Policy

Biden's Infrastructure Plan Confuses Costs for Benefits

The president is doubling down on bad regulations that raise labor and material costs of federal infrastructure projects.

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The list of things that President Joe Biden hopes to accomplish with his American Jobs Plan is nearly as impressive as its $2 trillion price tag. "It's not a plan that tinkers around the edges," Biden bragged during an April speech in Pittsburgh. "It's a once-in-a-generation investment in America. It'll create millions of jobs, good-paying jobs. It'll grow the economy, make us more competitive around the world, promote our national security interest, and put us in a position to win the global competition with China."

The president's speech did not dwell on the specific projects he wants to fund or how he might go about delivering them in a cost-effective manner. He focused instead on all the money he plans to spend and its potential for stimulating the economy. For Biden, the actual impact of new roads and rail lines on commute times and shipping costs is less important than the gargantuan price. That attitude suggests Biden's plan will buy a lot less infrastructure than it would if he prioritized efficiency.

Consistent with that prediction, Biden is not satisfied with creating jobs; he wants to create union jobs. "It's about time [unions] get a piece of the action," he said in Pittsburgh.

Thanks to the Davis-Bacon Act of 1931, which mandates that all infrastructure projects receiving federal funding pay "prevailing" (generally union) wages, organized labor has been getting a piece of the action for nearly a century. This requirement raises labor costs by as much as 22 percent, according to an analysis by Suffolk University's Beacon Hill Institute.

The president's insistence that he'll sign off on a contract only if it's with "an American company with American products all the way down the line and American workers" will raise costs even further. Existing "Buy American" provisions are a well-established driver of transportation project costs.

A 2019 report from the Congressional Research Service found that buying American steel costs around twice as much as importing it from China. Requiring road builders to use pricier domestic steel raised the cost of highway construction by about $2 billion from 2009 to 2011, back when then–Vice President Biden was overseeing the spending of stimulus dollars on infrastructure projects.

If the president's goal were truly to "build, baby, build," he would be making every effort to pare back regulations that raise the labor and material costs of federal infrastructure projects. Instead, Biden wants to double down on those rules.

Something similar could be said of the president's focus on advancing racial equity, a $20 billion item in his American Jobs Plan. In March, the Biden administration deployed the 1964 Civil Rights Act to pause a highway widening in Houston so that it can examine that project's potential racially discriminatory effects.

It is true that past federal infrastructure blitzes have torn through more than a few black neighborhoods with little regard for the people who lived there. But Biden's novel use of civil rights law to hold up a project he doesn't like could well backfire by creating a new avenue for activists to slow down lots of other infrastructure investments the administration actually wants. "What I fear is that we are opening a new front where civil rights law is being used with the same logic as environmental NIMBYism," says Michael Hendrix, director of state and local policy at the Manhattan Institute.

Speaking of environmental NIMBYism, Biden is backtracking on the Trump administration's reforms to the National Environmental Policy Act (NEPA), which requires federal agencies to assess the environmental impact of decisions like funding a bridge replacement or permitting an oil well. Activists of all stripes frequently use the law, and the power it gives them to sue federal agencies, to slow or stop infrastructure projects.

In 2020, the Trump administration finalized a rule aimed at narrowing the range of projects subject to NEPA and speeding up the reviews that would still be required. The Biden administration is now considering amending that rule and may even scrap it entirely.

Despite the president's claim that his American Jobs Plan will be a generation-defining investment in the future, his administration remains committed to preserving outdated red tape that will inevitably impede whatever it ends up trying to build.

NEXT: Brickbat: Just Sit There

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41 responses to “Biden's Infrastructure Plan Confuses Costs for Benefits

  1. Well also keep in mind the reason American steel is so expensive is because of the union wages and overcompensation the steel workers union. The logic applied to increasing the cost of the infrastructure can also be used to realize union labor increases the cost of nearly every material required for the project down the supply chain.

    The absolute retards arguing everyone should pay their employees more to compete with expanded unemployment, or those advocating for higher minimum wage, are too damn stupid to understand that if we actually eliminated all the anti-free market bullshit unions have lobbied for in labor law by literally buying politicians, then sure wages would go down in actual dollars. But so would the cost of nearly everything, and thus the overall cost of living. Allowing you to actually buy more with the dollars you earn.

