Infrastructure

Biden's $2.3 Trillion Infrastructure Plan Is Teeming With Cronyism

Democrats never miss an opportunity to rail against big corporations. Yet they're eagerly subsidizing their big corporate friends.

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"A crony anti-infrastructure plan" is, sadly, the best description of the Biden administration's proposed $2.3 trillion infrastructure plan. It's insanely expensive and unnecessary, especially coming, as it does, on top of last year's fiscal insanity.

Over the past year, our leaders have spent $6 trillion in bailout and COVID-19 relief funds. They've driven local, state, and federal government spending up to 43.5 percent of GDP, meaning that we're already in financial trouble. Now they want to top it off with trillions more of wasteful spending, describing it as "infrastructure" spending, which arguably everyone likes. But once you look at what's in the bill, you realize that the label is mere marketing for more handouts to politicians' friends and payments for pet projects.

A large share of the plan, for instance, is a massive handout to private companies. The proposal includes $300 billion to promote advanced manufacturing, $174 billion for electric vehicles, $100 billion for broadband, $100 billion for electric utility industry, and more. This is interesting since Democrats never miss an opportunity to rail against big corporations while professing their love for small companies. Yet they're eagerly subsidizing their big corporate friends whether these companies need it or not.

And in most cases, they don't, since they are big infrastructure investors already. AT&T, Verizon, and others are set to receive $100 billion for broadband despite their collective investment of more than $50 billion in broadband-related network infrastructure. The same is true of electric power companies, which are not only profitable firms but also massive investors in the electrical grid. In fact, during the pandemic, they actually increased their capital expenditures (or CapEx) to $141 billion from $121 billion. Yet, they will also get $100 billion.

Freight railroads, which will get a share of that $80 billion, are very lucrative, too. As former budget director David Stockman explains in a recent newsletter, freight railroads "have prodigiously reinvested in tracks and rolling stock." He adds that these companies don't need help, "especially not Warren Buffett, who owns a big chunk of the Burlington Northern Santa Fe…The latter, in fact, posted $23.5 billion of sales, $5.5 billion of net income, and $3.6 billion of CapEx during 2019. And the figures for the other big publicly held railroad companies are similar."

Biden's plan also includes hundreds of billions that have nothing even remotely to do with infrastructure. One example is a $400 billion handout to expand access to long-term home- and community-based care services under Medicaid, and extend its Money Follows the Person program. While this has nothing to do with infrastructure, The Wall Street Journal explains how it has everything to do with bolstering unions, writing that Biden's proposal highlights that "his home-care plan would 'create good middle-class jobs with a free and fair choice to join a union…and the ability to collectively bargain.' This is where the SEIU comes in." The Service Employees International Union, they write, "has been able to exploit Medicaid home-care programs to expand its membership with help from state Democratic lawmakers."

Finally, this plan would be paid for by eliminating tax preferences for fossil fuel companies, raising the corporate tax rate to 28 percent from 21 percent, doubling the top capital gains rate, and imposing a large minimum tax on the overseas earnings of U.S. companies. To the extent that Democrats are trying to pay for this spending with taxes, they're doing it in a way that belies their claim that this plan will result in a boost in quality infrastructure. That's because, as the Cato Institute's Chris Edwards reminds us, these tax hikes would punish the investors and corporations that drive infrastructure and own 65 percent of nondefense, nonresidential infrastructure. The federal government only owns 5 percent of it, with state and local governments owning 30 percent.

The Tax Foundation estimates that Biden's tax increases would reduce investment in fixed assets by more than $1 trillion. That means fewer infrastructure investments, too. This is unfortunate since a 2016 Congressional Budget Office report finds that private sector investments deliver twice the economic returns of federal investments. But as Edwards notes, "Biden's proposed green and labor union regulations would further undermine infrastructure investment."

There's much more to say about this plan and its backers (who continue to assert that it will grow the economy and finally fix our allegedly "crumbling" infrastructure). But for now, just remember that it's best described as a crony anti-infrastructure plan.

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  1. Infrastructure pork is a window into any politician’s soul.

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  3. Whoa, here we go AGAIN with Reason.com’s Marxist media bias! Singing the praises of Der BidenFuhrer all day long!

    1. And they posted mean articles about Trump!

      1. Why don’t you two faggots go fuck each other and leave us alone?

  4. Keep in mind that whatever the Democrats accuse others of doing is exactly what they’re doing themselves and it becomes obvious that what they condemn is what they favor.

