Biden’s $2.3 Trillion Infrastructure Boondoggle: What Would You Cut?

anoop

5 years ago

Why do we need to cut anything? Everything can be paid for with debt.

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ajc1970

5 years ago

Reply to anoop

Whoever is buying US Treasuries now deserves the default.

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PeterF

5 years ago

I would leave the high-speed rail piece intact. It’s time we had a passenger rail system that’s not more at home in the Congo than the United States. Obviously rail isn’t a good fit everywhere, but it should be supported in places where it is. We have heavily subsidized air travel and highways while overtaxing the railroads. Let’s reverse this, stop building new highways, and put the money into rail.

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TexasTim65

5 years ago

Reply to PeterF

The only place where passenger rail makes sense is the densely populated north east. And they already have rail there and it’s still losing money. Mostly because when you arrive at your destination city you still need to rent a car. You need to do that for air travel too but the infrastructure is already there (rental car centers at airports). Passenger train stations are mostly downtown where there is no place for rental car centers etc.

So why throw even more money at a money losing proposition. Only freight rail makes economic sense and we should allocate all the rail money for that.

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ThaomasH

5 years ago

I’m less concerned about how much and which items if there are tax increases to pay for all of it.

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Frank Sterle Jr.

5 years ago

Biden’s renewable energy
infrastructure funding should not be cut at all.

I feel it’s time that every residential/business structure
began harvesting at least some of its own energy through solar cell panels,
even if only as an emergency/backup source of power via storage system; albeit
the idea likely would be opposed by various corporate interests.

Is it wise to continue having every structure’s entire electricity supply relying on external power lines that are susceptible to
being crippled by unforeseen events, including storms of unprecedented magnitude,
especially considering our very vulnerable overreliance on electricity? There
also are coronal mass ejections to consider, albeit their damaging effects are
rare, in which power grids are vulnerable to potentially extensive damage and
long-lasting power outages.

If a new renewable-energy
form’s wide availability would come at the profit-margin expense of the
traditional energy production companies, one can expect obstacles, including
the political and regulatory sort. If it notably conflicts with long-entrenched
corporate interests, even very progressive motions are greatly resisted, often
enough successfully. Also, there will be those, including Internet trolls, who
will mock any idea for a new renewable-energy form as ‘not being realistic’,
especially if it will greatly reduce the global use/need of fossil fuel.

One post I read based his rebuttal solely on the
erroneous notion that if it were possible to have such independent solar-power
generation and storage, it would have been done by now and made a few people
very wealthy. Unfortunately, when such illogic is widely believed, it’s much
easier for some entity to maintain an outdatedly problematic but still very
profitable status-quo energy system.

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TexasTim65

5 years ago

No idea why you left Public Transit in there for 85 billion. Covid fears have decimated public transit ridership and may continue to do so for a decade or more. Plus why are the feds getting involved in what is a city or state enterprise. There is no reason a farmer in Nebraska should be contributing to NYC subways.

On the other hand, I do think 80 billion on rail is a good investment since rail remains a very cheap method of mass moving goods so money there for more rail / improvements to existing rail make economic sense. Passenger rail should be scrapped / privatized since it’s a money loser.

Not sure about 100 billion on Broadband. We’ve already linked 90% of the country to high speed entirely by private enterprise means (cable / telecoms) and now Musk is planning on handling rural via his satellite network. There is also Google fiber rolling out now too again via private enterprise. So not sure what we need another 100 billion for unless this is just way to spy on Americans in which case no way should we spend 100 billion.

Otherwise I’m pretty much in agreement with the rest. Since the Republicans have said they will spend a few hundred more billion then some of the budgets can be increased for things like road repairs etc.

How will we pay for it? Well, China will pay for it. We will print $ from thin air and send to China for goods used in all these projects so we get goods for printed money. Only the labor cost portions are what has to actually be paid via taxes.

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RonJ

5 years ago

“How will this be paid for?”

The Magic Money Tree, MMT? By creating Digital Dollars? By creating a few trillion dollar Platinum Coins?

I guess all the gold in Fort Knox won’t pay for it.

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Zardoz

5 years ago

Interest rates are negative… it’ll be paid for by debt that will generate future revenue.

Welcome to cloud-cuckoo land.

