Makes U.S. ‘Uncompetitive,’ Funds ‘Favored Industries, Friends’: Analysts Rip Biden’s Infrastructure Plan

President Biden on Wednesday unveiled his $2 trillion infrastructure plan, a mammoth undertaking that his administration is promising will improve the lives of Americans through the most sprawling federal spending initiative in half a century, although some of the proposals threaten to undermine the plan’s own goals.

Biden announced the American Jobs Plan, the first installment of a two-part infrastructure and economic recovery plan projected to cost $3 trillion or more over 10 years, Wednesday afternoon in Pittsburgh, the same city where he launched his presidential run nearly two years ago.

“It will grow the economy, make us more competitive around the world, promote our national security interest and put us in a position to win the global competition with China,” Biden said during his speech at a union hall, calling the proposal “the largest American jobs investment since World War II.”

The plan invests $621 billion into transportation infrastructure such as roads, bridges, public transit, rail networks, ports, airports, and electric vehicle development, including $20 billion to ensure those projects advance “racial equity” and “environmental justice.” Another $400 billion will go toward care for elderly and disabled Americans. Biden’s plan also puts $311 billion to rebuilding drinking-water infrastructure, expanding broadband access, and modernizing electric grids and $350 billion to building and retrofitting affordable housing as well as building and upgrading schools and child care facilities. The plan also reserves $580 billion for research and development investments, American manufacturing and small businesses, and job training.

The second part of the plan, expected to be released in April, will address health care, education, and child care.

The president and his administration have likened the vast scope of the infrastructure plan to President Lyndon B. Johnson’s Great Society in the 1960s and President Franklin D. Roosevelt’s New Deal during the Great Depression.

“This is the first time we’ve been able to, since the Johnson administration and maybe even before that, to begin to change the paradigm,” Biden said at a White House event in March.

Indeed, Biden and his aides studied the 32nd president as they prepared his agenda, and every time the president sits down at his Oval Office desk he faces the portrait of FDR he had mounted over his fireplace.

Not included in the $2.25 trillion price tag of the first part of Biden’s infrastructure plan is the additional $400 billion in clean energy tax credits it provides. The plan invests heavily in climate initiatives, but progressives are nevertheless pushing Biden to embrace their own eye-popping $10 trillion green infrastructure proposal.

Tucked into the administration’s summary of the bill is also the Protecting the Right to Organize Act, a major overhaul of federal labor law that includes forcing workers to pay union dues even if they opt out. The union rights bill passed the House earlier this month, but its chances are marginal to garner the votes of 10 Republican senators, the number needed to avoid a filibuster in the upper chamber.

Biden has promised that Americans making less than $400,000 will not see their federal taxes increase. Instead, the infrastructure bill targets the corporate tax rate, hiking it up to 28 percent to pay for the plan. Former president Trump and congressional Republicans had slashed the rate to 21 percent from 35 percent in their 2017 tax cuts.

“I think the Biden administration should be commended for deciding to cover the cost with taxes instead of relying on borrowing,” Alan Viard, resident scholar at the American Enterprise Institute, said in an interview with The Daily Wire.

However, raising the corporate tax rate creates an incentive for American companies to avoid the higher rate by investing abroad. Biden’s plan attempts to counteract that by increasing taxes on U.S. companies’ income earned by foreign affiliates.

“What could happen is we see U.S. companies not making these overseas investments, but we don’t see an increase in domestic investments and instead we see foreign companies getting these business opportunities abroad that American companies otherwise would have gotten,” Viard said, adding that American companies could also decide to become foreign companies.

As a result, the infrastructure plan makes the U.S. “objectively pretty uncompetitive,” said Garrett Watson, a senior policy analyst at the Tax Foundation.

“To the extent that we think there is productive or high returns to certain infrastructure spending or [research and development], it’s going to be undermined by raising the costs of producing in the U.S., which is what they’re doing with their tax changes,” Watson told The Daily Wire, adding that there are other ways to pay for the plan.

“It’s going to be hard for this administration to respond to any unintended consequences, be it corporations finding creative ways to avoid the tax hikes or moving investments abroad,” Watson said. “His corporate policy is a little incoherent because it’s at cross purposes with itself.”

Some of the Senate’s more moderate Democrats have supported a smaller increase in the corporate tax rate, suggesting that the steeper rate hike floated by the administration may be too much for key votes like Joe Manchin (D-WV) and Amy Klobuchar (D-MN) to stomach.

Meanwhile, Senate Majority Leader Chuck Schumer is weighing using an obscure procedural maneuver that would allow Democrats to shoehorn the infrastructure bill through Congress with zero Republican support. If the maneuver is approved by the Senate parliamentarian, Democrats could again use budget reconciliation, which allows a bill to pass with a simple majority of votes. The reconciliation process, typically used only once per fiscal year for legislation related to the federal budget, was used earlier this month to pass Biden’s $1.9 trillion coronavirus stimulus package.

Conservatives immediately panned the bill as indiscriminately throwing massive amounts of money at the problems it seeks to address.

“Washington will distribute funding to favored industries and friends. America has significant infrastructure needs, but should reject top-down Washington micromanagement, and instead empower states to allocate the more than $500 billion in extra aid they are still holding from the recent relief bill,” said Brian Riedl, a senior fellow at the Manhattan Institute.

For now though, the administration is unabashedly touting what the president called a “once in a generation investment” and what CNN hailed as “a window into Biden’s soul.”

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