Everything is Infrastructure Now – How Spending Got Out of Control & Words Lost Their Meaning

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Internet access is certainly important—but so is access to groceries. That doesn’t mean either should be defined as infrastructure or subsidized by taxpayers.

By Eric Boehm via Reason.com & Posted by Tyler Durden
© 2021 Reason.com – All Rights Reserved

“I truly believe we’re in a moment where history is going to look back on this time as a fundamental choice that had to be made between democracies and autocracies,” President Joe Biden declared during a March 31 speech in Pittsburgh, Pennsylvania.

What exactly could be so vitally important that not only America’s future but the entire project of liberal democracy hangs in the balance?

Infrastructure. Well, “infrastructure.”

In Biden’s telling, everything hinged on passing a multi-trillion-dollar spending package that was ostensibly meant to upgrade America’s basic infrastructure but that also contained a wide range of unrelated spending on new social programs, industrial policy, and other forms of federal bureaucracy. Previous generations may have fought civilization-defining battles against tyrannical rulers and such toxic ideas as slavery and Nazism. But the fate of the free world, the president would have you believe, now depends on whether 50 senators (plus Vice President Kamala Harris) will vote for bigger Amtrak subsidies and expanded government-run internet service.

On one hand, you can’t really blame Biden for overselling his infrastructure proposal. That’s what presidents have to do to get Congress’ attention, especially at a time when culture wars have come to dominate so much of the political discourse. Biden is working with a razor-thin Senate majority at a time of hardened partisan lines. He knows that Congress almost never does anything without an impending deadline or a lot of outside pressure. And infrastructure is mostly pretty boring—as most things the government does should be. Recasting his proposal as democracy’s last stand might prompt a few more people to pay attention.

On the other hand, he’s really overselling it.

Biden’s American Jobs Plan began its life in March as a $2.25 trillion proposal, but by mid-summer it had been split into two separate legislative efforts: a roughly $1 trillion bipartisan bill that includes about $550 billion in new spending, and a parallel, Democratic-backed $3.5 trillion budget proposal that encompasses many of the so-called “human infrastructure” elements from Biden’s original plan.

However it gets divided up for the purposes of clearing the necessary votes in Congress, what the president outlined in March remains a useful framework for understanding how Democrats, in particular, have approached this summer’s debate over infrastructure—much of which has little to do with infrastructure. Only about a quarter of Biden’s initial proposal was aimed at anything traditionally classified under that term, such as roads, bridges, railroads, ports, pipes, and power lines. The original package spent twice as much to expand government-run health care as it did on highway projects.

Some parts of Biden’s plan would actually work against the stated goal of improving America’s infrastructure. His push for “Buy American” rules and union regulations would drive up prices for raw material and labor. That means taxpayers would pay more and get less.

Biden pitched his infrastructure proposal by promising “transformational progress” on climate change, corporate welfare for industries making computer chips and other “innovative edge” products, and “historic job growth.” In that March 31 speech from Pittsburgh and in remarks in the months since, the president and other officials have compared the plan favorably to interstate highways and the Apollo program.

But those were tightly focused projects with clear (if highly ambitious) goals. Build modern highways across the country. Put a human being on the lunar surface. Biden’s plan, in contrast, is a mishmash of poorly defined objectives, political giveaways, and unrelated line items.

And even that isn’t enough for some members of his party. “Paid leave is infrastructure,” Sen. Kirsten Gillibrand (D–N.Y.) wrote in a widely parodied tweet about a week after Biden outlined his proposal. “Child care is infrastructure. Caregiving is infrastructure.”

It’s a good thing the stakes are considerably lower than the administration would like you to believe, because the gap between Biden’s ambitions and what he’s likely to deliver is wide enough for a four-lane highway.

It’s fitting that Biden announced his infrastructure plan in Pittsburgh. More accurately, it’s fitting that Biden flew into Pittsburgh International Airport before giving the speech at the Carpenters Pittsburgh Training Center.

“I just left your airport,” Biden told the crowd.

