Why is infrastructure different? (Part 2)
If we assume that the Biden Administration can put in place efficiency and transparency measures, to show the American taxpayer how their money is being spent, the next step is ensuring value for money. I read an excellent opinion piece by Fareed Zakaria from which I quote;
"New York University scholar Alon Levy did a detailed analysis of the country’s crazy costs and concluded that there were at least eight reasons for them. Fundamentally, though, they concluded that the costs were so high because Americans were unwilling or unable to look around the world and try to learn from other countries. American exceptionalism has led to an exceptional, uniquely bad system for building infrastructure."
It coms back to this 'We know best' attitude that is now an impediment to progress. Even before you can get started on the practical delivery of the plan, there needs to be some fundamentals in place to manage it. As Zakaria noted;
Most of the funds appropriated for the New Deal were administered scrupulously by Interior Secretary Harold Ickes, another confidant of FDR. Each of these men developed a reputation for honesty, efficiency and reliability, which in turn made people believe that government could do big things and do them well.
It's worth reading the White House Fact Sheet on The American Jobs Plan It helps you understand that infrastructure is NOT just about roads and bridges, as the Republicans would have you believe. It really is time McConnell and his intellectually deficient friends joined the 21st Century and did some research on modern day infrastructure. Broadband today is what electricity was at the time of FDR. For America to be competitive, it needs to bring high speed internet to every household and business. It is unacceptable that almost 25 million people do not have access to broadband services and for those that do, it is expensive. Take a look at this piece by allconnect from June 2020 and you'll see that lack of broadband infrastructure in rural communities is a big issue that needs to be addressed.
Texas ably demonstrated what happens when you deregulate and place profit over investment in the power grid. It effectively rendered Texas a third world state in 21st century America. The new plan addresses the dangerous number of lead pipes that are known to be the source of increasing levels of lead poisoning in young children as well as adults. It invests $111 billion in replacing ALL lead piping and service lines throughout the country and proposes to upgrade and modernize America’s drinking water, wastewater, and stormwater systems. In addition, it tackles new contaminants, and supports clean water infrastructure across rural America. For some reason, the Republicans don't see this as infrastructure.
Even before we look at roads, bridges and transport, the above investment alone, will require an army of workers to complete and this is where the beauty of infrastructure investment comes to life. Let's compare methodologies. If you give a tax break to a company where does the money go? The good news is, we have a shining recent example from 2017. It provides little if any job growth, does nothing to increase the standard of living of those working for the company. It benefits only senior executives and provides a slush fund to for stock buybacks. It's the equivalent of fiscal leaking pipes, the wealth just seeps away, providing little if any societal benefit.
Now compare that to infrastructure investment. It creates jobs that reduce welfare costs and that's just for starters. If those jobs are living wage jobs as they should be and are given to American workers, then the real benefits begin. Good wages allow those workers, in some cases for the first time in years, to provide a proper standard of living for their families. It pumps money back into the economy, as they start to buy things like consumer goods and vehicles, not to mention pumping money into tourism, as they are able to take family holiday, that has been missing in their lives for years. Last but not least, it delivers tax revenues. There's no 'grab and dash' corporate mentality of moving money offshore to avoid tax. Everyday working Americans pay their dues, as they have no choice, the IRS takes care of that.
I've heard numerous Republicans whining since the announcement of Biden's plan about a 'woke, left wing agenda', where your money is going to be wasted on Biden's socialist project. Firstly, give me a moment while I get my breath from laughing. This GOP obsession with taxes is beyond ludicrous. 'They want to hike your taxes' is the usual fear game that holds absolutely no water, unless you have a family income of over $400,000 a year. Let me try and spell this out for you. A $400,000 a year household income, puts you in America's top 1.8% income-earners according to the IRS. Therefore, by most metrics, you would be considered rich. So to be clear, that means that 98.2% of income earners will face NO TAX RISES. I have to assume that these Republicans squealing about tax hikes, are talking about their rich friends and themselves and NOT YOU.
All too often, the message is lost in a blizzard of fear messaging from the right. The tax pitch that Joe Biden has made, is in my view perfectly targeted to ensure that most Republican voters remain unaffected, whilst rich Republican donors are precision targeted. With further steps in hand to remove tax avoidance loopholes, the Administration is not being punitive, they are being socially responsible. The last Republican move to reduce the corporate tax rate to 21% was fiscally reckless. If you take this kind of action, the only way you can make up the deficit created, is to go after welfare benefits and that was the clear objective. By pushing it up to 28% (putting aside Trump's reduction in 2017), it remains the lowest it's been since WW2.
Biden is engaging on some fiscal rebalancing that makes absolute sense. The tax hike argument from Republicans is a non argument. This stupid statement of 'You are best placed to look after your money' is nonsense, especially if you consider the current mask debacle. You would think wearing a mask is a common sense thing to do, but oh no, Republicans turned it into an issue of political loyalty, even under penalty of death. FFS, give me break.
Paying less tax is only relevant if you've got a job to pay tax from Mr Cruz. Even after a good month for jobs in March, unemployment is still at 6%, so there is a way to go.
Come back tomorrow when we'll dive into the good news.