President Biden said today that infrastructure spending could help prevent inflation. This is odd for a few reasons.
First, the White House has been insistent that any inflation we’ve seen recently is “transitory,” that it won’t result in higher long-term inflation. So, preventing higher long-term inflation isn’t a goal of the White House since, by their account, there is no risk of it. Why entertain the thought?
Second, the justification doesn’t make sense. As NR’s Zachary Evans wrote, “Biden contended that investments in infrastructure such as roads, bridges, and broadband would eliminate economic ‘chokepoints’ that currently raise prices on goods.” There are indeed chokepoints that raise the prices on goods. Crowded highways full of semi-trucks, ports operating at maximum capacity, and packed freight terminals at airports are all costly.
But those are not $3.5 trillion problems, and they don’t have anything to do with free universal preschool, free community college, or any of the other items on the progressive wish list in the Democrats’ “infrastructure” plan.
It’s genuinely hard to think of anything that would be a $3.5 trillion problem since no piece of legislation in the history of the United States has even approached that price tag.
The U.S. does have something of a shipping crisis right now. The Port of Los Angeles and the Port of Long Beach, America’s two busiest ports, are operating at maximum capacity and have been unable to keep up with the flood of consumer goods Americans are buying from abroad as the economy recovers. Those are costly bottlenecks. If there’s a proposal to make those ports more efficient and expand their capacity, let’s hear it. Let’s have a big debate about how our American shipping policies can be improved. Maybe improvements will cost some money. Let’s get cost estimates from contractors on expanding our ports and debate whether spending that money is worth it.
To give an idea of the ballpark we’d be talking about, the Port of Los Angeles has invested about $4 billion in capital improvements over the past 25 years.
Biden wants to spend 875 times that on the Democratic proposal and 300 times that on the bipartisan framework. It’s not about relieving bottlenecks.