“The director of the airport said, ‘We’re about to renovate the airport….We’re going to employ thousands of people.’ And she looked at me and said, ‘I can’t thank you enough for this plan.'”

The Pittsburgh International Airport is an apt symbol for the disconnect between the ambitions behind government infrastructure plans and the far-less-impressive reality that often follows. Beginning in 1987, the airport underwent a massive expansion funded largely with public dollars. By the time the project was finished in the mid-1990s, Pittsburgh International was large enough for an estimated 35 million passengers per year. If it actually handled that many, it would have been America’s fifth-busiest airport in 2019—a year when fewer than 5 million people actually passed through its gates.

Even in the parts of Biden’s infrastructure plan that actually focus on infrastructure, there are red flags warning of boondoggles like Pittsburgh’s pointlessly capacious airport.

Take Amtrak. The government-owned passenger rail service already receives about $2 billion in annual federal subsidies. The American Jobs Plan called for giving it another $80 billion over eight years. Around the same time that Biden announced that proposal, Amtrak released a comprehensive plan for the next 15 years; it envisions 39 new rail routes reaching more than 160 cities that currently lack Amtrak service. And the text of the bipartisan infrastructure bill, which was introduced in the Senate in early August, tells Amtrak to prioritize adding new routes over turning a profit.

Railroad aficionados may love the idea of expanding the Amtrak network to such metropolises as Pueblo, Colorado; Christiansburg, Virginia; and Eau Claire, Wisconsin. But those routes are likely to end up looking more like Pittsburgh International Airport—expensive and empty—than like the rail lines in Europe or Japan that advocates want America to replicate. At least the planned new route from New York City to Scranton, Pennsylvania, will please one very important customer.

You can break down Biden’s original proposal into three mostly distinct categories: obvious infrastructure spending, kinda-sorta-infrastructure spending, and not-even-close-to-infrastructure spending. The first category is not, as Amtrak’s plans demonstrate, immune to waste—but the plan did include $154 billion for repairing highways and bridges, $77 billion for mass transit, $25 billion for airport upgrades, and $82 billion and $111 billion, respectively, for improving the electric grid and drinking water supply. Yet even throwing in the $300 billion for Veterans Affairs projects and upgrades to domestic military bases, the amount of clear-cut infrastructure spending was well below half of the total.

The second category is a bit fuzzier, and what belongs in it probably depends to some extent on your political priors. For example, Biden proposed $174 billion to subsidize the production and purchasing of electric vehicles while also working with state governments to “build a national network” of at least 500,000 electric vehicle charging stations by 2030. He also wants to electrify the entire federal vehicle fleet, including the U.S. Postal Service’s delivery vans, and to provide grants to electrify up to 20 percent of the nation’s school buses.

Is that infrastructure? School buses and mail trucks might be. Tax breaks for people who buy a Tesla instead of a Ford stretches the definition more than a little, but at least it has something to do with going places and building stuff.

The best example of this second category might be the $100 billion Biden proposed spending on government-run broadband internet. The White House’s official fact sheet on the American Jobs Plan compared this to the Rural Electrification Act, a Depression-era federal effort to run power lines to every home and farm in the country. “Broadband internet is the new electricity,” the document argues. “Yet, by one definition, more than 30 million Americans live in areas where there is no broadband infrastructure that provides minimally acceptable speeds.”

There are several caveats here. For starters, the Federal Communications Commission (FCC) gives a far smaller number, about 14 million Americans in 4.3 million households, who don’t have access to broadband internet speeds. And that figure has been shrinking rapidly—it fell by 20 percent during 2019 alone—as new technologies such as low-orbit satellites and faster mobile connections have brought more Americans online.

Internet access is certainly important—but so is access to groceries. That doesn’t mean either one should be defined as infrastructure or subsidized by taxpayers.  Broadband internet might be the new electricity, but there’s no evidence that a $100 billion government scheme is necessary to get Americans online.

