President Biden is proposing a massive spending plan to supposedly build and rebuild America's infrastructure. While the plan relies on the moderate and uncontroversial term “infrastructure,” less than 5% would actually go toward traditional road infrastructure projects. Rather, it will be spent on corporate welfare, tax credits, and the left's radical “green” agenda. On this episode, we learn what's in this plan, how much it will cost, and how we're going to pay for it (HINT: Taxes are likely going up).
Tim Doescher: From The Heritage Foundation, I'm Tim Doescher, and this is Heritage Explains.
David Ditch: Another thing they're looking to do is to spend trillions of dollars on “infrastructure.” Again, supposedly to juice the economy, but in reality, mostly going to benefit a handful of left-leaning constituencies. And you're left with the two bad options. Either they just put this on the national credit card, which is already overloaded, or as Senator Manchin has been saying, what he'd like to do is get rid of all the 2017 tax cuts and use that to pay for more federal spending. That definitely would not help juice the economy.
Doescher: That's David Ditch, on a prior episode of Heritage Explains, that focused on the so-called COVID relief package and how it hardly spent money on COVID relief. He was concerned that passing a law like this would inspire leftists to use the same strategy on things like infrastructure in the future. Well, just over a month later, he was proven right.
Doescher: President Biden and his cohorts in the Democrat party are now pushing for a “infrastructure spending bill.” Here's President Biden introducing his new plan.
President Biden: I'm proposing a plan for the nation that rewards work, not just rewards wealth. It builds a fair economy that gives everybody a chance to succeed, and it's going to create the strongest, most resilient, innovative economy in the world. It's not a plan that tinkers around the edges. It's a once-in-a-generation investment in America, unlike anything we've seen or done since we built the interstate highway system and the space race decades ago.
Doescher: This represents spending two and a quarter trillion dollars of money we don't have. If it wasn't such a serious issue, it would almost be comical. Whatever the justification, it seems like we just keep on spending money.
Doescher: But let's put spending on the back burner for a second and focus on infrastructure. When talking about infrastructure projects, you typically hear about spending money to build or rebuild things like roads, bridges, pipelines, and airports. But this recent clip of Transportation Secretary, Pete Buttigieg suggests their sites may be set on other priorities.
Pete Buttigieg: There is racism physically built into some of our highways, and that's why the jobs plan has dollars specifically committed to reconnect some of the communities that were divided by these dollars.
Doescher: See, told you. So what will we be spending two and a quarter trillion dollars on? Apparently not infrastructure.
Doescher: Our great Heritage experts discovered that less than 5% of this bill would be spent on traditional infrastructure projects. But rather, it would look more like just another slush fund set up for liberal priorities. So what are those priorities?
Doescher: If only 5% of two and a quarter trillion dollars will go toward traditionally defined infrastructure projects, where does the other 95% go? How are we going to pay for it? Will your taxes go up? Matt Dickerson is the director of the Hermann Center for the Federal Budget here at The Heritage Foundation. On this episode, he talks about Biden's infrastructure plan, the waste, the added strain to our financial situation here in America. But more importantly, he provides a roadmap on how we should do infrastructure in a way that limits government and allows the private sector to grow. We'll get into it right after this.
Doescher: Matt, President Trump, he made a big deal about America's “crumbling infrastructure.” And now President Biden and Democrats in Congress, they're pressing hard for this two and a quarter trillion dollar infrastructure spending package, we'll call it. Hearing that, this country must be in bad shape. Is that correct, or what should I say?
Matt Dickerson: Well, I think it depends on what you want to call infrastructure, right?
Doescher: Right. Yes. Yeah.
Dickerson: Of course, they're calling this an infrastructure package, but I think that's really a complete misnomer. Everybody cares about infrastructure, but they automatically assume that it's their roads and bridges that they drive on a commute. That's what a lot of people think about it.
Doescher: Traditionally, infrastructure is roads, bridges, tunnels, airports, whatever it is. But go into a little bit of what the Left is considering infrastructure right now.
Dickerson: Everything's infrastructure. This podcast is infrastructure.
Doescher: Interesting. So we're going to get money from... No, I'm just kidding.
Dickerson: But they're taking this buzz word that polls well, and they're trying to brand everything is infrastructure. But only 5% of this more than $2 trillion spending bill is what people actually think is infrastructure.
Dickerson: And most of that 5% of spending for roads and bridges is just going to go for maintenance of existing infrastructure that we already have. It's not going to be building new lanes of highway or helping to reduce congestion. It's just going to be simple maintenance.
