A robust infrastructure plan has been a priority for the Biden Administration since day one. So, too has passing the bill in a bipartisan deal. As such, the announced $550 plan, negotiated between the White House and senators from both parties is a major win for the administration as well as bipartisanship. 17 Republicans joined all 50 Democrats to advance the legislation on a 67-32 vote. But is it a win for the American people? Let us look at what is most likely in this updated deal:
Item:
- Roads, bridges, major projects ($110 billion)
- Destroying highways for real estate development ($1 billion)
- Public transit ($39 billion)
- Passenger and freight rail ($66 billion)
- Electric vehicle infrastructure ($7.5 billion)
- Electric school buses ($2.5-$5 billion)
- Airports ($25 billion)
- Ports ($17 billion)
- Cyber/Climate security ($50 billion)
- Drinking water ($55 billion)
- Broadband internet ($65 billion)
- Environmental spending ($21 billion)
- Safety ($11 billion)
As with any large spending the bill, the question comes, how do we pay for this? The proposed revenue raisers and spending offsets are:
- $205 billion from using unspent pandemic relief funds
- $56 billion in additional tax revenue from the extra economic growth generated from the infrastructure improvements
- $50 billion from recouping fraudulent unemployment benefits
- $49 billion for delaying the Medicare rebate rule enacted under former President Donald Trump
- $53 billion from unspent unemployment benefits from states that ended the enhanced payments early
- $28 billion from increasing tax reporting rules for cryptocurrency investors
- $21 billion from fees on government-sponsored enterprise
- $20 billion from spectrum auction sales
- $13 billion from a Superfund fee on corporations that pollute
Unsurprisingly there is a decent chunk of vagueness in how it is paid for, and it is rather likely that the numbers don’t quite add up. That isn’t necessarily a problem though. Infrastructure investment tends to yield positive returns. A dollar of infrastructure spending can increase near-term economic output by $1.50, and the multiplier effect can be even larger in times of recession. So long as regressive, inefficient funding mechanisms such as tolling are avoided, the US economy should come out ahead.
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