The notion of “minimally acceptable speeds” is also far less objective than it might appear. The FCC defines broadband connections as having “25/3” speeds—that is, a download speed of 25 megabits per second and an upload speed of three megabits per second. In layman’s terms, that’s fast enough to stream a high-definition movie in one room while three other people simultaneously check Facebook, send email, or do some online shopping. A typical Zoom call, meanwhile, uses about 1.5 megabits per second in upload bandwidth.

The text of the bipartisan infrastructure bill unveiled in August includes a provision changing that definition so that only “100/20” connections would be classified as broadband. Americans who desire a 100/20 connection can pay for one if they want it, but using those speeds as a national standard would do little more than create the appearance of a broadband access crisis for the government to solve.

Once you get past the parts of Biden’s plan that are actually infrastructure and the parts that are almost-kinda infrastructure, there’s still a huge amount of proposed spending that has literally nothing to do with infrastructure. According to the Committee for a Responsible Federal Budget (CRFB), a number-crunching nonprofit that advocates lower deficits, $1.7 trillion of the American Jobs Plan’s $2.6 trillion price tag would have gone to “areas outside of core infrastructure.”

This largest portion of Biden’s plan included $400 billion for long-term health care for elderly Americans and $566 billion in subsidies for manufacturing and research and development, to be aimed primarily at American producers of computer chips, like Intel, and other high-tech manufacturers. Smaller non-infrastructure items jammed into the plan included a $10 billion “Civilian Climate Corps” and $100 billion to help schools “go green by reducing or eliminating the use of paper plates and other disposable materials.” Another $126 billion would have subsidized the construction of energy-efficient housing, while community colleges stood to receive $12 billion for technological upgrades. The plan didn’t include anything about paid leave, but Gillibrand’s tweet calling for that was in keeping with the spirit of the proposal—even if it served as a sort of accidental parody.

The senator from New York was not alone in demanding more, more, more from the plan. “This is not nearly enough,” Rep. Alexandria Ocasio-Cortez (D–N.Y.) tweeted shortly after Biden’s Pittsburgh speech. “Needs to be way bigger.”

When heavy rains hit New York City in early July, viral videos of straphangers wading through filthy, waist-deep water inside a subway station in upper Manhattan prompted Rep. Jamaal Bowman (D–N.Y.) to call for federal action. “Our infrastructure is flooding and overwhelmed,” he tweeted. “It is urgent that our infrastructure package makes significant investments to prepare for and mitigate future emergency weather events.” Common Dreams, a progressive publication, said the subway flooding demonstrated why “climate is key” to Congress’ upcoming “infrastructure fight.”

The real cause of the flooded subway stations? Clogged drains, The New York Times reported a few days later. Removing water from the New York subway system is indeed a complicated bit of infrastructure—an estimated 13 million gallons of liquid are pumped out of the tunnels and stations on an average day—but making sure the drains are clear and the pumps are working shouldn’t require an act of Congress.

A certain subset of the political left cynically saw Biden’s infrastructure plan as a vehicle for all manner of social programs. Infrastructure spending, after all, is politically popular on both sides of the aisle, so why not redefine everything as infrastructure?

If you dream it, you can be it. Build it and they will come.

Just ask the Pittsburgh International Airport.

“The correct way to respond to a low-trust environment,” the liberal blogger-turned-Substacker Matt Yglesias wrote in January, is “to commit yourself to the ‘it does exactly what it says on the tin’ principle.” In other words, public policy should be easy to understand and easy to judge. If you buy a can that says orange paint, you expect it to paint things orange. If it actually turns your walls purple, you won’t buy that brand again.

Yglesias wasn’t writing about Biden’s infrastructure bill, which hadn’t been officially announced at the time. But his general guideline is useful for judging most major policy proposals. Even (or especially) if someone disagrees with you, he should be able to understand what you are trying to accomplish. I might hate orange-painted walls, but I can acknowledge that the paint in the can did what it said it would do. Think about the direct payments issued several times by the federal government during COVID-19. There are good arguments against them—checks went to relatively wealthy individuals and to households that hadn’t lost any income due to the pandemic, for example—but they were an obvious, easily understandable idea. The policy did what it said on the tin.

