Worley Blog


Posted on: April 22nd, 2021 by Clifford F. Lynch


President Obama tried it. President Trump promised it. Now President Biden is taking a very aggressive stance on infrastructure improvement. Hopefully, he can accomplish what no president since Dwight Eisenhower has been able to do – get Congressional approval, design, implement, and pay for a major improvement in the country’s infrastructure.


According to President Biden’s proposal, $2.3 trillion would be spent on infrastructure over an 8-year period, creating millions of jobs. (While similar Democratic proposals in the past all have emphasized new jobs, Biden is particularly pro-labor.) While the administration is touting the proposed legislation as a $2.3 trillion infrastructure solution, this may be a stretch, considering the provisions of the bill. When most of us think of infrastructure, we think of roads, bridges, waterways, and railroads. We are particularly concerned about the deterioration in our highways and bridges many of which are in sore need of repair or replacement. The best private source of information on this subject, the American Society of Civil Engineers, has concluded we need a $3 trillion investment in infrastructure over the next ten years.


The president’s proposal does not come close to that. It provides $115 billion to modernize the highways and bridges that are in the worst shape – about 20,000 miles of highway, according to the White House. The modernization of “economically significant” bridges would be included in this category. According to the New York Times, only a total of $625 billion is included for roads, bridges, rail, transit, ports, and electric vehicle charging stations. This would include such things as $85 billion for public transit, $80 billion for Amtrak’s northeast corridor, $174 billion for 500,000 electric vehicle charging stations, electrifying 20% of school buses and the federal fleet, $25 billion to upgrade air travel and airports, and $17 billion for waterways and ports.


The remaining $1.7 trillion expenditure on “infrastructure” becomes a little vague. It is reminiscent of some of the pork barrel legislation of the past. It includes such projects as a $100 billion broadband expansion, $100 billion to upgrade the power grid, $213 billion to provide more than 2 million affordable houses and apartments. $100 billion for long-term care service under Medicare, $180 billion for research, $100 billion for workforce development, and other seemingly unrelated allocations. While any one of these may be important, they probably will just clutter up, or even undermine, the president’s infrastructure plan.


Right on the heels of the expensive pandemic legislation, $2.3 trillion for anything will be a challenge. Once again, the administration refuses to consider increasing  the 30-year old fuel tax – the logical source of funds for highways and bridges, and is going to send the invoice to U.S. corporations. The suggested source of funds will be an increase in the corporate tax rate from 21% to 28%, a 21% global minimum tax, and other provisions that ensure U.S. corporations cannot avoid taxes through merger with or purchase of foreign corporations. (The corporate tax rate was reduced from 35% to 21% in 2017, to create more investments and jobs. The pandemic dashed those hopes, however.)


Not surprisingly, the program’s journey from proposal to law of the land will be a tough one. First of all, with the thin Democratic majority in Congress, the polarization we now have in this country will be a major stumbling block. In this case, maybe rightly so. This is a huge amount of money, especially following so closely the Covid-19 spending. The legislation is just too broad. We really need to do something about highways and bridges now, and let the other suggestions stand on their own.


While most businesses and business groups, including FedEx, the Business Roundtable, and the U.S. Chamber of Commerce, agree that infrastructure improvement is a high priority, they do not believe they should pay for it. The U.S. Chamber, for example has long been a proponent of increasing the fuel tax. Conversely, Jeff Bezos of Amazon said he supports an increase in the corporate tax rate. It is interesting to note that while the administration does not want more taxation, they seem quite willing to accept the increased prices consumers would see if corporate tax rates are increased.


It will be a long battle, but one major advantage to all of this is the fact that the infrastructure subject finally is on the table. Hopefully, after much discussion, negotiation, weeping, and gnashing of teeth, we will get at least some action.