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AWC

5 years ago

How will this be paid for? Are you seriously doubting the largesse of a Treasury/Central Bank coalition with a printing press, and no fear of using it?

Look, .gov and it’s corporate enablers are now firmly in control of the National economy. There is no turning back.

Fundamentals no longer matter. The future of “wealth creation” and distribution is now in the hands of the Central Planners. We will either voluntarily comply, or a digital currency will be instituted to force compliance.

May I suggest, y’all join in the game, or drop out and await the outcome?

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davebarnes2

5 years ago

“How will this be paid for? “

Increased taxes.

Get over it.

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ajc1970

5 years ago

Reply to davebarnes2

This is as funny as thinking future generations will pay these debts.

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ed_retired_actuary

5 years ago

I worked for a large multinational insurance company. I was amazed how readily the company was able to legally avoid taxes, primarily by shifting income to very low tax nations (usually with no or minimal economic substance behind the transaction), or even set up subsidiaries whose income was taxed by no nation what-so-ever. The accounting and legal profession and consultancies are very clever at developing these schemes and pitching these to their corporate clients. Thee IRS or other national tax authorities are usually years behind in understanding, these schemes, and often accept them as established practice by that time. I suspect that most large corporations (especially multinationals) meaningfully engage in these practices.

Cracking down on these practices is one way of raising a moderate part of the revenue needed for these proposals (let alone very large ongoing fiscal deficits). However doing so effectively requires a small army of dedicated and smart corporate tax professionals spending years attacking the myriad loopholes that vary across industries and companies, as well as hard to come by political consensus to back up such an effort that is too obscure to be popular except at the most general level. The recent administration proposal for a minimum % tax on financially reported income is a blunt instrument that would be only partially effective.

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Irondoor

5 years ago

Reply to ed_retired_actuary

Why wouldn’t your idea of closing loopholes work? Simple: The very smart guys at IRS who would do the work are hired by these very corporations, law firms and consultancies long before they can do damage. Why slog away at a government bureaucracy for $125,000 per year when you can make $1 million?

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frozeninthenorth

5 years ago

There is a strong argument that governments are now very bad a building infrastructure; the story of a simple wooden bridge being replace by a 4 lane 50 million bridge are too numerous to count, but how do you do public assets. Also I note that you cut all research funding, don’t you depend on the internet for some of your work Mish, who do you think developed the internet !

I don’t think that private enterprise is good at these things either!. As for the electric car subsidies sure they should be phased out at any rate they are close to being useless anyway, as the cost of electric cars continues to drop and the attractive features (low maintenance costs and self driving of sort) make them more and more attractive. Moreover, its been seen with the Y model a lot of the early buyers were there solely for the tax break

Subsidies to the oil and gas segment should also be cut, in that spirit — you want to explore for oil&Gas go ahead, but no more 200% depreciation for you, and the fact that electric automobiles to pay “gas taxes” should also be addressed (for the maintenance of America’s road infrastucture). I also thing that carbon tax should be paid by all, after all if you pollute you are reducing the value of the “free good of clean air”. That’s a perfect world.

We all agree that government are bad a public infrastructure because they tend to over-engineer and create massive bureaucracy (e.g. NASA and CDC) . But the real question is what is the solution?

America has been in two wars for nearly 15 years! That was a lot of money being spent too, did you have a problem with that, considering the value of these two endeavours? Yes government spending should be a thing of worry, but I didn’t see you complain once when the previous administration did a massive Keynesian economic boost by increasing spending and cutting revenues dramatically.

So discrete spending are easy to target by commentators, but the hard business of saying (the war is a waste of resources) or that the tax cuts have to be paid for (BTW GOP is always keen on that one when they are out of power, no so much when they run the show).

Mish these are the hard questions, I think your answer was cheap and flippant, you should do better

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Mish

5 years ago

Reply to frozeninthenorth

“Mish these are the hard questions, I think your answer was cheap and flippant, you should do better.”

Of course I would cut Defense Spending – 50% or more in fact. I have stated so many times.

The question at hand is “What you would do with Biden’s proposal?”

Was Defense spending in it?

My answer was neither cheap, nor flippant. Your response, however, is another matter.