Biden’s infrastructure plan plainly fails the “it does exactly what it says on the tin” test. That’s partly because so much of the proposal is unrelated to infrastructure. But there’s an even more basic problem here: The American Jobs Plan might very well result in fewer American jobs.

That’s one of the conclusions drawn by the Tax Foundation, a fiscal policy think tank, which found that “the combined effects of” Biden’s proposed spending and the corporate tax increase he has proposed to help pay for it “would reduce U.S. gross domestic product in the long run by 0.5 percent and result in 101,000 fewer U.S. jobs.”

The Penn Wharton Budget Model, published by the University of Pennsylvania, came to a similar conclusion. Higher taxes and more borrowing to pay for the infrastructure package would reduce the size of the U.S. economy over the next few decades, because “the crowding out of investment due to larger government deficits outweighs productivity boosts from the new public investments.” Also, there will be fewer jobs created and lower wages than if the package doesn’t pass.

Something called the “American Jobs Plan” probably shouldn’t have a net-negative effect on the number of American jobs. And a proposal that Biden promised would “grow the economy, make us more competitive around the world, promote our national security interests, and put us in a position to win the global competition with China in the upcoming years” probably shouldn’t shrink the economy and leave America with more debt and a less competitive corporate tax system.

That isn’t the only way the details of the plan could undermine Biden’s soaring rhetorical promises. Consider the White House’s insistence on tightening “Buy American” rules for federal procurement. Promising that the federal government will buy goods and equipment only from “an American company with American products all the way down the line and American workers,” as Biden did in March, makes for a nifty slogan. But it ignores the dynamics of the modern global economy and will inflate the cost of just about every part of the proposal that deals with actual infrastructure.

This is ultimately a question of priorities. If the goal of the Biden infrastructure plan is to build infrastructure, the White House should aim to get the most bang for taxpayers’ trillions of bucks. If buying cheaper steel from overseas means we can afford to build more bridges, we should do exactly that.

Even as the specifics of the infrastructure plan came into focus during the summer, those priorities remained fuzzy. Buried inside the 2,700-page bill that the Senate began moving in early August are head-scratching provisions such as a planned eight-person government commission to encourage more women to seek jobs in the trucking industry and $10 million for a new program to determine which wildflowers are the most “pollinator friendly” for planting alongside highways. And there are myriad politically motivated handouts, such as a $1 billion grant for the Appalachian Regional Commission, a multi-state economic consortium that just so happens to be co-chaired by the wife of U.S. Sen. Joe Manchin (D–W. Va.).

The can of paint mostly contains some other substance, that substance isn’t orange, and it lights itself on fire when I brush it onto my walls. Congress might pass it anyway.

Since the initial announcement, the American Jobs Plan has been split into two separate bills and pared down in some significant ways. The $548 billion Bipartisan Infrastructure Framework incorporates much of what the president originally proposed to spend on roads, bridges, rail, and utilities. It includes smaller windfalls for government-run broadband internet ($65 billion instead of $100 billion) and electric vehicle incentives ($15 billion instead of $154 billion). And it excludes the obviously extraneous spending on long-term health care and corporate welfare. As such, it is an improvement over the sloppy, confusing proposal that the White House first put on the table in March.

Everything not included in the bipartisan bill—the “human infrastructure” items such as paid family leave and universal pre-K—would have to be passed separately. This would probably be done with a simple Senate majority along party lines, via the reconciliation process, sometime after the bipartisan bill becomes law.

Paying for it all requires some budget gimmickry. Biden initially proposed hiking the corporate income tax from 21 percent to 28 percent—prior to the 2017 tax cuts, the rate was 35 percent—and using the new revenue to cover the plan’s cost. But he would have spread the spending over just eight years while using 15 years of higher corporate taxes to pay for it.

The bipartisan bill introduced in the Senate includes no tax increases (though the corporate tax hike could still be included in the budget reconciliation bill to come later). But there’s still plenty of gimmickry. The bill repurposes COVID-19 relief spending to pay for some of the new infrastructure costs and counts on promised (yet unlikely to materialize) future savings from cracking down on unemployment insurance fraud, among other things. Rather than covering the full $548 billion, the CRFB estimates that those offsets would amount to about $250 billion at most.