    The lefty idiots and union fifty centers on here are too ignorant and short sighted to realize the system they’re advocating for with artificially increased, government mandated (whether through law or making private companies compete with unemployment+covid stimmies) wages is one where the average Joe can make $100/hr doing pipe fitting, but a dozen eggs costs 15$, cable and internet is $1000/month, a Chevy Malibu costs $90,000, and average rent is 6k/month. Because those artificially higher wage, and all other government mandated or coerced added costs, will exist in every supply chain in every industry, as we’re seeing now with inflation across the board in nearly all sectors.

    1. Your average lefty useful idiot isn’t smart enough to understand that massively raising labor costs necessarily requires raising prices. The communists in charge of the country do, and they desire it. It effectively makes the country poorer and they are well aware the poorer and more distressed a population, they more they clamor for expanding big daddy government’s power. Just look at the draconian economic measures past in the last year (in response to a manufactured, self induced economic depression) from 30 rounds of stimulus to gold plated unemployment to making evicitions/foreclosures illegal to PPP loans. In addition it devalue’s the country absurd level of debts in real terms as there as absolutely no path forward to actually pay the debt off. And the same useful idiots who believe the government can raise labor costs massively with no consequence also believe the FED when they say current sky high inflation is transitory while CPI is 5% (which means inflation is really over 10%). It’s all about corrupt politicians and the incredibly high percentage of the American voting populace who are economically ignorant (by design, thanks to public “education”) useful idiots.

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    3. Dizzle,
      At one time most of the heavy industry was union. At the end of WW2 with European industry being destroyed by the war it was necessary to rebuild all that industry which they did including the latest (at the time) and most advanced methods for production of the product the plant would make. Now a steel mill in Europe could produce a higher quality steel at a lower cost because of more efficient methods that even used fewer workers to turn out much more quantity at a lower cost per unite.
      Now switch to the US industry. these steel mills in the US did NOT need to be rebuilt so the industry did not rebuild their industry to compete with markets form Europe and later from Japan and much later from China. The US steel industry had an ally in the US steel union(s). These unions knew if the industry rebuild like the European industry did they would loose thousands of union members because they could no longer be used. The unions and the steel industry worked hand in hand to get laws restricting the importation of steel. This protected the industry for a few years but ultimately cause it to just about to go out of business in the US.
      Back in the 1960s I worked construction and was a part of a union. Often there would be a construction job on the near by army base. Here the Unions have worked together that any job on the base had to pay the UNION SCALE even if it was not done by a union contractor. I have to admit that agreement the UNIONS had with the GOVERNMENT was good for my wallet but it sure did cost the US tax payers much more money. I later went to work for an oilfield service company that serviced the drilling of the wells and after the were completed and put in production. A separate branch of that service company was an industrial cleaning company which cleaned all kinds of equipment used refineries and power plants and chemical manufacturing. It also cleaned airports runways of the rubber that collected on it when the airliners came in for a landing.
      Now this industrial cleaning company had special equipment which it build in its own manufacturing facility. It took specialized training to operate this cleaning equipment. When this company did a job in a state with a union shop law this company had to pay the companies operators the UNION wage but they also had to hire operating engineers form the local union even those operating engineers could only set on their butts because they could not operate the equipment at the full salary for the operating engineers for the duration of the job. This mad the job cost many times more than it should have. The company that the cleaning job was being done for had to pay that higher cost also. This meant that the customers really pay that bill.
      This is the very same thing that will happen for Biden’s infrastructure bill will do also. It will make any improvements to the infrastructure cost much more than it should.

  2. Biden’s Infrastructure Plan Confuses Costs for Benefits

    I would suggest it’s not confusion, it’s ignorance.

    There’s the old story of Milton Friedman visiting a soviet construction site and wondering why he saw so many men running around with shovels and wheelbarrows and no heavy machinery. Upon being told that they did it this way to guarantee full employment for the men, he suggested a better way to guarantee full employment would be to take away their shovels and give them tablespoons.

    It’s the same way with pushing the Green New Deal based on the promise of thousands of new jobs – jobs are a cost, not a benefit. Under this view, free energy would be a disaster because there would be no jobs at all in the energy production business. If you really want to create new jobs, simply mandate that all electricity has to be produced from generators hooked to bicycles. Full employment for bicycle riders and bicycle manufacturers!

