“So far, Democrats and Republicans have made some headway on the bipartisan deal. They have agreed to a very vague framework that includes funding for roads and bridges, public transit, passenger and freight rail, electric vehicle infrastructure, clean drinking water, and broadband internet, among a few other areas. The agreement goes into almost no detail beyond those broad categories — with lawmakers now working to get more specific as they transform that framework into actual legislation.
Where both sides haven’t reached any agreement yet is how all of this will be paid for. Democrats want to pay for it largely by undoing parts of former President Donald Trump’s tax law, while Republicans suggested raising the gas tax and electric vehicle charging fees. With both sides rejecting each other’s ideas, they instead put out a list of potential revenue sources, ranging from stronger enforcement of current tax laws to spending caps to public-private partnerships. But the sides haven’t reached any concrete agreements here, and all of these ideas may not even be enough to fund the full bill.
Democrats have also promised to pass an additional infrastructure bill through reconciliation (to bypass the filibuster on a party-line vote). This bill would aim to fill in the other parts of Biden’s agenda left out of the bipartisan deal, including broader action on climate change and “human infrastructure” measures like an expanded child tax credit and elder care.
But the party hasn’t come to an agreement on this measure. Manchin suggested the bill could be as little as $2 trillion, while Sanders has worked on a $6 trillion proposal. There is, suffice to say, a very wide space in between.
In short: A lot is up in the air. The specific details are still being worked out. It’s not clear if any of this will happen.”
“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.”
“When the transit agency that serves Washington, D.C., replaced its aging trains during the last decade, it ended up paying about $400 million more than global averages—the equivalent of an additional 150 cars.
One major reason for the higher costs, according to economists with the American Action Forum who studied the D.C. Metro’s procurement process, was a federal mandate first imposed in 1982. It requires that equipment purchased by federally subsidized transit agencies contain at least 60 percent American-made components.”
…
“The cost of “Buy American” provisions can be significant. An analysis by the Peterson Institute for International Economics, a pro-trade think tank, found that “Buy American” rules on the books in 2017 cost taxpayers $94 billion that year—$745 per household.”
…
“Overpaying for subway cars didn’t make the D.C. Metro safer or more efficient. All it did was force riders and taxpayers to spend more for less. The same will be true of Biden’s policies.”
“The White House has already cut its initial $2.25 trillion infrastructure proposal by more than $1 trillion, and proposed significant changes to the taxation plan to pay for the infrastructure plan.
The GOP group, meanwhile, has added less than $100 billion in new spending to its initial proposal. The latest Republican plan totals $928 billion but is proposing just $257 billion in new spending, and repurposing the rest of the infrastructure money from unused American Rescue Plan funds.”
…
“Still, progressive groups are telegraphing their disappointment, especially after the Senate GOP filibustered a bill for a commission to investigate the January 6 insurrection on Capitol Hill — a violent event led by supporters of President Donald Trump targeting lawmakers of both parties.
“It’s hard to argue Republicans are good faith negotiations when they couldn’t pass that.” Maurice Mitchell, national director of the Working Families Party, told Vox of the commission bill. “Democrats are attempting to govern, and Republicans have their eyes on 2022 and 2024 and are seeking to get back into power.””
“while our infrastructure could certainly be modernized and could use some maintenance, it’s not crumbling. According to the World Economic Forum, U.S. infrastructure is ranked No. 13 in the world—which, out of 141 countries, isn’t too shabby, especially when considering the enormous size of our country and the challenges that presents.
Yet as Washington Post columnist Charles Lane notes, it would be more accurate to bundle European nations together, since they share a significant amount of infrastructure, which would move the United States into fifth place.
Moreover, while the American Society of Civil Engineers’ 2021 report card gave the United States a C-, this is its best grade in two decades—meaning that the quality of roads, bridges, inland waterways, or ports has been improving each year, without a congressional rescue plan. This fact doesn’t quite fit the crumbling infrastructure narrative that politicians and the media like to tout.
Academics also refute the idea that infrastructure is crumbling. Reviewing a large body of research in a National Bureau of Economic Research paper, Wharton University economist Gilles Duranton and his co-authors state: “Perhaps our main conclusion is that, on average, U.S. transportation infrastructure does not seem to be in the dire state that politicians and pundits describe. We find that the quality of interstate highways has improved, the quality of bridges is stable, and the age of buses and subway cars is also about constant.””
…
“in theory, government spending could lead to higher growth in the longer term. Unfortunately, legislators’ well-documented tendency to make decisions based on politics often leads them to favor projects that are outdated, expensive, and never profitable at the expense of private and profitable alternatives.”
“What forces, then, did drive the cost escalation? One key finding, the authors say, is that if a given community is wealthier, the state will wind up spending more to build a given mile of interstate. This effect increased over time.
To some extent, correlations of this sort might manifest themselves even if affluent neighborhoods do not exert any particular clout. Amenities that attract well-off residents, such as water views, may be the same ones highway builders take pains to avoid spoiling; municipalities may have reason to press for features such as noise barriers in places where property tax collections are high and officials have an incentive to keep property values from falling, and so forth.