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frozeninthenorth

5 years ago

Reply to Mish

Mish I was very serious. Cutting defense spending by 50% is an easy toss out, again. Its so much harder to get the right number. The truth is that certain things need to be done by governments. Inefficient yes but what are the options. America’s infrastructure is in bad shape, no doubt about that, in California its almost criminal.

Cutting job creation in research, really. People are assets and should have the opportunity to find new skills, to do that they need resources and help. Governments are very good at fundamental research, and no corporation will pay for that, did you know that 50% of the technology used in an Iphone was developed in US government labs, 40 years earlier.

Don’t know what you have against trains but I will let that one ride, manufacturing subsidy is the most troublesome of the lot, and I agree that there’s a 300 billion potential savings there, but again maybe I am wrong, but again complex issues that may need to be addressed.

What’s the right figure for the total I have no idea, to be honest I thought that 100 billion for America’s energy infrastructure was really small change for what is needed there. Go from the macro to the micro on the energy grid the numbers grow quickly. My firm is building a 1,000km DC 750 kW powerline and the total build cost will be just short of 500 million — that’s for a 500 mile power line. Now imagine 200 of these in a country with 300 million people, its not that much. That’s a sector I understand and in my opinion America could spend 10x that amount and its network would still be very vulnerable. In such a large country numbers grow quickly

In my opinion there is no right number, there has to be a cost/benefit analysis for each project. See what the country can afford (yes that the sticky point fo the discussion), but America has been printing dollars for a few years now, might as well enjoy a while longer…(yes this last sentence was flippant).

But Mish I was being very serious!

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Eddie_T

5 years ago

Last part first.

It will be paid for by raising taxes again and again until they’re so repressive there is no middle class left, and regular Americans start voting with their feet.

While I like eV’s and want them to succeed, I would let them and the infrastructure to keep them moving pay their own way or not. I think more huge subsidies will further distort a part of the economy already distorted enough by incentives. We could incentivize them by taxing gasoline a lot more.

I’d keep or raise incentives on solar power for people’s houses, both stand alone and grid-tied. This helps build a much more resilient, self-sufficient country.

I wouldn’t spend federal money on high speed broadband right now.

I’d put the money back into passenger and freight trains. I’d out more into ports and waterways. We need a canal system, something that is real infrastructure. Let the illegals get a green card and build it. It suits their skill level.

Too many too these “infrastructure” improvements won’t put unskilled people to work. We need workfare instead of UBI.

I suppose it’d be interesting to go line by line and identify which pork goes to which congressional district. These giant stimulus programs are bound to be full of pork.

In general, my ideas are not too different than yours. I’m okay with most of your cuts. Which is too bad, because some of them are going to be passed whether we like it or not. Especially on climate. We need to do things to fight climate change. But what’s going to be spent just won’t be on the right things. It will be spent on the pork.

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whirlaway

5 years ago

Reply to Eddie_T

“It will be paid for by raising taxes again and again until they’re so repressive there is no middle class left…”

There is very little middle class left now. This is not the 1960s or 1970s anymore. The number of Americans in the top 10 percent income range is only about 5.5 percent of the people. If at all the taxes are going to be raised, it can only be on the upper classes.

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Eddie_T

5 years ago

Reply to whirlaway

You’re right about the trend, but the top 10% income range does not constitute the entire middle class.

If you look at household income, those who make a combined household income between $95K and $200K constitute what has largely been considered middle class, and that group collects around 28% of income.

Interestingly people who write about this stuff, when they get to “rich” they stop talking about income and go to net worth. Rich (upper 5%) would be those who have net worth of more than $1M. This is mixing apples and oranges, but it’s necessary, because when you start talking about real wealth, it is only tangentially related to income.

https://en.wikipedia.org/wiki/Household_income_in_the_United_States

It is typical to lump the “upper class or “super rich”” together as all those who have income in the top 1%. As I have shown many times, that cut-off is very misleading. 22% of ALL income goes to those in the top .01% .

https://review.chicagobooth.edu/economics/2017/article/never-mind-1-percent-lets-talk-about-001-percent

In general, I am in favor of the super-rich paying more tax, but they have proven to be fairly unassailable. Those of us who are barely in the 1% or just below, still pay a LOT of tax. The middle class also pays a LOT of tax. I’m talking about proportionally to what we make.

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Biden’s $2.3 Trillion Infrastructure Boondoggle: What Would You Cut?

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