At the time this is typed, the Biden Administration and the Senate are wrangling over what constitutes infrastructure, how much to spend, and how to pay for it. Let’s leave taxes – a weighty subject worthy of its own note – for another post.
As to what constitutes infrastructure: I am more aligned with the Republicans’ view than with the Democrats’. The recent Texas power grid failure, the Solar Winds hack, the Colonial Pipeline cyberattack, and the recent internet cloud provider Fastly “glitch” (that affected, among others, the United Kingdom’s main public service portal and The New York Times) demonstrate the current vulnerability of many of the critical aspects of our infrastructure – both those under government and private control – to natural hazards and terrorist threats. I would submit that we should focus our infrastructure investment – through governmental direct spending and tax concessions (buttressed by regulation and oversight) to those private entities controlling critical aspects of our infrastructure — on roads, bridges, rail, public transit, national broadband expansion, reinventing our electric power grid, securing the safety of our water supply, and other like priorities. There are some areas, arguably tangential to these “core” priorities, in which I would like to see us invest, including some climate-related initiatives, support for semiconductor chip industry, and technology to mine and exploit rare earths (a vital arena in which China currently wields almost monopolistic influence). Although I have sympathy for a number of the priorities that the Administration and Democrats have sought to shoehorn within their definition of infrastructure – childcare assistance, elderly and disabled care, electric vehicle incentives, workforce development programs, and paid family leave — these are not infrastructure. I would submit that Democrats’ attempt to include funding for these priorities within their infrastructure proposal risks, in an old business phrase, sacrificing the good for what they consider the perfect.
I am certainly not versed enough to know how much total infrastructure spending is appropriate or how whatever is finally enacted should be allocated among different core infrastructure priorities. That said, based upon reports of their respective positions, I am again closer to the Republicans’ position than I am to the Democrats’. The Republicans want to fund part of the new infrastructure program out of previously-enacted COVID relief; Democrats do not. My view: with the nation approaching herd immunity, vaccine doses going unused, the economy rebounding faster than the economic community expected, jobs going unfilled, and annualized inflation currently running well above 40-year norms, I harbor doubts that all of the still-unspent COVID relief is truly needed (there are undoubtedly areas in which unspent sums will still provide value). To the extent that the enacted excess can be identified, it should be shifted to other national priorities including infrastructure. We do not need gratuitous spending. A notable segment of financial analysts, contrary to the belief of the Fed and the Administration, clearly feels that unhealthy inflation levels and a deepening federal debt are indeed potential respective outcomes of the Fed’s monetary policies and the Administration’s fiscal policies. As all readers of these pages are aware, I have no economic background, but I share that segment’s uneasy sentiments. On infrastructure, we should spend what we need to spend, not feather ancillary aspirations.
As all who care are aware, the White House called off infrastructure negotiations with a Republican Senate group led by U.S. WV Sen. Shelley Moore Capito right before the President left for Europe because it considered the Republican proposals unacceptably stingy. This was seemingly a wise move, inasmuch as a bipartisan group of five Democrat and five Republican Senators including U.S. UT Sen. Mitt Romney and U.S. WV Sen. Joe Manchin has since agreed upon a heftier infrastructure package, with an expenditure approximating $1B over five years, focusing on core infrastructure and funded in part by repurposing some COVID relief funds. As he returns from overseas, President Biden will confront conflicting priorities: to get as much of his agenda through Congress as he can before the 2022 campaign season truly heats up, contrasted with a desire to strike a deal with Republicans that will demonstrate to the centrist Americans who voted for him that he is able to accommodate competing views as he claimed he could during his presidential campaign.
Otto von Bismarck, German Chancellor in the late 1800s, is generally credited with the observation, “Politics is the art of the possible.” The President is facing the reality that the vast majority of his party will wish him to use the Senate’s reconciliation process to push through their laundry list of priorities, and will threaten not to support a measure that they consider but half a loaf. On the other hand, I fear progressives’ preferred approach will feed the Republicans’ claim that Mr. Biden has proven to be more “socialist” than he promised during the campaign, in my view thereby endangering Democrats’ electoral prospects in 2022 and 2024. If advising Mr. Biden, I would suggest that he tell Sen. Romney and his four Republican colleagues in the bipartisan group that if they can get five more Republicans to publicly indicate by June 30 that they will vote for the bipartisan group’s proposal, Mr. Biden will publicly support it – and tacitly dare disgruntled progressive Democrats to oppose it. At the same time, I would further suggest to the President that he tell Mr. Manchin and the Democrats in the bipartisan group that if the bipartisan Republicans cannot garner the support of five additional members of their caucus by June 30, it will prove that his and these centrist Democrats’ professed faith in bipartisanship and Republican goodwill was a pipedream, and that Democrats should stand together to use the Senate’s budget reconciliation process — including tax increases to be determined — to enact the expansive infrastructure priorities that the Administration originally proposed.
My guess: Mr. Romney and his colleagues will not be able to get another five Republican votes. The Democrats will have to go it alone on this, and, where they can, other measures. The dishearteningly intractable partisan posture maintained by most official Republicans and many Trump voters since Mr. Biden’s inauguration is certainly worthy of a post; but this note is best left to infrastructure.
McCoy's Noise 