Biden’s $3 Trillion Infrastructure Bill
We're about to spend a whole lot more money.
Fresh off a $1.9 trillion stimulus package to boost an economy that’s nearly recovered from the pandemic, the President is about to introduce a massive package to rebuild America’s infrastructure and invest in some pet projects.
The YahooNews headline, “Buttigieg looks to remake America’s crumbling infrastructure — and boost his own brand in the process,” was amusing on two fronts. First, while Transportation Secretary is a much bigger job than most people realize, this is hardly Buttigieg’s initiative. Second, since when is it a problem that people get credit for doing their job well?
Within weeks, the Biden administration will introduce a massive infrastructure plan that, if realized, could be as transformative as the Works Progress Administration was during the Great Depression. But much like that famed antecedent, the infrastructure plan is sure to be criticized by Republicans as a ploy to usher in socialism.
An early outline of the plan, published on Monday by the New York Times, has the Biden administration spending $3 trillion on everything from rural Internet to green housing. Few other details are available, in particular how Biden will find the requisite congressional support, and funding, for the plan. But the fight over infrastructure is coming, and Buttigieg will be in the middle of the scrum.
First and foremost, he’ll be the administration’s salesman, making the case to Republican governors and mayors that supporting the infrastructure plan will be in their best interests. He has also pledged to turn the Transportation Department into an unlikely crucible of progressive policy, vowing when he first came to Washington that the agency would “rise to the climate challenge.” He has also promised to apply an “equity lens” to infrastructure projects.
“Black and brown neighborhoods have been disproportionately divided by highway projects or left isolated by the lack of adequate transit and transportation resources,” Buttigieg tweeted in December. “In the Biden-Harris administration, we will make righting these wrongs an imperative.”
National infrastructure, racial equity and climate change are an ambitious portfolio for the young secretary. They also sound like the sturdy pillars of a Democratic presidential campaign, something Buttigieg won’t talk about but that is not lost on his former staffers.
“He gets to be Build Back Better,” a former staffer on his presidential campaign said, echoing one of the slogans of the Biden presidential campaign. “He gets blank checks. He can tie himself to feel-good projects coming out of the administration.” He also gets to tour the nation, introducing himself to prospective voters, and tout those aforementioned feel-good projects to media both national and local.
The goal, as one flattering recent profile on Buttigieg put it, is to “quest to make transportation cool again.” More practically, the administration believes there is no serious constituency advocating for keeping the nation’s infrastructure in a state of disrepair. The challenge will be in preventing Republicans from painting the plan as tunnels for turtles, a series of giveaways to progressive groups for progressive imperatives.
“The secretary believes that no matter where you live and what your politics are, the American people will benefit from an investment in infrastructure that is focused on jobs, climate and equity,” Transportation Department spokesman Ben Halle told Yahoo News. “And he will work with the White House to deliver that message directly to the American people.”
I liked Buttigieg in the 2020 primaries but thought he was too inexperienced to be President. Transportation has never been a ticket to future elective office, with Elizabeth Dole the only one to move on to a higher post, but there’s no reason that Buttigieg couldn’t leverage this project, a changed media environment, and his natural skills to his advantage. One imagines, though, that Kamala Harris will get at least as much credit as he does.
As to the merits of the package itself, we have little to go on besides rhetoric. That we have underinvested in maintaining existing roads, bridges, and railways has been a complaint going back as long as I can remember. Our airports are mostly out-of-date. And we’re well behind competitors in things like high-speed rail.
Certainly, $3 trillion could fix a lot of that if there’s the political will to do so but NIMBY makes it incredibly difficult. While racism should never be discounted as an explanation for American policy decisions, the main reason we’ve tended to build interstate highways, airports, and the like in their neighborhoods is that they’re poorer and less politically organized. We’re not going to tear down rich neighborhoods to build these things.
The linked New York Times story (“Biden Team Prepares $3 Trillion in New Spending for the Economy“) doesn’t fill in many details, even over how many years the $3 trillion is intended to be spent. Apparently, we’re going to get some of the money from “tax increases on corporations and the rich,” which is the Democratic Party’s version of “cut waste, fraud and abuse”—a chimera that appeals to the masses allows deferring hard choices.
Administration officials caution that details remain in flux. But the enormous scope of the proposal highlights the aggressive approach the Biden administration wants to take as it tries to harness the power of the federal government to make the economy more equitable, address climate change, and improve American manufacturing and high-technology industries in an escalating battle with China.
The $1.9 trillion economic aid package that Mr. Biden signed into law this month includes money to help vulnerable people and businesses survive the pandemic downturn. But it does little to advance the longer-term economic agenda that Mr. Biden campaigned on, including transitioning to renewable energy and improving America’s ability to compete in emerging industries, like electric vehicles. Administration officials essentially see those goals — building out the nation’s infrastructure and shifting to a low-carbon future — as inseparable.
To the extent we’re investing taxpayer money in “renewable energy,” it makes sense to consider its effects on the climate.
It’s not at all clear why America can’t already compete in electric vehicles, which is hardly an “emerging” industry. Tesla, after all, is based in California. And all manner of electric vehicles are already coming from American automakers over the next year or three. It’s not obvious what the federal government’s role is here. Backing the establishment of rapid charging stations might be a worthwhile investment of public funds but the risk of forcing standardization early is that it might short-circuit innovation.
Just how to approach the legislative strategy is still under discussion given the size of the proposal and the thin majority that Democrats hold in the House and the Senate.
Mr. Biden’s advisers plan to recommend that the effort be broken into pieces, with Congress tackling infrastructure before turning to a second package that would include more people-focused proposals, like free community college, universal prekindergarten and a national paid leave program.
Leaving aside the politics, it’s not at all obvious how these would work. Presumably, we’re not going to establish federal community colleges. So, we’re just going to pay for people to attend existing community colleges? With what guarantee that they won’t jack up prices? Subsidizing early childhood education and, indeed, childcare, would bring us in line with most other developed nations. But details on how this would work are needed. And paid leave for whom? And why is that a taxpayer responsibility?
