President Joe Biden’s $2.3 trillion infrastructure plan is getting pushback from Republicans and moderate Democrats. Members are questioning the bill’s large cost and are concerned that funding it with corporate tax increases would undermine the recovery. Senate Republicans are talking about a compromise package of $600 billion or more, but that is still a lot of money that the federal government does not have.
It often makes sense for the parties to compromise in the middle, and infrastructure spending seems like a worthy goal to most members. But the Biden plan goes awry in so many ways that even a compromise would likely undermine efficient investment. …
… Tax Hike Damage. About 65% of America’s infrastructure is owned by the private sector — everything from broadband to pipelines to the electric grid. Biden proposes to raise corporate taxes by $2 trillion over 15 years to fund his infrastructure plan, but that would suppress investment in private infrastructure by reducing after-tax returns.
Not Needed. Most of Biden’s infrastructure spending would be for facilities owned by the states and private sector. But the states can fund their own infrastructure — for example, more than half the states have raised their own gas taxes to fund transportation since 2015. Subsidies to private infrastructure is also not needed, such as Biden’s $174 billion for electric vehicles. Car companies are already pumping billions of dollars into EVs, and there are already 30,000 EV charging stations across the nation.
Corporate Welfare. During the presidential campaign, Biden said, “we do not reward corporations, we reward individuals,” and he complained about “trickle??down economics that works for corporate executives and Wall Street investors, but not working families.” But Biden’s own plan includes hundreds of billions of dollars in business subsidies — for EVs, broadband, manufacturing and utilities. If passed, the subsidies would add to the feeding frenzy of corporate lobbying in Washington.