U.S. Infrastructure Bill Falls Far Short of What Is Needed

On August 10, the U.S. Senate passed a $1 trillion infrastructure bill after months of negotiations, which was hailed as a major bipartisan victory for President Biden. The congratulations, however, are likely to prove premature, for various reasons:

  • The House of Representatives is on recess until Sept. 20, and House Speaker Nancy Pelosi said she would not pass the infrastructure bill unless it is coupled with a $3.5 trillion Budget Plan, which has little prospect of gaining Republican support. While it might pass the House (with a majority of Democrats) , the Senate Republicans who voted for the infra structure bill are speaking out against the overall budget as too costly, and could still derail it in the Senate.
  • A bigger problem for President Biden is what is actually in the bill. Hailed by him as one which will “help make a historic recovery a long-term boom,” the provisions fall far short of what is minimally needed even to repair existing deteriorating infrastructure, much less provide a modernizing factor which could improve economic productivity. Of the $1 trillion price tag, only $566 billion is in new investment, to be spent over the next five years, a paltry sum given the needs. And of that amount, only $20 billion is allocated for spending by the end of 2022. While there has been talk of supplementing the amount with funds from state and local governments, many of them are facing severe deficits as a result of the costs of the COVID pandemic, and have had steep declines in revenue. The American Society of Civil Engineers, which does an annual assessment of the “gap” between funds allocated, and the actual need, stated in their annual report that there is a $2.6 trillion deficit, far beyond the funding level contained in the Senate bill.
  • Though not fully specified in what has been released so far, much of the U.S. spending will prioritize Green technologies, which will reduce overall productivity in the economy, by substituting efficient and reliable energy production with inefficient and unreliable “sustainable” sources, such as solar and wind.
  • A further problematic aspect of the bill is that it has been pushed by the White House team as needed to “send a signal” to China that the U.S. is not in decline. Both Joe Biden and his Secretary of State Tony Blinken made this point in comments after the vote in the Senate. But a comparison done by the daily Politico of what is in the bill with what China is planning highlights the inadequacy of the Biden legislation. In 2018, China’s infrastructure spending as a percent of GDP was 5.57%, compared to only 0.52% for America. In the same year, China spent $8 trillion in its state infrastructure budget, the U.S. $146 billion. The article pointed out that between 2011 and 2013, China poured more concrete than the U.S. in the entire 20th century! As for modernizing transportation, while the Biden bill allocates $25 billion for upgrading airports, China will build 162 new state-of-the-art airports by 2035.
  • The final point which must be made is that the idea of competition with an adversary as the basis of determining funding is an example of the worst kind of geopolitical calculation. Instead of competing against the Belt-and-Road Initiative –as was the talk at the G7 summit –why not cooperate, to take up the challenges faced by both the poorer countries, and the so-called advanced nations of the G7?
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