Some White House officials believe the focus of the first package may be more appealing to Republicans, business leaders and many moderate Senate Democrats, given the longstanding bipartisan push in Washington for an infrastructure bill.
That plan would spend heavily on clean energy deployment and the development of other “high-growth industries of the future” like 5G telecommunications. It includes money for rural broadband, advanced training for millions of workers, and one million affordable and energy-efficient housing units. Documents suggest it will include nearly $1 trillion in spending on the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the electric grid and other parts of the power sector.
Whether it can muster Republican support will depend in large part on how the bill is paid for.
Let’s leave aside for now whether any bill at all proposed by a Democratic administration will get Republican support. But the sheer hodgepodge of programs lumped into “infrastructure” here is mindboggling.
“Rural broadband” sounds very much like a 1990s project, although one presumes that we’re now talking about whatever the 5G version is of cellular towers rather than running miles of fiberoptic cable to serve a handful of people who choose to live in the middle of nowhere.
A million housing units is not a lot of housing units in a country of 330 million people and it’s not clear why the federal government needs to build them. Presumably, for the poor and homeless? But if so, I thought we figured out decades ago that it was better to subsidize their living in existing housing rather than segregating them into “projects.”
But “construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and improvements to the electric grid and other parts of the power sector” seems more-or-less unobjectionable on its face. Rail is easily the most controversial of these, with those living outside the major metropolitan areas seeing no benefit. Beyond the politics, the logistics are simply a nightmare. Once-great subway systems like those in New York and DC are falling apart but it’s next to impossible to upgrade them without months- or even years-long shutdowns. And it’s nearly impossible to build new ones in big cities because of the massive disruption of existing routines that stretch on for years and years.
Officials have discussed offsetting some or all of the infrastructure spending by raising taxes on corporations, including increasing the 21 percent corporate income tax rate and a variety of measures to force multinational corporations to pay more tax in the United States on income they earn abroad. That strategy is unlikely to garner Republican votes.
“I don’t think there’s going to be any enthusiasm on our side for a tax increase,” Senator Mitch McConnell of Kentucky, the Republican leader, told reporters last week. He predicted the administration’s infrastructure plan would be a “Trojan horse” for tax increases.
Again, even aside from the politics, it’s not obvious the money is there. The 2017 tax cut under President Trump took corporate rates from 35 to 21. Biden wants to raise them to 28 percent, which is what the Obama-Biden administration had proposed cutting them to but failed. Even if the support to do that exists, it’s not clear that it will yield much money since corporations have the means to shift their earnings to shield them from taxation. Indeed, the reason Obama wanted to cut them from 35 percent to begin with is to encourage more compliance.
The overall price tag of the package could approach $4 trillion since it includes several tax incentives, like credits to help families afford child care and to encourage energy efficiency in existing buildings. It could also extend temporary tax cuts meant to fight poverty, which could increase the size of the proposal by hundreds of billions of dollars, according to estimates prepared by administration officials.
Mr. Biden supports all of the individual spending and tax proposals under consideration, but it is unclear whether he will back splitting his agenda into pieces, or what legislative strategy he and Democratic leaders will pursue to maximize the chances of pushing the effort through Congress.
Apparently, they’ll have Buttigieg do it.
And, yes, the “temporary” child tax credit that was part of the “relief” bill is almost certainly going to become permanent. Again, that may be a good thing on a number of fronts but it’s expensive.
On the broader political front, even leaving aside the question of whether Republicans will support any of this, I’m not sure I understand the logic of getting out so early with the massive cost of the bill will offering so few details. “How will we pay for it?” no longer seems a relevant question, given that we now have a bipartisan consensus that we can just spend all the money we want, borrow it on really low interest rates, and the debt will magically go away at some point. So, right now, we’re just left with we’re going to spend $3 trillion—or, more likely, $4 trillion—on a huge grabbag of stuff and call it all “infrastructure.”
When Bill Clinton raised taxes on corporations and the rich we got the first annual federal budget surplus in nearly 30 years.
The phrase “how will we pay for this?” always comes up with any sort of spending which directly benefits the people rather than the 2500 families who actually run this country.
The fact is that we have already incurred the expense. We have allowed bridges to crumble into disrepair. We have delayed highway expansions, rail service, and electric charging infrastructure and now it’s time to pay.
America is focused on the current quarter’s numbers, we’ll figure out tomorrow, tomorrow. For the most part, ignoring them doesn’t make inconvenient expenses go away. We either fix the bridge or let it fall onto the rail line below – those are the options.
@Tony W: Seconding this. Since the Carter administration, the right has howled against Democratic spending while running up debt whenever it’s in power.
How about we just go ahead and do it?
Yes a trillion here and a trillion there seems like a lot of money, but if we look at it over the usable life cycle of the projects it is a much smaller investment. Then consider that we have under invested in infrastructure over the past 40 years and a large chunk of this money is being used to complete thousands of projects that are in reality differed maintenance.
Plus the way the Fed Gov budgets, makes the $3-4T a much smaller impact. Since infrastructure improvements are multi year if not decade long projects, the $4T figure may only have a $400B effect on the annual budget. Cancel the F35 fighter project and you come close to paying for it.
Wow. James is right. Doing stuff is really hard, so why should anyone even bother to try? Let’s keep living in the Republican state of entropy where we never bother to improve anything, we just hand the nation’s wealth over to the super-rich so they can go wherever they want, and we’ll all just keep watching what the citizens of this nation built over 200 years crumble away.
That’s the real Reagan revolution.
@Mikey:
The Clinton tax hikes were accompanied by an already-in-the-works massive decrease in Defense spending (a perfectly reasonable effect of the end of the Cold War) and the rather short-lived dotcom bubble. We also got rather significant spending cuts after the “Republican Revolution” of 1994.
