Four big problems with Biden’s ‘infrastructure' plan
The Biden administration is promoting its American Jobs Plan as an “infrastructure” proposal. In reality, it’s a gargantuan tax-and-spend package that would expand federal power and control in a wide variety of areas.
Although the plan is hyped as a path toward shared goals such as “jobs” and “global competitiveness,” a closer look reveals that it suffers from four core problems that completely undermine those goals.
Problem 1: Destructive tax hikes
Just as the economy is pulling out of the pandemic recession, the plan would slam businesses with $2.7 trillion in tax increases over the next 15 years.
This would reduce incentives for businesses to take risks in hiring new employees and make entrepreneurs less likely to take the biggest risk of all: starting a new enterprise. Over time that would have the effect of reducing economic growth, which means fewer jobs and lower wages.
Problem 2: Spending that doesn't create jobs
The infrastructure part of the plan follows the same failed path as the 2009 stimulus bill signed by President Barack Obama. A 2013 analysis of the Obama stimulus showed that the infrastructure-spending bump served to divert construction workers from private-sector projects to federal projects, meaning there was a minimal amount of job creation.
Further, federal regulations mean that these projects would have inflated costs for materials and labor, reducing the total number of projects and jobs tied to the spending.
Problem 3: Central planning
The plan would lead to more federal involvement in local infrastructure such as schools and water systems, and more micromanagement of private-sector concerns such as energy, manufacturing, housing and more. In total, this would mean taking a huge amount of money (more than $20,000 per household) from the private economy and redistributing it toward politically favored interests.
The health of America’s democracy would take a turn for the worse if Washington gains even more say over local decisions.
Problem 4: False advertising
When federal officials reference infrastructure investments, the first thing that usually comes to mind is the quality of the nation’s highways and bridges, which carry countless amounts of both people and goods from coast to coast and border to border.
However, the Biden plan would only dedicate about 4% of its spending to highways and bridges. It would spend more on mass transit, which carries less than one-tenth as much passenger traffic as highway.
On top of the misguided infrastructure choices, the plan also includes massive amounts of spending that have nothing to do with infrastructure. This includes hundreds of billions of dollars in corporate welfare, “green” slush funds, big subsidies for electric vehicles that will overwhelmingly benefit wealthy households, and a Medicaid benefit expansion. These provisions should stand or fall on their own, not hide behind popular terms like “infrastructure.”
In short, the “American Jobs Plan” would destroy rather than create jobs, harm rather than enhance global competitiveness, and waste huge sums on infrastructure.
David Ditch is a policy analyst in the Institute for Economic Freedom at The Heritage Foundation. He wrote this for InsideSources.com.