Doescher: So similar to this, we had David Ditch on a few episodes ago talking about the 1.9 trillion. Another two trillion of the so-called COVID Relief Bill. And less than 10%, and that's a generous number by the way, less than 10% of that actually went to COVID relief. And he said he was concerned that this model would be used for an infrastructure bill. So he was almost seeing into the future, talking about what's happening. So here we are, it happened. Obviously, two and a quarter trillion dollars is a lot. 5% of that is not that much. Talk where the rest is going.
Dickerson: It's a little bit of everything under the sun. I think if we remember over the last couple of years, the Left really campaigned on this Green New Deal, where the federal government would be getting involved in every facet of the economy. Spending on this, that, and you name it. That's really the model that this bill is following.
Doescher: So Green New Deal, meaning this is going to be a huge focus in promoting electric vehicles, promoting probably alternate sources of energy... And then you, of course, you open the door to subsidies. Is that correct?
Dickerson: Absolutely. There's going to be a more than $170 billion for electric vehicles. So if you're in the market for a new, expensive, subsidized Tesla, this will be a good for you.
Dickerson: There's going to be tons of money going for subsidies for green, clean energy. And of course they want to also use this package to attack the fossil fuels industry that so many people rely on.
Doescher: We can talk more about subsidies and perverse incentives like that, but it just sparks in my head, who drives a Tesla car? Who has the money to buy a Tesla car? And it's not everyday working people. They're expensive cars. And if you have a tax credit to buy one and we have to pay for this, and we're going to get into how we're going to pay for this. We have to pay for it... It would strike me that the everyday working people are, therefore, subsidizing the wealthy people who can afford a Tesla. That's pretty much where we're at, isn't it?
Dickerson: Yeah. I think in large part, it's going to be a transfer of wealth from people who drive, to people who can afford these electrified vehicles, and people who are taking transit, and riding on the subway in urban areas. So it's going to be taking money from people in rural areas and transferring it to folks who live in dense, urban areas.
Doescher: Let's talk about how we're going to pay for this. I've seen we're going to raise the corporate tax. Trump cut the corporate tax. We're going to raise it, and that's going to pay for it. But to me, that doesn't seem like there's going to be nearly enough to pay for all this. How do they propose that?
Dickerson: You're right. President Biden is proposing to raise the corporate tax rate from 21%, which is about middle of the road for the normal average for our international competitors. Actually, there's 25 of our major international competitors that have a lower corporate tax rate than the United States does right now.
Dickerson: Taking it to 28%. And if you take into account the state corporate taxes that businesses are going to have to pay, that's going to give the United States the highest corporate tax rate in the entire industrialized world of our international competitors. It's going to be higher than China's 25% rate. If you're going to give the United States a higher tax rate than communist China, that seems like really bad policy.
Doescher: Yeah, and on top of that, you've got people even here, I've heard some people on the Right talking about how it's okay to raise corporate taxes because the working man needs a break kind of a thing. It's that mindset. Just discuss, just a little bit, what a raise in the corporate tax means for people. I've even seen a report that utilities are going to go up. That hits people directly in their pocket.
Dickerson: Absolutely, it's important to remember that only people pay taxes. All of the taxes that are imposed on businesses get passed on to workers. They get passed on to investors, and they get passed on to consumers. A study by Adam Michel at The Heritage Foundation showed that 75 to 100% of the corporate tax burden gets passed on to workers. And so, if you think about who is going to have foregone raises, who's going to get hurt the most by this over time? It's going to be blue collar workers.
Dickerson: At American companies.
Doescher: And one of the main things that the Biden administration talks, about Democrats in Congress, Pelosi, Schumer... These are good, well-paying jobs that we're creating here. We're going to create jobs by taking money from the private sector and then putting it through a government program. What is the jobs number we're seeing here? Obviously, they're going to say we're going to gain jobs, and we probably think we're going to lose some jobs because of this. So reconcile that a little bit.
Dickerson: Yeah. And if you think about the tax increases in this package... Means that this is not a jobs bill. The President's Chief of Staff, Ron Klain, says that raising these taxes is good policy by itself. Destroying these jobs would be a huge mistake. There's an estimate by the Tax Foundation, one of our friends that does analysis of tax policy.
Dickerson: They found that just raising the corporate rate to 28% would cost more than 150,000 jobs of American workers.
Dickerson: And that's not taking into account the other tax increases that are part of this package either.