@Tony W: @Sleeping Dog: @wr: As a general matter—and this goes back at least to the 2008 recession if not longer—I’m in favor of investing in infrastructure and human capital. I’m musing about what the details might look like given that none have been provided. And noting that there are some serious, practical obstacles to things like improved rail and airports (which I very much support in the abstract) that get even more complicated when you add in equity and environmental impact concerns (which we should do!).
So basically Clinton’s tax hikes weren’t simply “a chimera that appeals to the masses allows deferring hard choices” but were actually part of a coherent and responsible fiscal policy that, again, resulted in the first annual federal budget surplus in nearly 30 years.
@James Joyner:
True the devil is in the details and getting stuff done is harder and harder, but right now all the anguish is over the top line number and will most likely continue to be as it is the easiest to fear monger.
Because Biden opponents aren’t going to care what’s in it – they were always going to attack the price tag.
Honestly, other than yelling about Green Deal stuff what can they complain about? Red state legislators *need* this money or else it means they have to raise taxes back home to pay for these projects. Whining about repairing bridges and roads turns people off since that’s the sort of thing most folks agree the government should be doing. If it ends up having something like rural wifi infrastructure, are they going to tell their poor constituents and business concerns that no, you don’t really need this tech to keep you competitive in this economy?
We needed this YEARS ago – a running joke of the last Admin is that it’s always Infrastructure Week, we’re just waiting for the announcement. Like with any home repair, putting it off just drives the bill up and stick shock sets in. Better to get it out of the way now, let them screaming themselves hoarse but get it done.
Complaining about the price tag is quintessentially American.
Just. Do. It.
And for once, do it right, rather than just picking the lowest bid. When I lived in Germany as a teen, I remember noticing how pristine their autobahns were; I learned later why this is often the case. The companies contracted to repair roads are (or were, I don’t know if this is still in effect) responsible for their condition for a set period of time. They don’t want to keep coming back to fix things, so they engineer the HECK out of the roads and they LAST.
I was looking for a place to point to this article and infrastructure investment is at least tangential. Bottom line: After 20 years of frittering away our financial might engaged in minor, fruitless wars around the world, China has been investing their money and strengthening their national security in the process. Seems like we are traveling the same path the British Empire did.
A NEW GREAT GAME FINDS THE SOUTH ATLANTIC
@Sleeping Dog: cancel the f-35 program and build a few more of the better f-22s if you have to. The f-35’s been such a disappointing boondoggle that the Pentagon is now requesting a third new strike fighter, to handle situations the f-35 isn’t good at. The Pentagon is an endless money pit.
@Jen: The autobahns are so smooth and well designed it is easy to go at this high speeds they drive. I’m told the road foundations are so much thicker than ours which is the reason they don’t have as much winter heave as we do.
In a period when Republicans make such populist noises I was amused by this little line in the OP: “…we’re now talking about whatever the 5G version is of cellular towers rather than running miles of fiberoptic cable to serve a handful of people who choose to live in the middle of nowhere.” Made me wonder if our host’s AL roots included rural folk who (finally!) got electric and phone services because of New Deal programs.
It was a sort of nostalgic moment.
@Teve:
While I was being factitious in intimating the cancelling the F35 would pay for Biden infrastructure proposal, that program has been one of the great boondoggles in history.
@Mikey:
The budget surplus was owing to a unique set of coincidences that had nothing to do with Clinton and only tangentially to do with the tax hike. But I dismiss “tax the rich” as a chimera not because sensible tax policy can’t help raise revenues but because there’s nothing like the ability to raise nearly $6 trillion by “taxing the rich.” It’s a handwave designed to convince people that they can get stuff for free because someone else is going to foot the bill. (And Biden’s starting bid for “the rich” starts at those earning $400,000 a year.)
@JohnMcC: 4g cell towers are possibly a better solution than laying millions of miles of fiber optic cable. The 4G cell tower has a range of between 20 and 45 miles, depending on the circuitry of the tower equipment. 5g is less than a quarter mile. 4g LTE typically runs at 10-30 mbps, and that’ll get you by for years. Hell I’ve sold 5g equipment and nobody can even give me a straight answer on what we’ll use it for. Eventually it’ll be necessary, but I’m guessing not for many years.
I’m a big critic of Starlink, but that might actually be the best technology for rural areas. It’s supposed to have speeds of 50-150 Mbps.
@JohnMcC: when asked if government programs have ever been good, even George Will named rural electrification.
And what about multiplier effects? How much money did the government spend developing the Internet versus how much tax money has it collected from the deal?
@JohnMcC:
We didn’t move to Alabama until late 1980 and lived outside a small city. It was practical to run phone lines because of population density but took a while before they ran cable our way, so we subsisted off a roof antenna for TV our first few years there.
It’s just not practical to run fiberoptic cable to everywhere. I live on 5 acres and we’re responsible for our own electricity (a co-op), gas (a large propane tank), and water (a well on the property). We’re close enough to civilization that Cox ran cable out this way and we have good Internet.
Regardless, my point is that I think we’re getting to the point where running cable isn’t necessary. Just as countries in the developing world leapfrogged landline telephones and just went to cellular, I suspect we’ll deliver that last mile of broadband service through the 5G equivalent of that.
If you buy a new car and never change the oil or check the brakes or refill the transmission fluid it’s going to end up costing you a hell of a lot more than it would have cost to do the maintenance.
Thanks primarily to the Republican Party and its Reaganite fantasy economics, we did no maintenance on our nice new car. Now it’s belching black smoke, stalling out at stop lights and can’t find third gear. The money that might have gone to maintenance went instead to enriching the 1% and blowing big holes in the Iraqi desert. You make choices in life, and there are consequences.
FTFY, YahooNews.
@James Joyner: James, the right in the early/mid-1990’s were unanimous in predicting a disastrous economy, and later were unanimous in declaring no credit for Clinton and the Democratic policies.
I’ll file their statements in the circular file.
As for the dot-com boom, and the general late 1990’s booming economy, the right has also tried to declare it as ‘just a coincidence’ for decades now.
