this long, in-depth “fact sheet” released by the White House, and check it out yourself. Let me go into more detail on some of the standouts for me.

1. Large-scale road and bridge repair, including upgrades to better withstanding severe weather events.

The Biden Administration includes upgrading rail lines and airports in this effort, and offers also more funding for transit services and vehicles. The transit part is intriguing since there was a lot of money already put into transit to keep them afloat as people stayed in during the COVID World.

2. $174 billion is mentioned “to win the EV market.” It includes turning over a number of buses from diesel to electric, and electrifying Post Office vehicles, among other federal agencies.

3. Over $100 billion for drinking water initiatives, including removing all lead pipes and remediation of PFAS (which has been polluting increasing areas of Wisconsin).

4. Also around $100 billion each to expand broadband and upgrade electric grids and related power infrastructure.

5. Retrofitting and rehabilitating homes to allow for more affordable housing, and upgrades to public and private housing. It also includes fix-ups for ventilation and other infrastructure in K-12 schools, higher education, and child care centers.

6. Funds for Research and Development, including lab upgrades and a concentration on climate science. It also has elements of a Green New Deal for manufacturing, including

The federal government spends more than a half-a-trillion dollars buying goods and services each year. As a result, it has the ability to be a first-mover in markets. This incredible purchasing power can be used to drive innovation and clean energy production, as well as to support high quality jobs. To meet the President’s goals of achieving net-zero emissions by 2050, the United States will need more electric vehicles, charging ports, and electric heat pumps for residential heating and commercial buildings. The President is calling on Congress to enable the manufacture of those cars, ports, pumps, and clean materials, as well as critical technologies like advanced nuclear reactors and fuel, here at home through a $46 billion investment in federal buying power, creating good-paying jobs and reinvigorating local economies, especially in rural areas.

Make it in ALL of America. The President believes we must build social infrastructure to support innovation and productivity across the country. He is calling on Congress to invest $20 billion in regional innovation hubs and a Community Revitalization Fund. At least ten 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 Community Revitalization Fund will 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. And, President Biden is calling on Congress to invest $14 billion in NIST to bring together industry, academia, and government to advance technologies and capabilities critical to future competitiveness. He is calling on Congress to quadruple support for the Manufacturing Extensions Partnership —increasing the involvement of minority-owned and rurally-located small- and-medium-sized enterprises in technological advancement…..

Pair job creation efforts with next generation training programs. President Biden is calling on Congress to invest in evidence-based approaches to supporting workers. This includes wraparound services, income supports, counseling, and case management, paired with high-quality training and effective partnerships between educational institutions, unions, and employers. Specifically, he is calling for a $40 billion investment in a new Dislocated Workers Program and sector-based training. This funding will ensure comprehensive services for workers, who have lost jobs through no fault of their own, to gain new skills and to get career services they need with in-demand jobs. Sector-based training programs will be focused on growing, high demand sectors such as clean energy, manufacturing, and caregiving, helping workers of all kinds to find good-quality jobs in an ever-changing economy.
7. There also is an estimated $400 billion for long-term care services based out of the home, which includes funds to increase pay for caregivers and give more of those workers the ability to collectively bargain for wages and benefits.

So how would this get paid for? By reversing some of the GOP Tax Scam’s giveaways to corporations.
Biden plans to fund the spending by raising the corporate tax rate to 28%. Republicans slashed the levy to 21% from 35% as part of their 2017 tax law.

The administration also wants to boost the global minimum tax for multinational corporations and ensure they pay at least 21% in taxes in any country. The White House aims to discourage firms from listing tax havens as their address and writing off expenses related to offshoring, among other reforms.
Certainly overdue, and hopefully it encourages more corporations to invest in workers over profit-hoarding and stock buybacks. I do not see a reference to getting rid of the income tax cuts for the rich that were part of the Tax Scam, so we’ll see how much of the corporate tax measures pay for this package.

However, when discussing the price tag, let’s remember that this package is intended to be spread over 8 years - it’s not $2 trillion+ in 1 year (just like the Tax Scam, by the way). I’d also like the see how the CBO scores the future revenue boost that would be projected to be from the additional jobs and wages that are likely to result infrastructure package. Because it’s also a stimulus measure with all of this added investment.

This plan is coming at a time when public construction has taken a back seat in the last year. If you look at today’s construction spending report from the Census Bureau, you’ll see that governments were spending less in this type of investment in a number of areas in the COVID World, which largely began after the February 2020 reports.

Change in public construction spending, Feb 2021 vs Feb 2020
Highways and Streets -1.0%
Other Transportation -2.3%
Educational -2.3%
Power -3.4%
Conservation and development -19.1%

Some of this adds up, as COVID-related services and economic support payments have been a bigger priority for governments in the last year. But we were neglecting infrastructure for years even before the COVID World existed, and this plan from the Biden White House at least will start putting a dent into that gap, and hopefully can restructure our economy back toward investment over paper-trading.

As legitimate pros in Economics will tell you, investment is a great bang for the buck if you want to grow the economy. And this seems to be set up in a way that it will keep inverstment at this higher level for years to come.

1 comment:

  1. "3. Over $100 billion for drinking water initiatives, including removing all lead pipes and remediation of PFAS (which has been polluting increasing areas of Wisconsin)." I can almost promise you this money will be rejected by the WI GOP led legislature if they have the opportunity.