Score 2 for Bidenomics
The bipartisan infrastructure bill is a solid success for the new economic paradigm
Many people apparently have reasons to be disappointed about the bipartisan infrastructure bill that just passed the Senate. Some are very justifiably angry because of the time and hassle it takes to actually disburse the money that gets spent on infrastructure projects in the U.S.. Others are disappointed that the bill doesn’t have many climate provisions. Still others believe the bill is a Republican trick — a way to give centrist Dems like Manchin and Sinema an excuse not to vote for an expansive follow-up bill in reconciliation.
I suspect that there is more than a bit of ritual play-acting to many of these lamentations. It’s a very rare thing for Republicans to pass legislation that helps the country while a Democrat is President; if Dems act too triumphant about the bill, it could cause the GOP to lose face, since that would mean they handed Biden a partisan victory. Instead, they have to wail and moan, both to allow Republicans to say “Hey look, we got away with stiffing the Dems”, and to leave no doubt in the Dems’ mind that they’ll be letting their voters down if the reconciliation bill gets watered down.
In fact, the bill is a major success for the Bidenomics agenda, even if Biden himself ends up reaping only modest political rewards. Remember that government investment is a core element of Biden’s program. Government investment has been falling as a percent of GDP for decades, even as private investment has mostly held up.
Falling investment means the U.S. has become something of a consumption society, partying today and letting tomorrow worry about itself. But don’t blame profligate U.S. consumers for the problem — it’s all about the way our legislators choose to approach investment. For decades now, what our elected leaders have basically done is to delay, squabble, point fingers, and eventually, when the civil engineers scream loud enough and a few bridges collapse, they hold their nose and hurl a pot of money at the legacy infrastructure that we built in the mid 20th century — patching up the potholes and shoring up the bridges and hoping that the problem goes away for a few more years.
At first blush, it might seem like the bipartisan infrastructure bill does exactly the same thing. It contains the following:
$110 billion for road and bridge repair
$66 billion for upgrading and maintaining passenger trains
$65 billion for making the power grid more robust and reliable
$39 billion for public transit
$25 billion for upgrades and expansions at airports
$17 billion for upgrades and expansions at ports
This really does sound like a lot of same-old, same-old. But here’s the thing — this is spending that absolutely needs to be done. And instead of making the Democrats fight tooth and nail for it, as they did during the Obama and Clinton years, the GOP (or at least, enough of the GOP) simply said “OK, yes, we’ll do it”. Yes, this stuff is table stakes as far as investment is concerned, but by cutting this deal, the GOP is declining to force Dems to waste their reconciliation budget bill on table stakes. It shows that for all their obstructionism, Republicans want this country to continue being a functional country (though they have far less ambitious ideas about what a functional country entails). It’s also one more hint that authority figures might finally be taking steps to reduce unrest.
And even more encouragingly, there’s some stuff in the bipartisan bill that goes beyond just hurling money at patching up old roads and bridges, and actually makes investments that would leave the country qualitatively better off than before. This includes:
$65 billion for rural broadband
$55 billion for upgrading water infrastructure, including replacing all lead pipes (!!!)
$47 billion for cybersecurity and climate change mitigation
$21 billion for cleaning up toxic waste
$15 billion for electric vehicle charging stations and electric school buses
$11 billion for safety initiatives
$8 billion for Western water security
This is not all stuff that I’d choose to prioritize if I had been making legislation. Cleaning up lead is an amazing landmark initiative, and of course electric vehicles are great, but I’d have probably skipped the rural broadband (as the technology threatens to be obsolete soon). But you know what? These kinds of spending initiatives are highly encouraging, because they suggest that our leaders have at least some small smidgen of vision for a country that doesn’t just look like a patched-up version of 1985. I mean, come on — we just got Republicans to vote to replace all the lead pipes in the nation. How cool is that??
But on top of those good things, the bipartisan bill has one hugely important new thing — it starts to attack the problem of America’s ruinous infrastructure costs. The fact that America spends at least twice as much per mile of road as other (highly unionized) rich countries, and far more than twice as much per mile of train track, is a huge reason why our infrastructure is so subpar.
Fortunately, the bipartisan bill has several provisions to finally start attacking this problem:
It instructs agencies to expedite permitting.
It strengthens the Federal Permitting Improvement Steering Council, whose job is to streamline infrastructure permitting. It makes the council permanent and extends its jurisdiction.
It consolidates the government’s environmental review process by having different agencies submit one joint review instead of a whole bunch.
Now you can look at this as a bunch of obvious, no-brainer stuff we should have done decades ago, and you’re not wrong. But the fact that we’re starting to actually attack the cost problem shows that A) our leaders are aware of the problem’s existence, and B) there’s actually a glimmer of hope that our leaders will start to focus on effective government, rather than endless ideological fights over whether government should be bigger or smaller.
I’m not sure how this affects Biden’s political fortunes, but it’s a very good sign for Bidenomics as a coherent economic policy approach. A bipartisan shift toward government investment (and toward effective government) is a big part of what the American economy needs. Economic programs win when both parties agree to implement their own versions of the basic idea, no matter who wins Congress and the Presidency — it’s how Eisenhower, LBJ and Nixon completed the New Deal, and how Clinton completed Reaganomics (this isn’t a judgement call, just a description of how things went down). Call me a crazy optimist, but I don’t think this bipartisan bill is a GOP trick — I think it’s the GOP seeing where the future is heading, and wanting a piece of it.
So score 2 for Bidenomics. On to the reconciliation bill. Keep the hits coming — we’ve only taken a few steps, and there’s a long road ahead.