@Teve:
There have been many billions of dollars spent on rural broadband, none of it producing much service. I have also been thinking that Starlink, or one of its competitors, is more likely to deliver actual service than trying to string fiber, coax, and/or wireless technology.
@Michael Reynolds: While I think you’re largely right here, I would note that Obama spent a boatload in stimulus and somehow managed not to do all that much in the way of infrastructure investment even though it was an obvious need. And that was a dozen years ago.
@James Joyner:
Obama had to perform a labor of Hercules just to get his first priority – a minimally decent level of health insurance – past the obstructionist GOP. What were the odds he could get a major infrastructure program passed? What are the odds that Biden can do better even now, despite the fact that the need is even more acute?
Is anyone ever going to ask WTF Sovereign nations borrow their own money (at interest) backed by only said nation’s full faith and credit?
Surely we have others methods to control inflation and the grankly the current method isn’t very effective.
It is embarrassing having people from Europe come to the States. JFK is a mess. LAX is a mess. Our highways are embarrassing. Our internet speeds are lower than countries I visited as a teenager that still had dirt streets and donkey carts. On a couple occasions I’ve had to drive Brits around LA and they can’t believe the state of things.
Steve Jobs is reported to have said he didn’t want to be the richest guy in the cemetery. america may just end up the richest empire in the ash heap of history.
@Teve:
That reminds me of when I started in telephony in the early 80’s and ISDN was the big buzz word. After much talk and few applications, the joke became ISDN meant, It Still Does Nothing. That said it was a huge benefit of the telcos for connecting their points of presence, but the touted business applications never occurred.
@Michael Cain:
Starlink first public beta results look good but Musk says they’ll get even better
@Michael Reynolds:
That’s because those states are run by DemoCraps!
/GOPSenator
When I took DFW to RDU I was in Xanadu! There weren’t even no dirt on the hot dogs!
Fun fact, 11% of Americans have never been outside the state they were born in, and 40% have never been out of the country. Over half of Americans have never owned a passport.
@James Joyner:
Tax revenue increased by 2.8% of GDP between 1993 and 1999, and even when considering the effect of the dot-com boom, that simply doesn’t happen without Clinton’s tax hike. The spending decrease wouldn’t have resulted in the budget surpluses on its own.
@Michael Reynolds: But ARRA passed at $831 billion, of which only $105.3 billion went to infrastructure.
@Teve:
Why go anywhere else, we have everything here!
More seriously, though, travel to countries besides Canada and Mexico can be prohibitively expensive. Taking a family of four on an European vacation will put you out several thousand dollars just for plane tickets. Food and lodging can be substantial expenses as well if the exchange rates are not favorable. The only reason my family and I are able to go as frequently as we do is the free lodging and car my in-laws are gracious enough to provide.
@James Joyner:
ARRA was every last penny Obama thought he could get past Congress. It was inadequate, everyone knew it was inadequate, and Republicans were happy that it was inadequate. Might he have gotten more? Who knows, but there was no chance at all of 3 trillion.
We have unique challenges that Europeans and the Japanese don’t – our sheer physical size being the main one. Now, having let things go to hell, our challenges are even bigger. And there remain absolute mare’s nests of conflicting interests, environmental concerns, equity concerns, partisan imbecility, and of course the very real possibility that infrastructure we build now may be obsolete before we finish it. See: your remark about 5G versus optical fiber. Should we be building roads for human-driven cars? Or should we be building smart roads better suited for EV’s? Just a few years ago we were busily upgrading airports to handle huge A-380’s and now those planes are going away.
I propose a Democratic alternative to the Laffer Curve: Spending on infrastructure pays for itself with increased economic growth and higher tax revenues in the future.
@Gustopher:
Does it though?
I happened to watch a YouTube piece on the Spanish high speed rail network. It’s actually the most extensive in the world relative to population, one of the most extensive relative to square miles, and it’s a giant 10 billion Euro a year money suck because no one is riding the damn thing while every little city demands their own link. Wait til Wyoming decides it needs an international airport.
@Mikey: yeah I just looked at a few dates, and round-trip from Jacksonville to Rome, even if you look three months out, is 1000 bucks a ticket.
@Mikey:
In part that is due to a lack of travel infrastructure. I was always intrigued by how many and how often Europeans travel to North Africa. Curious about this I did a bit googling and and low and behold the number of scheduled ferry service between multiple ports and most of coastal North Africa. Even ferry service to Iceland.
While ferries wouldn’t help in going to Europe, they could provide a cost effective alternative for travel to South and Central America. Not to mention, it would be nice to have a direct ferry from Portland ME to Halifax or Yarmouth NS, rather than the current triangle or quadrangle that only runs in the summer.
nobody is saying the debt’s magically going to go away, that’s …inaccurate, to put it mildly. Democrats are just deciding that they are not going to be the ones to sacrifice their priorities just so Republicans can give Bill Gates and Jeff Bezos more tax cuts every time. And, actually, if your GDP is growing faster than the interest on your debt, you can actually keep that up forever. Imagine that you are a doctor making $100,000 this year and you’ve got $50,000 in debt. And every year you get a 10% raise but your debt goes up by 5%. You can in fact do that for eternity.
The worse your finances are, the higher interest you have to pay to borrow money. Yield on the 10 year treasury right now is 1.645%. GDP growth in 2019 was 2.2% Looks like we’re fine.
@Michael Reynolds: Yes quite correct.
Poorly situated infrastructure doesn’t per se pay for itself (the Spanish situ having been partly driven by Regional government corruption with easy duping of National Gov and EU matching funds that incentivized).
Although USA baseline infra is indeed rather in a sad state so the low-hanging fruit are there. Upgrade your East Coast rail – and do highway and airports for Rest of Country as the side-payment to Rest of Country. And urban light rail and tramway for the sprawling new cities, more feasible than undergrounds.
