Is Biden’s Infrastructure Plan Really Infrastructure?

The American Jobs Plan, as the administration dubs it, seems to stand in stark contrast to the message of unity Americans are used to hearing.

USA Today

As President Biden nears his hundredth day in office, he is attempting to pass his second landmark piece of legislation, the American Jobs Plan. This bill, which has been described by his administration as a crucial piece of legislation aimed at fixing the crumbling roads, bridges, and waterways in our country, has received significant pushback from Republican lawmakers, who criticize the magnitude of spending in the bill, as well as the lack of bipartisan input.

This bill does contain some money for traditional infrastructure projects: 85 billion is aimed at repairing highways across America, as well as 80 billion to be given to Amtrak, 25 billion to modernize airports, and 17 billion to improve waterways. However, significant amounts of money will be spent on other, more politically motivated endeavors, including 174 billion in tax credits and incentives aimed at increasing the number of electric vehicles, 400 billion for expanding in-home care under Medicare, and billions more for other Democratic priorities.

This is the crux of the issue with the bill: many of the items in the bill are not related to infrastructure. While many studies have shown that electric vehicles will be crucial if we’re going to reduce our carbon emissions, this industry cannot be propped up by government spending. As it stands today, these vehicles are still far too expensive for the average consumer, and the lack of charging stations across the country (especially in the midwest and southern portions of America) render these vehicles impractical for most drivers. To offset the high sticker price for Electric Vehicles, President Biden is proposing tax credits which people can use to reduce their tax burden if they purchase an electric vehicle. While he has not released any details as to how these tax credits will work, prior tax credits for EVs have mainly benefited those who could already afford these expensive vehicles. This is because the credits are based on the purchase price of the vehicle, and are applied to your tax return, not the initial purchase price of the car. and have not served as an incentive for middle or lower income Americans to purchase these cars. Additionally, Medicare spending is not an infrastructure project, and this incredibly divisive portion of the bill will delay the progression of the bill while our roads, highways, and bridges fall into disrepair.

The entire bill amounts to around 2.3 trillion dollars in federal spending. Biden plans to pay for this by enacting one of the largest tax increases in the past century, increasing the corporate tax rate from 21% to 28%. According to a study done by the US Chamber of Commerce, increasing the corporate tax rate to 28% will decrease the overall competitiveness of the US economy, which could force American companies to move jobs overseas in order to stay competitive. These tax increases, while well-intentioned, could actually end up damaging the economy, and the middle class, in the long run, by forcing companies to reduce the number of jobs they have in America.

However, these large tax increases are not the only option when it comes to paying for this bill. If Biden wished to, he could pass the smaller, more critical part of this bill — improving American infrastructure — by using a combination of public and private spending. In 2019, private funds raised 96.7 billion for infrastructure worldwide, a clear sign that private funds would be willing to invest in these sorts of projects. Currently, there is a federal cap of 15 billion dollars for private-activity bonds to fund these projects, which could be lifted by Congress. American and Canadian pension funds have already funded infrastructure projects on the state level, in an attempt to diversify their portfolio, and would likely be interested in investing money for interstate highways. Additionally, states could also finance these improvements with money from tolls.

Recently, a group of moderate Republican senators led by Shelley Capito (West Virginia) and Patrick Toomey (Pennsylvania) have released their own, 568 billion dollar infrastructure plan as a substitute for the American Jobs Act. This plan includes about 300 billion for roads and bridges (more than double what Biden proposed), as well as money for railways, broadband, airport, and water. In the past few days, this plan has been well received by moderate senators on both sides of the aisle, who see this bill as a necessary compromise for improving infrastructure across the country. While Senate Republicans have not explained how they would pay for their bill, its price tag of 600 billion is far more feasible than the 2.3 trillion proposed by Biden, and these details are likely to be released soon.

Biden campaigned on a promise to unify the country and reach across the aisle to work with Republican lawmakers, and this is the perfect time for him to do so. Infrastructure spending is one of the few things that both parties have agreed upon in the past, and this Republican proposal is clear evidence that the moderates in the GOP are trying to work with the incumbent president. If Biden truly wishes to make good on his promise to pass bipartisan legislation, he could limit his initial infrastructure bill to traditional infrastructure projects, and agree to find alternative avenues for financing these investments. This approach would allow Congress to pass meaningful legislation that most members can agree upon, even if the minority believes it is either too extreme or doesn’t go far enough, with the goal of passing legislation regarding Electric Vehicles, Medicare, and other issues in the future.

Andrew Furlong is a Junior studying Statistics and Machine Learning, with a minor in mathematics. Academically, he’s interested in issues involving econometrics and mathematics, and understanding causal relationships between economics and politics. In his free time, he likes to cook and swim.

The Triple Helix at Carnegie Mellon University promotes the interdisciplinary nature of public policy, science, technology, and society.