Infrastructure, Human and Otherwise: The Spending Is Easy, The Funding Is Hard

The senate is now dotting the “i”s and crossing the “t” in the word trillions, as in the $4 trillion President Biden plans to spend on infrastructure and on bringing the nation’s welfare state more in line with those of Europe and the wishes of senator Bernie Sanders. This past weekend enough Republicans voted to move the smaller bill, the one dealing with roads, bridges and other more traditional infrastructure, forward to assure a filibuster would not prevail. Procedural hurdles remain, making the timing of final approval uncertain (it might have happened by the time you read this), but one thing is clear: 18 Republican senators are less frightened by Trump’s threat to retaliate against the “weak, foolish and dumb” senators, deploying his $100 million fund in “lots of primaries,” than by their constituents who want their pot-holes filled and the nation’s business attended to. That makes this merely procedural vote more consequential than it otherwise would be.

The bill calls for about $1 trillion in spending, some half of which will come from repurposing funds provided by past relief programs. Add the other half, $500 billion of new spending, to the larger $3.5 trillion package for what is now called “human infrastructure” by Biden and his media claque, and you get the $4 trillion total.

For our purpose, which is to describe the New America that will result from the two spending packages, we can combine the spending and their financing, since the initial decision to separate steel and cement from “human infrastructure was a device to allow Biden to redeem his promise of bipartisanship without actually reducing total spending.

Infrastructure Repaired

America will have a refurbished infrastructure. Bridges and roads ($110 billion) and ports ($17 billion) will be repaired. Perennial loss-making Amtrak, used by politicians to flip up and down the Boston-New York-Washington rail corridor ($66 billion), and public transit that very few ever use ($39 billion) get cash infusions. There will also be $73 billion for green programs (electric vehicle charging stations with locations determined by Transportation Secretary Pete Buttigieg), a greener grid, including a $21.4 billion “green energy venture-capital fund,” to use The Wall Street Journal’s description. It is to be used by Energy Secretary Jennifer Granholm to pick innovative winners; she made her name picking losers as governor of Michigan. Oh, yes. There is $65 billion to increase high-speed internet access to the tech giants the administration is planning to sue for violating the antitrust and privacy laws and, in one Biden iteration, are “killing people” with misinformation about Covid. Enough goodies here for all the bipartisan sponsors to have something to tell the folks back home about its direct advantages to them.

Kindergarten the New Infrastructure

The infrastructure bill will be paired with a $3.5 trillion American Families Plan to support “human infrastructure”.  Free two years of pre-kindergarten early in life, free two years of community college later; paid family and medical leave; Medicare expanded to cover dental, hearing aids and glasses, and Medicaid expanded to cover the uninsured; child tax credits; higher pay for carers; affordable housing. And more. All items that once were the fruits of successful individual striving -- hard work and risk taking – will  become entitlements, seemingly free gifts from the state.

To get this done using a parliamentary technique called reconciliation, which eliminates the need for Republican votes on the $3.5 trillion package, Democrats must stay within the current 10-year spending budget. So up go taxes on what Sanders calls ”the wealthiest Americans and ... the most profitable companies in our country” (evil doers, all), and in come a variety of accounting gimmicks, along with some sales of the family silver – spectrum, $6 billion sale of oil from the strategic reserve, and cash to be generated by regulating crypto currencies.

Most important, the budgeted cost of the new programs is reduced by shortening their length, so that only two instead of ten years of outlays are included in the budget. Even more inventive: costs are cut by reducing the number of years of funding for existing programs, and assuming that the out years will be paid for with a 33% return on the investment (spending) made in the early years. Presto: all programs will be funded.

“Pay Fors” That Don’t Pay For Enough

Lest you believe these “pay fors” actually pay for these new programs, note that the nonpartisan Congressional Budget Office says the spending will add $256 billion to the national deficits over the next decade. The University of Pennsylvania’s Penn Wharton Budget Model puts the added deficit at $351 billion, and The Committee for a Responsible Federal Budget says $400 billion is the right estimate of the amount of added red ink that will spill across government ledgers.

The CBO and other estimates could not have come as good to news to Treasury Secretary Janet Yellen, who is busy finding ways to juggle the books to prevent us from defaulting on our national debt until congress can get around to raising the debt ceiling. But she is steadfast in support of more debt, defending it as an opportune time to borrow because interest rates are so low.

There’s More Unless Rules Matter

Reconciliation, which renders the 50 Republican senators powerless to affect the content of the $3.5 trillion American Families Plan bill, is bound by rules limiting the scope of the bill to measures related to the budget. Democrats have decided that those rules are more elastic than anyone ever imagined them to be. Included in the bill will be provisions providing a path to citizenship for eight million illegal or undocumented immigrants, take your pick, strengthening the hand of unions seeking to organize nonunion workplaces, and encouraging states to make ballot access easier. The senate parliamentarian advises the presiding officer, in this case Kamala Harris, on whether these items are eligible for reconciliation. The parliamentarian’s advice can be rejected by the Vice President, so nothing much stands between Democrats and their wish-list than the weight Harris is prepared to give to tradition.

Sanders The Big Winner

Bernie Sanders is being hailed as the new pragmatist for reducing the budgeted term of welfare programs to two years so that they fit within the budget and allow use of the reconciliation process. Only someone unfamiliar with Sanders would hurl such an insult at the Social Democrat from Vermont. What some see as Sanders’ compromise is nothing more than his patient pursuit of enactment of policies he brought with him four decades ago to the mayor’s office of a small town of a small state and thence to the agenda of a self-styled “moderate” President.

Bernie, the name he often prefers as it adds to his avuncular image (although not among political prisoners rotting in the dungeons of Cuba and Venezuela, regimes his is reluctant to condemn), is a conviction politician, “a lay priest seeking a secular goal” to borrow Churchill’s description of one of his contemporaries.  And the Social Democrat believes, quite correctly, that he is a winner. “Virtually every major program that we wanted remains intact. The difference is that they are not going to be funded, initially, for as long as we would like [emphasis added].” Sanders knows  funding for the new welfare programs will be renewed by politicians loathe to vote against child credits, family leave and other features of the New American welfare state.

Biden Enters The History Books

 Biden, meanwhile, will achieve his goal of enacting a latter-day combination of FDR’s New Deal and LBJ’s Great Society, with add-ons of his own. That is no small achievement, with features that have been needed for soe time. CNN historians are already at their keyboards, preparing to place him in the pantheon of Democratic heroes, a man who is snatching a record peace-time portion of the national income and wealth from individuals “voting” in markets, and turning it over to the political class – government bureaucrats, lobbyists, ethnic groups. Consequences to be determined. Not bad for a “moderate” chosen by Democrats to lead them into battle against the reviled Donald Trump, rather than the too-radical Social Democrat who opposed him for that nomination.