@Sleeping Dog:
The North African ferry connexions are rather heavily driven by the Maghrebine origine population demand. They rather adore (a) holiday travel back to the ‘Mother Country’ [even to 3rd gen although drops off heavily at 3rd gen from 2nd], (b) take their car with the family packed in back to show off and also engage in a bit of Contrabandier activity. The secondary component is the French retirees in particular love of visiting Morocco or Tunisia in camper-van vacations. Perhaps such could replicate with South America but why not simply drive through Mexico. In any case the Socio-economic dynamic with the literally 6-10 million odd Maghrebine origin Europeans doing “home country” [very much to be understood like 2nd generation Italian-Americans talking about Italy] would seem to be lacking for ferry services, what, across the Caribbean? Rather daft I think.
@Michael Reynolds: @James Joyner: Everybody’s also conveniently forgot that about 30% of the ARRA was tax cuts.
And it turned out that “shovel-ready” projects were pretty rare. Infrastructure is hard. Sending out checks is easy.
@Teve:
I don’t think it’s reasonable to expect that historically-low rates will persist indefinitely. We’re continuing to pile up principal in huge chunks. Yes, we’re borrowing essentially for free right now. But the bill will come due. We can’t grow our way out of that.
@Michael Reynolds:
I absolutely agree–but it needs to be kept in mind that the situation was based on the premise that the Dems needed 60 votes for everything. If the Dems had entered 2009 with the ideas they’ve turned to this year–using reconciliation for ambitious legislation, and floating if not pursuing serious filibuster reform–they’d have approached the situation very differently. They’d probably have created a larger ARRA through reconciliation, for one thing, similar to what they’ve done with the Covid relief bill this year.
In 2009, despite the GOP’s unprecedented use of the filibuster, the Dems more or less just passively accepted that reality, in part because they were so close to having 60 votes and did ultimately get 60 votes for about a half a year, and in part because they thought that peeling off a few Republican Senators–as they did manage to do with ARRA–was a worthwhile endeavor. They did eventually use reconciliation in 2010, but only as a last resort, to get the ACA past the finish line after the bill was imperiled following Scott Brown’s upset win, by which time they knew they weren’t getting any Republican votes.
The bottom line is that they were stuck in a paradigm of refusing to push back on the institutional limitations that the GOP was using against them. That’s no longer the case now, which is why the Dems are pushing a more ambitious agenda with much smaller Congressional majorities.
@James Joyner: I’m 44 and I’ve been hearing people say that the debt was an imminent catastrophe since I was a teenager. And also that hyperinflation was coming any day now. The evidence says they consistently didn’t understand the situation.
Shit, the 30-year Treasury is only 2.38.
@Teve:
I am part of the 40% that has never left the Country (but I have been to other states) and I still do not have a passport. Despite my family having all traveled to other Countries/states and having Passports including my Brother’s tween/teenage kids and my sisters kid having needed a passport for quite some time as they have traveled abroad when they were younger.
I am the homebody in my family, and for the most part it really does not phase me if I never travel out of country. My Aunt in Turkey would love for me to get my passport and visit her, but pre and post Covid I made no steps to get my passport.
Wait, not quite true, when I was gathering up the stuff needed to get my CA Real ID so I could at least use my Drivers License at an airport security check so I could board a plane (I got lucky and got my Real ID fairly quick a month before the SIP orders hit CA last year) I did get a passport photo at Walgreens but never moved to fill out the paperwork required to get the ball actually rolling at getting a passport.
Again, not well traveled but my family is (Canada, Mexico, Guatemala, Island nations, Africa, Italy, Turkey, Greece, France, India, and some others I am forgetting).
@Tony W:
…or Lockheed Martin’s shareholders. Even Rand Paul has stopped criticizing spending on the military or homeland security.
@Teve: In 2010 a group of more or less prominent Republican more or less economists sent a letter to Ben Bernanke warning that his asset purchase program would soon drive up rampant inflation. In 2010 they were asked about it, most refused comment, the rest stood by it. Krugman likes to talk about the letter as a prime example of Zombie Ideas. He, and others, and reality, keep killing them, but they never die. Last I heard, still none of the signers had recanted.
They’re better now, but I used to say the Fed had a crystal ball, and across the bottom of the ball was painted “NOITALFNI”. No matter what the real world circumstances, the Fed could always see inflation right around the corner.
@James Joyner:
I don’t either. And it seems like I see prices going up, gasoline being obvious. But sometimes I wonder.
I’ve seen an effort to plot interest rates through history, going back to Medieval, or even earlier records of loans. It shows a more or less steady decline over time, with a trend line approaching zero around now. Picketty talks about capital accumulation approaching Gilded Age levels of six times GDP. The 2008 crash was largely caused by the “savings glut”, a huge pile of money looking for better than market returns, and banksters willing to cheat to supply them. Even after 2008 wiped trillions off the books, there’s still a gawdswad of money floating around. I’m unconvinced Modern Monetary Theory is more than different rhetoric, but the monetary world may have changed. Capital scarcity has been the norm throughout economic history. That may be changing.
I haven’t seen much discussion as to why interest rates are so low and why exactly we had the stagflation of the 70s.
@Teve:
F-35s and F-22s are not substitutable. They do different missions, and have different strengths (and weaknesses). The most glaring of these is that you can’t fly an F-22 from a carrier. Other differences are more subtle.
Apart from that, it’s not clear that we could build more F-22s, even if we wanted to. That line is closed.
Even if you don’t like the F-35 — and I don’t much — there are no easy alternatives or equivalents.
@Sleeping Dog:
It produced actual planes that are actually operational and can actually fly missions successfully. That puts it way ahead of the real “great boondoggles in [military procurement] history”.
During the 2000s, the Army spent more than 1/3 of all its R&D investments on programs that were eventually canceled without fielding anything. The Marines failed three times in a row to replace their Amphibious Assault Ships, first with AAAV and then with EFV and then with ACV. F-35 is nothing like the cheap effective high-commonality family of fighters it was sold as, but as major recapitalization programs go it’s in the middle of the pack somewhere.
@James Joyner:
Exercise for the student:
1. What % tax on every stock/bond/commodity trade would be required to raise $6T over four years?
2. How much of that revenue could not legitimately be considered “taxing the rich”?
3. [Extra credit] How much would such a tax reduce market volatility?
