Let’s get on with it!
Yes, of course, it’s too early to tell whether the proposed allocation and distribution of resources are precisely what is required to bring America’s infrastructure and essential citizen-support services up to 21st century standards. However, we all know or should know, the status quo is unacceptable. America is in a rut, and I’m not just talking about our streets and roads.
As readers of these columns should know, I have been a frequent critic of spendthrift politicians and spendthrift government. Contrary to the advocates of Modern Monetary Theory, I worry that there is a strong relationship between the confidence investors have in any currency’s integrity and that currency’s continued buying power, or lack thereof. We have just committed $1.9 Trillion to COVID relief, and now comes the Biden Administration’s proposal to invest another $2.0+ Trillion on American infrastructure and sagging education, and enhanced access to other basic needs. What to do?
Well, the operative word in the prior paragraph is invest. And this is the time to invest, especially with interest rates at all-time lows. Combing through Biden’s, just released, American Jobs Plan, one is impressed and, perhaps, unsettled by the obvious need as well as the opportunity to invest in projects that should produce a handsome mid-to-long-term return on investment.
There’s $621 billion in infrastructure to modernize 20,000 miles of highways and roadways and to repair the country’s ten most important bridges, as well as funds to repair about 10,000 smaller bridges, with $85 billion earmarked for modernization of public transit and another $80 billion to improve rail lines.
The plan is both ambitious and highly targeted, calling for a network of 500,000 roadway electric charging stations over the next decade, and the electrification of 20 percent of the school bus fleet, and electrifying the entire federal and postal fleet.
Another $100 billion is earmarked to modernize the nation’s electrical grid and extend and expand production and investment tax credits to accelerate clean energy jobs and projects in wind, solar, and other forms of renewable energy.
All lead pipes and service lines in drinking water systems would be replaced, and $56 billion in grants and flexible loans would be provided to states, tribes, and territories to upgrade drinking, wastewater, and stormwater systems.
Biden would fund 100% high-speed broadband coverage and provide $213 billion to build and retrofit over 2 million homes and commercial buildings, including community colleges, aging schools, child care facilities, veterans’ hospitals, and federal buildings. One million affordable housing units would be produced or retrofitted, and over 500,000 homes for low- and middle-income homebuyers would be built or rehabilitated.
Under the bill, private developers could get tax credits in low-income neighborhoods for rehabilitating or replacing housing, which would then be sold at no more than four times the median local household income.
We are on the verge of robust growth coming out of our days of COVID quarantine. It would be a dereliction of responsibility and an avoidance of opportunity not to get on with the job of investing in our long-neglected infrastructure, our pre-K education, improving the schools into which the preschoolers would graduate, universal access to broadband, equitable availability to quality healthcare, broad access to community colleges, and improving access to livable housing.
The proliferation of makeshift tent communities in our city parks and streets suggests we can do better. Somewhere between doing nothing and doing everything, there is a need for sensible investment in programs that will make America more competitive, more equitable, more secure, and, at least, comparable to the rest of the advanced world.
Getting the investment done, however, is going to be a tough slog. Today’s Republicans have become very budget conscious and deficit wary now that Democrats are in control. They have, miraculously, snapped out of their profligacy now that they are no longer in power. The trillion-dollar pre-pandemic Trump deficit never seemed to bother any of them, but now they are in high dudgeon over President Biden’s determination to invest and invest big in America’s competitive future and the nation’s human capital.
Of course, we’ve seen this movie before. Remember John F. Kennedy’s Apollo Project to put a man on the moon? There actually was not much enthusiasm for the project at the time it was proposed. Many believed, at the time, that the cost was an exercise in irresponsible spending. Today, however, the vast majority of Americans agree that the 21 hours and 36 minutes Neil Armstrong and Buzz Aldrin spent on the moon digging up 45 pounds of moon rock to show for their ride into space were among the most glorious hours in all of history. Few would argue today that the $25 billion cost (about $152 billion in today’s dollars) wasn’t worth it. It spawned an era of innovation and immense focus on engineering and science. Today, the things we take for granted that are an outgrowth of the Apollo program are practically too numerous to count. At the time, however, former President Eisenhower called the project “nuts.” And, truth be told, President Kennedy didn’t accord it much value either, other than to hopscotch over the Russians in rocket technology and, perhaps, to further establish an aura of Camelot in America.
President Biden’s American Rescue Plan is big and bold. It is 7.5 times the cost of Apollo (in today’s dollars). Apollo cost 2.5% of GDP over ten years. Biden’s American Rescue Plan is estimated to cost 1% of GDP over eight years, paid for with increased corporate taxes back to pre-Trump days.
Alongside the Apollo project, Medicare would, today, rank among the most popular projects ever undertaken by our government. Popular today, but a grunt at the time. True, there were strong liberal and conservative wings of both the Republican Party and Democratic Parties back then, but Medicare was anything but uniformly popular in the moment. In 1965 when the House of Representatives finally adopted a unified House and Senate version of the Medicare bill, nearly half the Republicans voted against the measure. When it got to the Senate floor a day later, the majority of Republicans voted against Medicare.
Now, in the interest of candor, I was among the Republicans in the country at that time, more than a half-century ago, who also thought Uncle Sam shouldn’t be paying people’s medical bills. Today, I and the vast majority of the Republican seniors I know absolutely love their Medicare.
We don’t know what Biden’s final American rescue Plan will look like. There is plenty of Republican opposition, and many Democrats aren’t happy with some aspects of the proposal at this early trial-balloon stage. There is considerable horse trading yet to be done.
That being said, there is a big difference between rapacious spending and prudent investing. Most of the targeted areas of focus are solid and worthy of substantial investment. With some needed fine-tuning, the country will enjoy an enormous payback from wise public investment in the areas that are the focus of Biden’s American Jobs Plan.
The investment objectives, broadly articulated, are every bit as worthy as Apollo and Medicare, and the potential payback even greater.
Let’s refine the details and then get on with it.
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