    1. “Biden’s Infrastructure Plan Confuses Costs for Benefits

      I would suggest it’s not confusion, it’s ignorance.”

      I’d say it neither. It’s a payback to unions and big business, and a down payment on the contributions and votes they’ll provide in 2022.

      1. Yes.

    2. Jobs don’t produce goods and services; jobs produce votes and union dues.

    3. It’s neither confusion nor ignorance: The costs are the intended benefits, and the purported benefits are nothing more than an excuse to incur them.

  3. “bad regulations that raise labor … costs”

    At least Biden is much better than Orange Hitler on that issue. Remember when Drumpf’s draconian war on immigration prevented Reason.com’s benefactor Charles Koch from importing cost-effective foreign-born labor? I certainly remember. Mr. Koch actually lost $5 billion during Drumpf’s final year in office.

    Of course with a billionaire-friendly Democrat in the White House, billionaires are doing much better.

    #InDefenseOfBillionaires

  4. Christian, you might want to take a quick look at this source, it will explain a lot to you.

    https://democrats.org/where-we-stand/party-platform/

    1. Seven months after the election, and Reason still doesn’t seem to understand the intentions of the Democrats and those that helped them achieve a one party government. Or, they’re playing dumb, because their benefactor (and they themselves) were also helpers.

      1. ” Or, they’re playing dumb, because their benefactor (and they themselves) were also helpers.”

        More like a closeted victory lap.

  5. Remember, progressives and socialists do not relate costs and benefits. These are completely separate concepts and numbers, to be determined by arbitrary political judgement. And for extremely economically retarded wokesters, any kind of cost-benefit analysis is unfair and oppressive.

    1. Sounds very “Soviet” {and I am sure you are right about that].

      We are on a train, no cost of fuel, no tickets to buy, and no tomorrow, and seemingly no end of the track.

      It’s just all about paying favors for votes, with money from air.

      When it hits, it will hit very very hard. The party will be over, and the ice man will come.

  6. I look at these Biden proposals and see how obvious it is that even something with a useful goal (which is not true – just a different problem) is hijacked by the activist base of the D’s for activist base reasons. Basically ‘spoils’ projects.

    I look at the opposition to these projects – the articles here and most of the comments – and all I see is the same sort of ‘spoils’ focus. Different base and that’s all. Fixable only by electing a different crowd but not by improving decisions.

    And in this case it isn’t just D’s and R’s (though obviously they’re the only ones who will actually get any spoils rather than merely rationalizing why spoils are a-ok as the goal).

    1. … Its all but a problem with ever-growing ‘communism’ in the USA.

      1. What the fuck does that even mean? To you and your ilk, ‘communism’ is just a word to throw out there.

        1. [WE] mob control of EVERYTHING. Everything is a [WE] mob battle.
          No longer are Individuals in charge or even LOCAL governments. Everything has to be a battle at the highest group of National Socialism (def; Nazism).

          In short it’s too much *POWER* given to one central Gov-Gods and it’s a traitors ideology to the USA.

          Think about it…..

  7. Remember when the USA passed the Constitutional Amendment that said….

    The United States shall fund ‘Infrastructure’ throughout every state in the Union…

    Ya; me neither…

    Crony Socialism for the WIN! /s

    1. Actually, the 15th, 17th, 19th, and 26th Amendments all contributed. Every time we expanded direct democracy, we created incentives for pork.

    2. There is absolutely a constitutional rationale for a generic ‘infrastructure’ project. Four of them in fact. Not at all the same as rationalizing any particular project or deciding on any policy for how to deal with infrastructure. But:

      To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

      Like it or not, that means influencing (roughly) the cost of capital. You may not like Hamilton’s policies re a federal/central bank – and to some degree at least the later Whig notions of what to do with tha bank balance sheet – but it is not unconstitutional. Same goes for Jackson’s opposition – where he was ok with distributing loans through state banks, he just wanted more spoils/cronyism for his new party rather than just the old Eastern elites.

      To establish Post Offices and post Roads

      Again like it or not, this was infrastructure NOT some modernist bullshit about delivering mail to people’s houses.

      To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes

      Like it or not, ‘interstate commerce’ is far more about infrastructure than it is about production/consumption. The latter is local.

      No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State,

      That is a totally open-ended authority. Even if it grants precisely ZERO executive branch authority over the implementation/execution of what Congress legislates.