@DrDaveT: I didn’t say “and throw away all the ones we’ve got”. The U.S military has like 400-500 F-35s.
K Drum
@Lounsbury: It’s possible that upgrading the rail on the West Coast would be a good idea, too. Last time I road Amtrak from Portland to my home in Longview, there were about 300 people boarding that train in Portland. At 2 pm. On a midweek day. If other major cities on the West Coast do that type of business too…
@Gustopher:
That one has the advantage of actually being true. And, when pressed, even the most die-hard Republican will admit that — if you phrase it in terms of “free public roads” and “public education”. They seem to think that those two kinds of infrastructure are somehow unique.
The filibuster was used over and over to hurt black people and promote white supremacy.
Kevin M. Kruse posted 27 receipts
@Teve: apparently he did so after McConnell said today that “there was no history of the filibuster being used in a racist way. None.” Because McConnell tells stupid, blatant lies.
@Teve:
He’s also from ‘bama.
@DrDaveT:
“And, when pressed, even the most die-hard Republican will admit that — if you phrase it in terms of “free public roads” and “public education”. They seem to think that those two kinds of infrastructure are somehow unique.”
Well, the first of those items, anyway.
The devil is in the details. The federal government is great at throwing money around, but it sucks at project management, planning, execution, and oversight. I’m less concerned about the top-line dollar amount than how it will actually be spent and the value-for-money.
Outside of a few agencies that hardly anyone cares about, like the Corps of Engineers, the federal government doesn’t actually build much infrastructure, especially roads and bridges. The feds give grants or special loans to states and localities to manage the projects, which are actually accomplished by private companies. There isn’t much federal oversight and neither party has expressed any interest in improving federal oversight or good governance – instead, the “debates” are all about the Benjamins.
And the issue that was exposed during the Obama administration was that there isn’t a ton of slack capacity, the number of “shovel ready” projects is very slim, and that the biggest impediment to actually getting projects accomplished are not always about money.
So the previous experience we’ve had with the feds dumping money for “infrastructure” should be a cautionary tale. It’s not the 1930’s or even the 1950’s anymore. The notion that the federal government can appropriate $3 trillion (more than the annual GDP of almost every country on the planet) and actually turn that money into actual tangible benefits without wasting most of it is questionable IMO.
I think one has to consider the actual capacity and capabilities of the federal government as opposed to the best-case fantasies that people imagine.
@Michael Reynolds:
JFK is owned by NYC and LAX is owned by Los Angeles.
AFAIK the last major international airport built in the US was in my hometown of Denver about 25 years ago. It was almost $2 billion over budget and the feds only provided about $600 million in funding – the rest of the money came from Colroado Residents of the Denver metro area are still paying off the bonds.
I have no problem with subsidizing improvements at JFK or LAX assuming they don’t turn into black holes like the CA high-speed rail line. But the responsibility for those airports is primarily with the entities that actually own and manage them.
The devil is in the details. The federal government is great at throwing money around, but it sucks at project management, planning, execution, and oversight. I’m less concerned about the top-line dollar amount than how it will actually be spent and the value-for-money.
Outside of a few agencies that hardly anyone cares about, like the Corps of Engineers, the federal government doesn’t actually build much infrastructure, especially roads and bridges. The feds give grants or special loans to states and localities to manage the projects, which are actually accomplished by private companies. There isn’t much federal oversight and neither party has expressed any interest in improving federal oversight or good governance – instead, the “debates” are all about the Benjamins.
And the issue that was exposed during the Obama administration was that there isn’t a ton of slack capacity, the number of “shovel ready” projects is very slim, and that the biggest impediment to actually getting projects accomplished are not always about money.
So the previous experience we’ve had with the feds dumping money for “infrastructure” should be a cautionary tale. It’s not the 1930’s or even the 1950’s anymore. The notion that the federal government can appropriate $3 trillion (more than the annual GDP of almost every country on the planet) and actually turn that money into actual tangible benefits without wasting most of it is questionable IMO.
I think one has to consider the actual capacity and capabilities of the federal government as opposed to the best-case fantasies that people imagine.
@Michael Reynolds:
JFK is owned by NYC and LAX is owned by Los Angeles.
AFAIK the last major international airport built in the US was in my hometown of Denver about 25 years ago. It was almost $2 billion over budget and the feds only provided about $600 million in funding – the rest of the money came from Colroado Residents of the Denver metro area are still paying off the bonds.
I have no problem with subsidizing improvements at JFK or LAX assuming they don’t turn into black holes like the CA high-speed rail line. But the responsibility for those airports is primarily with the entities that actually own and manage them.
@Andy:
Oh, please. This, again?
You’re right. The federal government never won WW2, or put a man on the moon, or made our food safe and our air and water clean. All of that was fake news.
It is certainly true that the federal government sucks at [fill in the blank] when it is being actively sabotaged by a political party whose electoral success depends on maintaining the myth of government incompetence. You seem invested in that myth; are you on the supply side or the demand side of it?
@James Joyner:
Weren’t we talking about 3 trillion? And that would presumably be spread over several years.
Our highest earning 1%, about 1.4 million taxpayers, make an average 1.7 million per year for a total of 2.4 trillion/year. If we raised their effective income tax rate, we’d raise 119 billion per year. That would be .6 trillion over five years.
The wealthiest 1%, a different but heavily overlapping group, hold 34.2 trillion in wealth. If we imposed a 1% annual wealth tax we’d raise 342 billion per year. Over five years that’s 1.7 trillion.
I am glossing over a lot of detail and neither would raise the whole 3 trillion, but either would take a chunk out of it. And I’m using what I feel are reasonable numbers. Higher rates would raise more.
And these are individual rates. We could also raise corporate income taxes, perhaps even to a point that GE pays more than a net zero, or less.