    1. Reminds me of an old Pollock joke: a Pollock, his wife, and another guy were stranded on an island. The other guy is rather horny and has a plan to get it on with the pollock’s wife, so one day, he says – “hey you, quit fucking over there!” The pollock is perplexed and doesn’t see what the guy is talking about, so he climbs a tree to see if he can see it. He reaches the top, looks down and notices the other guy banging his wife, and says to himself “Wow! They really are fucking!”

      1. fish can’t climb trees

        1. Cleaning spit soda off of keyboard now… you got me.

  5. “Finally, this plan would be paid for by eliminating tax preferences for fossil fuel companies, raising the corporate tax rate to 28 percent from 21 percent, doubling the top capital gains rate, and imposing a large minimum tax on the overseas earnings of U.S. companies.”

    The Democrats are going after their favorite demons. A standard mining asset depreciation is a “subsidy”, bad corporate tax policy will be reimposed and will try to mitigate the bad effects by making the tax policy worse but likely unenforceable measures. Like California attempting to mitigate the effects of the tax policy driving the wealthy out of state by imposing an exit tax on leaving CA.

    The Dems are stupid but they are consistent.

    1. Yeah, they say depreciation is a subsidy. Then they turn around and give cash to every industry they like.

      The only way to fix things is to get rid of the democrats.

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  7. Is there a country left on Earth where the government is fiscally responsible AND the government isn’t a straight up police state gone mad because of the rona? Where can I move to that people will just leave me alone to do my business in peace without leaving the printing presses on 24/7?

    1. You think it’s bad now, just wait. After 9/11 this country went to s***, they destroyed us from the inside out. Then China destroyed us without even sending a missile or a plane. Biden will put us further in debt and taxes will surely go up. In just a couple of years from now (2023-2024), the world will be rocked by massive earthquakes destroying most of America.

  8. “This is interesting since Democrats never miss an opportunity to rail against big corporations while professing their love for small companies. Yet they’re eagerly subsidizing their big corporate friends whether these companies need it or not.”

    Hey, Fascism isn’t cheap!

    1. Was I the only one who lived through the Obama years? “Cast yourself as a hero of the downtrodden, then trod all over them to help your donor class” is now the DNC playbook. And since the sheep are wising up to the game, the DNC needs more “mail in” ballots to make up the difference.

  9. Biden and plan are like oil and water.

  10. Whatever you all spent 2020 pimping this dude as the anti Trump and all we got were hyperinflation and chaos. I’ll just let this dude fuck it up some more because the closer we get to economic collapse the better we’ll be after we throw the garbage out and institute a government that denies participation with anyone left of center.

    1. I was hoping for a solution that had a little more “everyone achieves wisdom” and a lot less “everyone goes hungry”. That does not seem to be on the horizon.

  11. “Freight railroads, which will get a share of that $80 billion, are very lucrative, too.”

    Which $80 billion is that? Am I missing something? I don’t see any previous mention of a chunk between $50B and $100B, or even any amount that includes the digit 8 (for example, if it mean “that $180 billion”).

    1. I think she forgot a colon after “that” (that: $80 billion)

  12. Is there gambling going on in here?

    1. SHOCKED I SAY!

  13. Properly criticized on financial data but we know the spending is driven by ideology with cost as no object. More statist policy, less economic freedom is a goal not a defect for liberals.

  14. Helps me to remember an old Pollock joke: a Pollock, his significant other, and another person were abandoned on an island. The other person is fairly horny and has an arrangement to get it on with the pollock’s better half, so one day, he says – “hello you, quit screwing over yonder!” The pollock is bewildered and doesn’t perceive what is the issue here, so he climbs a tree to check whether he can see it.
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    1. something fishy is going on here. I like this version better

  15. The Tax Foundation estimates that Biden’s tax increases would reduce investment in fixed assets by more than $1 trillion.

    Interesting assertion but as there is no link, as usual, there is no way of actually figuring out how they calculate this.

  16. teeming! to the fainting couch

  17. Reason only likes cronyism when it benefits the Kochs and other rich bastards.

  18. Are you sure this is crony capitalism? Because ENB assured me yesterday that independent businesses and trade associations attempting to lobby their representatives so they don’t get crushed by Amazon was crony capitalism AT ITS WORST.

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