Many voters do seem aware of the shell game happening before their eyes. An NPR/PBS/Marist University poll taken in April found that 96 percent of Americans, including 95 percent of Republicans, consider roads, bridges, and ports to be part of the country’s infrastructure. When asked about “pipes that supply drinking water” and “the electrical grid,” 89 percent and 85 percent agreed that those things are infrastructure too—including 79 percent of Republicans in both cases. But with other things Biden is trying to sell as infrastructure, a stark contrast emerged.

Among Democrats, 80 percent were willing to nod along with the president’s claim that long-term health care is infrastructure. Similarly large majorities of Democrats say broadband internet service (74 percent) and electric vehicle charging stations (72 percent) should count. Republicans largely disagreed, with just 26 percent viewing electric vehicle charging stations as infrastructure, 35 percent seeing long-term health care as infrastructure, and 44 percent considering broadband internet service to be infrastructure.

Infrastructure has historically been a bipartisan effort, a fact Biden has stressed. But he’s also eager to redefine what qualifies. “Two hundred years ago, trains weren’t traditional infrastructure either until America made a choice to lay down tracks across the country,” Biden said in his March 31 speech. “Highways weren’t traditional infrastructure until we allowed ourselves to imagine that roads could connect our nation across state lines.”

The two efforts are pulling against one another. Many voters, accustomed to a low-trust political environment, are correctly surmising that he’s not telling them what’s really inside the tin.

Infrastructure bills don’t generally get through Congress because of what they mean for America’s competition with China or because they achieve “transformational progress” on climate change or even because they promise to reinvent the Eisenhower interstate system. Infrastructure bills get through Congress because they contain a lot of money that individual members can spend on their constituents. Almost everything about politics is transactional, but infrastructure bills are maximally so.

In that sense, infrastructure might be defined as “big things the government does that affect a lot of people.” And under that expansive definition, Biden’s plan comes into focus. Infrastructure, the White House and its allies are arguing, is not about roads and bridges and trains and pipes. It’s a catchall for spending that’s supposed to benefit large swaths of the population—whether you’re trying to drive from city to city or trying to get online or trying to afford an electric car.

And yet even under a definition that stretches the meaning of the word infrastructure almost beyond recognition, Biden’s proposal still runs into problems. The tax increases, favors for unions and other special interests, and economically nonsensical mandates like the “Buy American” rules mean that the American Jobs Plan undercuts its own ambitions.

Meanwhile, by prioritizing sloppy and politicized goals that are disconnected from the realities of what he’s proposing, Biden is encouraging less serious policy making. Amid the flurry of tweets mocking Gillibrand’s claim that “paid leave is infrastructure,” a comment from the former South Carolina governor and likely future GOP presidential candidate Nikki Haley stood out. “Protecting the unborn is infrastructure,” she wrote. “Religious freedom is infrastructure. Fiscal responsibility is infrastructure.”

Haley was probably not trying to do much more than score some retweets by—as the kids say—owning a lib. But she made an important-if-incidental point. Stretching the definition of infrastructure is a game that both parties can, and will, play.

In that light, Haley’s tweet comes across not as a joke at Democrats’ expense but as a warning to the party that currently holds slight majorities in Congress. A future Republican administration—maybe even a Haley administration—and a GOP-controlled Congress could very well push an “infrastructure” bill that bans abortion or requires voters to show a photo ID at their polling place. If paid family leave is infrastructure, why not subsidies to encourage having children? You need electricity to run your phones and other digital devices, so maybe regulating speech on the internet is infrastructure too?

This would be a terrible way to make policy. Whatever your views on religious freedom, abortion, online speech, the minimum wage, or the legality of selling your own kidney, such debates should not be settled by legislation that’s ostensibly about building bridges and airports.

Infrastructure is important. Not every important thing is infrastructure.

By Eric Boehm via Reason.com & Posted by Tyler Durden
© 2021 Reason.com – All Rights Reserved

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