@gVOR08: Dang. That’s supposed to read
@Andy:
Oh, I know, believe me, I’m an LA taxpayer now – LAX helps pay our bills, although the transportation to and from doesn’t bear thinking about. Unless you’re flying coastal you probably spend more time getting to and from LAX than you do in the air.
I was just seeing this country the way foreign visitors do. It’s sad when people from a former empire and now second rate power can laugh at us. It’s embarrassing that the UK, France, or hell, Portugal, have better roads than we do.
@DrDaveT:
The federal government today isn’t the federal government of 50 or 80 years ago. Congressional oversight isn’t what it was 50 or 80 years ago. That you have yet to name a contemporary example of federal government competence for any project of significance and have to resort to examples from more than a half century ago is telling.
This is a systematic problem that can’t be waved away with the same tired blame directed at your partisan opponents. The federal government that exists today is sclerotic and dysfunctional.
One has to deal with the capabilities of the federal government as it exists today, not hypotheticals, not wishful thinking, and not appeals to a nostalgic past.
And one also needs to understand how infrastructure projects are actually managed, which is not from philosopher kings directing things from Washington. Almost all of it is managed and contracted by states and localities with partial federal funding. That is a fact that can’t be denied. If one is actually interested in end results, then state and local capacity has to be factored into any plan to dump $2 trillion into infrastructure – which so far this “plan” doesn’t come close to doing.
Details matter.
@Mikey:
Bill Clinton didn’t just raise taxes on the rich. He raised them on everyone. More Social Security was taxable. Gas taxes went up. etc. And the budget got balanced because of very tightly controlled spending over the next eight years (and, as noted above the peace dividend from the end of the Cold War and the dot com boom).
The simple fact is that you can not fund any kind of a large government on the backs of the rich. The United States has one of the most progressive income tax systems in the world. FAR more than any of our European counterparts. That’s the only it works: by taxing the middle class. Consider some of our peer nations and their top marginal rates:
The UK’s top rate is 45%. It kicks in at 150,000 pounds. Their second rate is 40%. It kicks in at 50,000.
France’s top marginal rate is 45%, kicking in at 152,000 euros. Their second highest is 41%, kicking in at 72,000 euros.
Sweden’s taxes are more local. But the top marginal rate is probably around 52%. It kicks in at the equivalent of $60,000
No nation funds themselves on taxes on the rich. Except us. Which is why we’re so deeply in debt.
Addendum: can I just add that I am so much happier debating the crappiness of Democratic proposals rather than whether the President is an insane looney-tune who might tweet us into World War III or a malicious troll … who might tweet us into World War III? This is what I wanted when I voted for Biden: bad, but within normal parameters. And so far, he’s not that bad.
@Andy:
Indeed. Whose fault is that?
Yes, it is, but you don’t seem to understand what it’s telling.
I have established that there is no inherent reason why the federal government cannot be competent, or even excellent, at project management, execution, or oversight. If you are claiming that something has changed, so that this is no longer true, the burden of proof is on you to make that case.
Yes, it is. Deliberately so. But again, this is a contingent fact, not necessary. You are repeating the tired conservative talking point: “We have made the government inept, therefore it is necessarily inept.” You’re better than that.
Well, that should make it even better then, right? You have assured us that the states and localities are far more capable than the feds at everything. Surely local control of fed money should be the best of both worlds, right?
(Unless, of course, the local jurisdiction is LA or NYC, right? You don’t seem very impressed by them in your replies to Michael…)
Do you have any actual arguments for your positions, or just assertions?
@Hal_10000:
US equity trades total well over $120T per year. A 1% tax on trades would produce (even accounting for damping effect on trading) nearly a trillion dollars per year of revenue. That’s a significant fraction of a “large government”, funded almost entirely by “the rich” — who would essentially never notice the difference.
@Hal_10000: Hear hear!!! Every single day since January 20th of 2021, I’ve woken up feeling grateful that at least the adults are in charge again.
@Hal_10000:
I know, right?
@Andy:
I was not aware that our food supply had become unsafe.
FEMA has been pretty good under Democratic administrations. Vaccine rollout has gone from really shaky to pretty good in a few months. We have several rovers on Mars. We aren’t being attacked by terrorists.
@Hal_10000:
When multimillionaire Mitt Romney’s effective federal tax rate is 14% but middle-class Mikey’s is 21% we are clearly not funding our government through taxes on the rich.
@Hal_10000: Also I like your addendum too. Thank goodness we have actual leadership again. We don’t have to agree with them, but it’s sure nice to disagree on policy rather than insanity.
@DrDaveT:
1) You tax a thing, you get less of a thing. That’s the figure for 2020, which was unusual. Such a tax would likely bring in way less income than advertised as gimmicky taxes always do. There’s a reason other countries don’t fund themselves this way.
2) A lot of those stock trades involve things like retirement funds. So you’re taxing a lot of middle class people through the back door.
3) Even assuming it work as advertised (it would not), you’re still only about halfway to closing the funding gap and nowhere near funding something like universal healthcare.
The best way to balance the tax system right now would probably to be to eliminate corporate taxes and tax capital gains as income. That would mean little grannies with retirement funds get more dividends but rich capital sharks get heavier taxes.
@DrDaveT:
In theory, the federal government could be more capable as it was 50 or 80 years ago – that much I agree with. The question then becomes is why has the federal government become so incompetent, sclerotic and incapable? Your theory seems to rest entirely on a partisan argument that any current problem with federal-level capacity (or government capacity generally) is wholly the fault of the political party you, coincidentally, don’t like. If that is what you actually believe, then the burden of proof is on you to make that case.
The reality isn’t that simplistic in my view. The federal government still has its foundations in industrial-era process from 1930’s through the 1950’s and has been slow to update bureaucracy, procedures, and processes. Instead of any kind of real systemic reform, new requirements just get piled on top of old requirements which only makes things worse. There have been a bunch of studies on this going back decades measuring various performance aspects as well as resources spent on administration and compliance compared to resources spent on actual functions.