Another possibility, however, is that wealthier persons are simply “more effective at voicing their interests in the political process.” The highway route gets diverted in a way that protects their amenity, but spoils some equally valued amenity in a less affluent neighborhood. The unwelcome extension is completed far behind schedule, with concomitant expense, because opponents have been skillful at working the system by stretching out hearings and reviews and then suing.”
…
“Brooks and Liscow pinpoint the early 1970s as the inflection point for increased spending on highway projects. What was happening around that time? The National Environmental Policy Act (NEPA), which requires environmental impact review for federally funded projects, was passed in 1970. California passed its considerably more stringent CEQA (California Environmental Quality Act) the same year, and it was signed by none other than Gov. Ronald Reagan. In 1972 and 1973, Congress added additional federal laws that provided key leverage in fighting construction projects on the basis of loss of species habitat and wetlands. The U.S. Supreme Court helped out with the 1971 case of Citizens To Preserve Overton Park v. Volpe, which multiplied the chances to go to court over development by curtailing judges’ deference to agency decision making. All of these laws and decisions have made it much easier for citizens to contest infrastructure projects, driving up their cost and delaying their implementation and completion.
Among Brooks and Liscow’s most interesting findings is this: The relationship between local resident income and project expense took off just as these changes in law were coming online. Before 1970, the two were related modestly enough that the correlation failed to score as statistically significant. It then proceeded to quintuple.”
…
“the new “citizen voice” laws brought some authentic benefits; objectors could bring genuinely useful information to the highway planners about ways to avoid environmental harm.”
“Certainly, the need for infrastructure spending over and beyond what the federal government, states and localities already spend is oversold.
Infrastructure is obviously important, and building or repairing it can be a good investment, depending on the particulars. But enormous catch-all Washington infrastructure bills aren’t well suited to discerning, nonpoliticized investment decisions, and the endlessly repeated cliche about our “crumbling” infrastructure doesn’t hold up.
A recent paper for the National Bureau of Economic Research noted, “Over the past generation, the condition of the interstate highway network improved consistently, its extent increased modestly, and traffic about doubled. Over about the same time period, the condition of bridges remained about the same, the number of bridges increased slowly, and bridge traffic increased modestly. The stock of public transit motor buses is younger than it was a generation ago and about 30% larger, although ridership has been about constant.”
Shooting money out of a bazooka is not self-evidently what the state of America’s infrastructure calls for. But when the only tool you have is huge reconciliation spending bills, everything looks like a crisis urgently requiring more profligacy.
The bills are also a substitute for passing significant nonspending policy changes, which is seemingly beyond Biden’s power. Unlike FDR, Biden has narrow and tenuous congressional majorities. He’s not getting HR1, gun control, a higher minimum wage, or immigration reform, and perhaps couldn’t even if Senate Democrats eliminated the filibuster.
What he can do, which FDR and LBJ never could, is reach for the word “trillion” as much as possible.”
“Liberals are wary that the GOP may be trying to prolong infrastructure talks for weeks or even months, potentially setting back Democrats’ ambitious agenda as Biden goes back and forth with the opposition party over how big to go and when. But several prominent progressives also want to keep giving Biden room to try with Republicans — up to a still-undetermined point.
^
At the moment, the two sides seem very far apart: Biden’s initial infrastructure spending pitch was more than $2 trillion, with a second part of the plan still in development. And several Democrats said Monday they seriously doubt that discussions with the GOP will produce anything at all.
Republicans have not indicated they would be willing to spend anything more than $800 billion — a paltry sum for Democrats — and even that might be a stretch. And while liberals in Congress aren’t yet asking Biden to ditch the talks altogether, they are clearly signaling that his patience, like theirs, should be finite.”
“even a quite generous accounting still suggests that only a little more than half of the bill is targeted at anything that meets the definition of infrastructure, and that includes projects like $111 billion for drinking water and $328 billion for upgrading military health facilities and other federal buildings. As Politico notes, those sorts of projects involve some amount of physical building and construction but have never been previously categorized as infrastructure.
The plan also includes a lot of spending on stuff that doesn’t even remotely count as infrastructure. For example, the proposal includes about $590 billion for vaguely defined job training, research and development, and industrial policy, as well as another $400 billion for expanding and supporting home health care. That’s about $1 trillion in non-infrastructure spending in a supposed infrastructure bill.”
…
“even if you just confine your analysis to the parts of the bill that are actually infrastructure, what you find is that it’s chock-full of provisions that almost seem intentionally designed to make big infrastructure projects much slower to complete and much more expensive.
As Reason’s Christian Britschgi wrote, the plan includes “Buy American” and prevailing wage provisions that would drive up the already-high costs of infrastructure and funnel a lot of money to the unions that support Biden, and that Biden has repeatedly said he supports. To the extent that American infrastructure has problems, it’s partly because of comparatively high construction costs that make projects more difficult to build. Instead of attempting to solve that problem, Biden’s infrastructure plan would make it worse.”
…
“at its heart, it’s not really an infrastructure plan. It’s a payoff plan for Biden’s labor allies. And that helps explain the non-infrastructure parts of the plan too. The $400 billion for home health care would heavily benefit the Service Employees International Union.”