Fiscal Policy

Biden’s ‘Infrastructure’ Plan: If You Build It, You Will Pay

President Joe Biden speaks about his $2 trillion infrastructure plan in Pittsburgh, Pa., March 31, 2021. (Jonathan Ernst/Reuters)
Redefining ‘infrastructure’ doesn’t make Biden’s bill any less wasteful.

‘You and I come by road or rail. Economists travel on infrastructure,” Margaret Thatcher once told an audience — pillorying economists’ love of jargon and recognizing the real value of infrastructure in allowing people to go about their daily business. President Biden’s infrastructure plan is bloated, wasteful, and indifferent to how people really travel. It could do with a good dose of Thatcherite logic.

First, there’s the bloat. The bill can be seen as the second part (with the American Relief Act being the first) of a partisan wish list of items, this time being sold as “infrastructure.”

Much has already been made of this. Senator Kirsten Gillibrand’s Humpty Dumpty–like attempt to redefine the term to fit the bill was widely criticized on social media. A Politico review of the bill’s $2.25 trillion spending plans found that $821 billion would count as infrastructure under generally accepted definitions and $111 billion was probably close enough to count. However, $1.32 trillion, or close to 60 percent of the bill’s total tab, was “really stretching things,” “a very distant relative of,” or “not even remotely” infrastructure.

Given the bipartisan agreement that genuine infrastructure needs attention (even recognizing that the nation’s infrastructure isn’t in as bad shape as it is painted), the president probably could move a bill with broad cross-party support. The decision to attach sundry unrelated items — such as federal funding of schools, job-training initiatives, and unionization of home health-care and child-care workers — to what most voters consider a must-pass bill suggests that Biden doesn’t think he can get those passed any other way.

Then there’s the cost. President Biden boastfully claimed that the bill would create 19 million jobs “that pay well.” That could possibly represent value for money at $118,000 a job. However, Transportation Secretary Pete Buttigieg had to contradict his boss, recognizing that this figure included over 16 million jobs that would be created anyway. As Reason’s Eric Boehm calculated, that puts the dollar figure per job created at over $800,000. It’s not quite the $2 million per job created by Los Angeles after the Obama stimulus act, but it’s getting there, and on a much bigger scale.

Part of the reason is that the bill doesn’t help make the building of real infrastructure projects quicker or more affordable. In fact, it doubles down on policies such as project labor agreements and “Buy American” requirements, while failing to do anything about the plague of permits. Perhaps the president’s old boss could remind him how those affected his stimulus bill’s supposedly shovel-ready projects.

Finally, there’s the waste. Perhaps the worst aspect of the bill is that it misunderstands what people need from infrastructure. Simply throwing money around and building projects is a spectacularly bad way to build the road and (sometimes) rail they need.

Spain offers a cautionary tale. Just over a decade ago, Spain’s socialist government decided to spend a bundle on upgrading the country’s infrastructure. Years later, the country is littered with gleaming transportation projects that no one uses. For example, the province of Castellón opened a new airport in 2011 that didn’t see a flight until 2015. A new high-speed-rail line from France across the Pyrénées to Figueras had to file for bankruptcy. Even the country’s new toll roads faced problems, failing to raise the money they needed to be profitable.

Spain is by no means alone. In China, where “ghost cities” remain mostly empty, the government is spending $400 billion on infrastructure in various regions, including the creation of data centers, with no indication of who will use them.

As for how you and I travel, the Biden plan includes $85 billion for mass transit and $80 billion for Amtrak, even though transit ridership collapsed during the pandemic and Amtrak hasn’t done much better. So far, there are few indications that people will flock back to transit and rail once the pandemic is over, which would suggest sticking to a “fix it first” principle, but the plan instead appears to be based on the “Field of Dreams” ethos of “If you build it, they will come.”


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