This has affected most areas of the federal government but is most obvious in IT, HR, Project Managment, and Contracting/Procurement. It affects everything from the Obamacare website fiasco to the fact that it takes the Defense Department longer to define the requirements for a new weapons system than it took us to fight and win WWII.
In my own case when I got hired as a DoD civilian it was a YEAR from the time I applied for the job until I actually started working. A YEAR! The Obama administration tried to make this process faster by essentially ordering agencies to complete hiring processes within six months, which helped some, but the root of the problem is the process itself. And if you need to change the position description, or the pay grade, then the process to do that is another 6-18 months. So the result is that civil service positions can be gapped by a couple of years because of the bureaucracy.
And the less said about contracting and procurement the better. IIRC when I last looked up the data, only about 10% of federal projects meet their requirements and a tiny percentage are on-time and on-budget. Again, you can look at any major project over the last several decades if you want examples. The major area where the federal government has direct management of projects is national defense. I don’t know of anyone on the left or right who thinks that the system is working.
Well, federal government reform has been one of my personal pet issues for at least a decade now. Making it better is about deeper systemic reform which neither party has shown any interest in. This isn’t surprising considering it’s practically difficult and isn’t something the public is clamoring for. It’s much easier for parties and partisans to focus on top-line numbers and then blame the other side for failures.
Secondly, you yet again misstate my position, so let me correct you again. If you can find, anywhere, anytime where I have said, “that the states and localities are far more capable than the feds at everything” then please provide the proof.
You seem to have confused analysis for advocacy. It’s simply a fact that the vast majority of infrastructure projects are managed by state and local government and the federal role is primarily about financing, regulatory compliance, and oversight. Pointing out this fact is not the same thing as your strawman assertion that I’m claiming states and localities are better at everything.
It’s the same for the vaccine distribution system we’ve talked about previously where the roles and responsibilities have been in place for a very long time. Asserting that the federal government, which could not develop a functional website after three years and $2 billion, can just step in and quickly replace what states and localities have done for the past century is beyond foolish.
If one wants a greater federal role in this or any area, then one needs to understand the system as it currently exists and then put forward at least an outline of exactly how these roles and responsibilities should change and how that change should take place. And I’d be happy to seriously consider such alternatives, but so far there aren’t any. Certainly, you’ve not yet offered any actual alternatives.
I’m not the one making assertions. And my arguments have been clear – when it comes to huge federal programs the details matter, particularly in relation to how our various governing institutions ACTUALLY function. Pumping $3 trillion into the infrastructure system as it exists is probably going to cause problems because the system isn’t designed to handle an infusion of cash that is more than the annual GDP of most countries on the planet. Assuming the federal government is more capable than it actually is is dumb. Assuming the US has all this excess capacity to build infrastructure lying around waiting for a historically high infusion of cash should at least be treated with skepticism. It wasn’t so long ago that the rhetoric of “shovel-ready” projects met reality. Nothing has changed since then. So my argument is that these factors need to be considered if one wants any big federal infrastructure plan to succeed.
@Hal_10000:
It is understood that people would behave differently in the face of new incentives. I built some of that into my numbers — I didn’t just assume the volume of trades would remain the same. But part of the point of this approach is that the activities it disincentivizes — arbitrage, churn, etc. — are things that destabilize the market. Even if revenues aren’t as high as expected, that’s a good thing for other reasons.
It’s the same reason as here — regulatory capture by the wealthy.
The median wealth American does not have a 401(k) worth mentioning, so I’m not particularly concerned. Besides, it’s an insignificant amount of tax on any individual — that’s part of the beauty of it. And companies already tend to select into 401(k) providers like Vanguard with low churn (and thus low fees). I really don’t think this is a real problem.
“Only solves half of the problem” is plenty good enough for me. Funding universal healthcare isn’t hard; other nations do it routinely.
As for taxing capital gains as income: absolutely. Let’s do that too.
@Andy:
The funny part here is that I was going to make the same observation about you. You dismiss my analysis of what has changed in federal government over time as mere partisanship, while asserting that your axioms about what government could or could not do today are conclusions, not premises. The one thing I think we can agree on is that we’re talking past each other here.
FWIW, I base my analysis on why government is less capable now on having watched the sequence of changes being made over time — mostly by Republican administrations. Those changes have reduced capability, downsized, underfunded, divested, disincentivized public service, deliberately sabotaged agency missions, and generally badmouthed and scapegoated federal government for electoral propaganda purposes. I could go into lots of details, but I get the impression that wouldn’t be fruitful at this time.
@DrDaveT:
I’m sure we are talking past each other to some extent.
Much of my perspective is informed by nearly a quarter-century of working the sausage factory of the Defense Department. Defense is not a function that sees much in the way of various GoP attempts to “starve the beast” yet these problems are just as endemic in the DoD as any other agency if not moreso. The GoP is also not historically associated with attempts to increase the number of rules and regulations in the federal government – at least as compared to Democrats, yet in Defense regulatory growth and stupid, inefficient rule-making is a substantial problem.
A lot of these endemic problems are also not directly attributable to the ideological divides between the parties. Human resources is a good example. It’s not like partisans in Congress are arguing about hiring timelines, or the size and scope of ancillary training. These issues come from the bureaucracy itself – the problem, as I see it at least – is not the GoP or Democrats directly trying to scew things up, but benign neglect.
Another example -Neither Democrats nor Republicans were directly responsible for the dorked up the Obamacare website rollout. Republicans had no influence on the contract and Democrats had every intention of making it successful, but wrongly assumed that the bureaucracy would implement the legislative timeline. When it blew up and became a political issue, Republicans pounced and Democrats deflected and handwaved. What no one did was talk about, much less fix, the underlying problem, which is a dysfunctional bureaucracy in need of systemic reform. And that’s the element I specifically focus on, precisely because it is endemic.
Part of the problem with Biden’s Plan, is that everything he looks at is considered Infrastructure, like free college & day care.
And re. paying for it, Buttigieg has just suggested taxing vehicles per miles driven. Which will surely hurt the Economy & cause Inflation !