Doescher: I've seen so many headlines about building new railways. And Biden talking about, "Yeah, come on, it's time. We got to connect America with railways..." And things like that. And I'm thinking, is that an outdated technology? Why would we invest in that right now? I've even heard of incredible things like pods shooting people across continents and stuff like that. Why would we invest in trains and railways?
Dickerson: Well, obviously President Biden was very famous as a Senator from commuting from Delaware to Washington DC by Amtrak.
Doescher: That's right.
Dickerson: So it seems, he likes Amtrak. He wants to invest in trains. But it's really a really poor investment of American taxpayer dollars, to funnel money into this agency that loses all sorts of money.
Dickerson: There's only one place, one corridor in America from DC to New York-Boston, the Acela corridor, where Amtrak actually turns a profit.
Dickerson: The rest of the Amtrak routes... Amtrak put out a map. And it says they're going to use this new, tens of billions of dollars to expand... They're the routes that nobody wants to take, and they lose tons of money.
Doescher: Yeah. I was going to say, to get from Paulding, Ohio to Celina, Ohio, that's a drive. You don't take a train there. But is that the kind of thing that they're doing? An 18,000-person county to a 30,000-person county? Have they done a cost-benefit-
Dickerson: Well, if they did a cost-benefit analysis, it would not pass the cost-benefit test.
Dickerson: With Obama's stimulus package, he made all these promises about high-speed rail. There's no high-speed rail.
Doescher: There's no high-speed rail.
Dickerson: I couldn't even build it in California.
Doescher: Yeah. Wow, unbelievable. Matt, we heard a clip at the top of the episode from Secretary Pete Buttigieg talking about how infrastructure has been historically racist. So I was shocked to see that. I never thought infrastructure could be racist, but hey, I don't know.
Doescher: So I watched the video clip, and then I logged onto the White House website and read the proposal. And it says, “The President's plan includes $20 billion for a new program that will reconnect neighborhoods cut off by historic investment and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access.” So for context, just explain a little bit of the thinking here. Can we advance racial equity and environmental justice through infrastructure?
Dickerson: I think one of the things that's worth keeping in mind is that when the federal government started building out the interstate highway system, it used all sorts of federal money to build highway lanes from the outer suburbs and from city to city. And then the thinking was, we need to build these interstate highways through local communities into the middle of cities. And so that wasn't really something that was done with the state and the city. Working with its various communities in the different neighborhoods to decide what the best plan for... That's what happens when the federal government gets involved in these types of decisions.
Doescher: Wow, yeah.
Dickerson: These types of problems that that can happen.
Doescher: How are they planning on doing this?
Dickerson: $20 billion. And you think it's only going to cost $20 billion? There's going to be more coming.
Doescher: Yeah. Yeah, not much of a plan there. So tell me a little bit more about how we as conservatives can respond to this. Is this something where we're going to need to run for local office? Or are we going to have a say in our local communities and our state government? Or is this all federal government? Can we do nothing right now?
Dickerson: Well, I think certainly some of the money is going to be given as grants to state and local governments. But I do think the most important thing is communicating to your lawmakers in DC. Help them understand what the proper role of the federal government is, and that decisions should be made at the local level. And people that are benefiting from certain projects should be the ones paying for them. It doesn't make sense for somebody in Manhattan, Kansas, to be paying for the subway in Manhattan, New York.
Doescher: Where do you see this going? Is this just a pie in the sky thing to generate headlines? Or are they pushing hard for this right now?
Dickerson: It is the president's top priority. They're putting a lot of capital into it. Every Democrat member of Congress and Democrat senator is going to be able to allocate some of this money. And they're going to be able to add their priorities. And it's starting as a $2 trillion package now.
Dickerson: Think about how much stuff that the Democrats want to do. AOC wants this package to be five times as big. It's taking money out of the productive private sector where people know how to make decisions, know what's good for their company, and they know what's good for the community. They know what's good for their family. And you're transferring that money and that power to bureaucrats and the elites in Washington DC. And if you think about the philosophy of this entire proposal, it's that the private sector, the people, can't make good investment decisions. It's only the elites in Washington, DC that can make good decisions for the country.
Doescher: Matt, thank you so much for keeping track of this, and we can't wait to have you back into keep us posted on where it's going.
Dickerson: Great. Thank you so much, Tim.
Doescher: And that's it for another episode of Heritage Explains. Thank you for hitting the five-star rating button. Thanks for leaving comments. And thanks for sharing us with your friends, your family, and on your social media sites. Don't forget to check out the show notes where we link to all the relevant info in this episode. We can't wait to upload the next episode Sunday at 8:00 PM. We'll see you then.