      Maybe you assholes should read and understand the actual Constitution. Rather than just some modern con artist who wants to substitute founders hagiography over the actual means by which power was intended to be controlled by the constitution (meaning checks and balances and separation of powers and such). Because heading down the hagiography path just turns you into useful idiots of those who are perfectly happy that your political side has no actual alternative ideas

      1. “No State shall… enter into any… Compact with another State?

        So the national public vote compact needs to change its name or something?

        1. afaik that compact has to ultimately be approved by Congress before it happens.

          Before that it is just political jawjaw.

          A lot of things could be political jawjaw related to that. Expand the House. Expand both the House and Senate. Get states to eliminate winner-take-all at state level. Get them to eliminate gerrymandering. All sorts of things. Even totally crappy ideas that do nothing but suck up oxygen.

          Instead the rhetorical field is – as always – some crappy idea and on the other side – silence. Helluva political system.

      2. JFree summarized, “Here’s the text. But it means exactly the opposite of what it says and I’ll spout out paragraphs of deceitful B.S. to make it mean exactly what it doesn’t mean.”

        For Example —
        Post Roads doesn’t mean post roads they mean EVERYTHING.
        Regulating value of the coin means STEALING and PRINTING it.
        Just like Standard Weights and Measurement doesn’t mean ‘Standard’.
        Although the Commerce clause doesn’t contain the word ‘Interstate’ it should because JFree says so.

        JFree Summary, “That is a totally open-ended authority” (i.e. limitless) power the people gave to the Gov-Gods.

        UR such a dipshit.

        1. the Commerce clause doesn’t contain the word ‘Interstate’ it should because JFree says so

          FFS. How do you read – Commerce…among the several states.

          On edit. Forget it. Who the fuck cares. You assholes who want to read the text of the constitution as if God himself interprets every word – and we generations of Americans just sit listening to him in reverent awe – are the MAIN part of the problem.

          The first big ‘constitutional’ policy dispute was between Hamilton and Jefferson. Both are founders. Neither were progtard commies from Kenya. they both used the word ‘unconstitutional’ to beat each other the head and attempt to get their way in the power game of politics. Yet you people are sitting here – 230 years later – pretending that one them was absolutely wrong, the other absolutely correct, and the only thing that should be occurring now is an argument that finally decides – once and for all – who was wrong and who was right. You people just stupid?

          1. If I say commerce among you and I do I mean commerce among Jack and Jill? If not; then why would commerce among the several states mean commerce within the several states?

            A quick history lesson on it proves it was written as intended. It was to prevent state-tariff/tax battles from propping up between states or trade disputes between states and it fits perfectly with the power to regulate commerce with other nations (also in the same sentence).

            Secondly to ‘regulate’ doesn’t mean to steal them or ‘do’ them.

  8. That’s a good union and also mafia trick, poor lots of extra concrete to hide the bodies.

  9. “….”prevailing” (generally union) wages…raises labor costs by as much as 22 percent…”

    Many moons ago, I took a couple of temp jobs which drove this point home to me. Both jobs were in the same city, both were short-term, and both were simple, manual-labor jobs, requiring minimal training. One was funded by the City, and one by the State of CA, which also had “prevailing wage” policies in place.

    The city-funded job paid $10/hour, which was well above the minimum wage.The state-funded project paid $30/hour. Thirty dollars an hour was the same wage I made, just a couple of years before, as an adjunct faculty member (through a fellowship) at the State University.

    The other lesson I learned is that $30/hour will buy one hell of a lot of beer.

  10. Its not confusion. Nor ignorance. The bill’s authors are fully aware the money will go to various pockets, including theirs by way of kickbacks.

  11. Not to mention all those tens of thousands of high paying jobs in the IRS!

  12. Oh, and the bill spends almost a $Billion on another couple miles of the Train From Nowhere To Nowhere in CA.

    The primary purpose of practically each and every Dem infrastructure proposal is graft. Yes, sure, graft to the unions. But more importantly, to the families and cronies of the Dem politicians pushing the legislation through.

  13. Doling out the cash IS the point. Who cares if the projects ever actually get finished? See: CA High-speed rail.

    1. Or to the main point; Enslaving/Stealing human labor IS the point.
      … because *some* people work for cash in this country.

  14. You forgot about the MBE/WBE set-asides that also drive up costs.

  15. Or “Biden’s Confused”.

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