Too soon, Joe! America just spent $5.3 trillion to keep the economy from completely crashing during a worldwide pandemic, and now President Biden wants to spend another $2.3 trillion on infrastructure, research, and dealing with climate change. The Wall Street Journal reported:
“It’s not a plan that tinkers around the edges,” Mr. Biden said during a speech in Pittsburgh, where he kicked off his presidential campaign. “It’s a once-in-a-generation investment in America.”
Biden could not have this more wrong. First, it’s not a “plan” in the sense of having a reasoned outcome. It’s just profligate spending on projects, most of which will never be completed. Second, it’s not an “investment” because it’s really financed by debt and future taxes that will never be collected.
Mr. Biden’s proposal includes $621 billion to modernize transportation infrastructure, $400 billion to help care for the aging and those with disabilities, $300 billion to boost the manufacturing industry, $213 billion on retrofitting and building affordable housing and $100 billion to expand broadband access, among other investments.
Again, these are things the government only does well when there’s a definite roadmap (like Ike’s Interstate system, or Kennedy’s moon shot). Biden’s spending is not a bold initiative, it’s just more cash poured into terrible projects that will go enormously over budget and never be completed.
One only needs to look at projects like Boston’s Big Dig, that broke horrendously bad at $24.3 billion to move some roads underground and dig a new tunnel (that fell in). It cost more to dig a few miles under Boston Harbor than it did to dig the entire Eurotunnel “Chunnel” under the English Channel. Biden’s $2.3 trillion will be spread so thin into so many pork troughs that it will literally disappear into the corrupt fertilized ground without sprouting a single shoot to account for it. The money will simply be gone and we’ll be left with the bill.
We simply can’t afford it. Any fifth grader can see it in one chart. And today’s fifth graders will be paying for it 30 years from now.
Biden aims to pay for this by increasing the corporate tax rate at a time when global corporate tax rates have been declining for years, and corporations are flourishing, while providing most of the technological and economic advances that lift nations and people out of poverty.
The infrastructure plan would cost roughly $2.3 trillion over eight years and be paid for over 15 years by raising the corporate tax rate to 28% from 21% and increasing taxes on companies’ foreign earnings. The tax changes would revamp or replace much of the international tax structure congressional Republicans established four years ago in the law signed by then-President Donald Trump.
The U.S. would go from having a slightly-below average corporate tax rate to having one of the highest in the world, according to the Tax Foundation.
Low corporate tax rates mean businesses will compete to locate in America versus pursuing inversions to move headquarters and jobs overseas to less taxed places. There’s a definite correlation between the U.S. corporate tax rate and company market capitalizations. Lower taxes means more valuable companies, which fund 401(k) plans, spur investment, create jobs, and lift the economy so people can pay more taxes to government and get better services.
Raise the corporate tax rate and we strangle government like grabbing a chicken by the neck.
America has enough problems funding mandatory spending programs like Social Security, Medicare, Medicaid, and $1.5 trillion in unpaid student loan debt that Biden also wants to forgive.
Shoveling cash we don’t have into projects that will never be completed is not the way to stimulate the economy, or to “invest” in America. I’d say it’s a good way to build a road to catastrophe.
I’m glad Republicans will oppose this gargantuan money bomb, not necessarily because they oppose spending (I could see Trump trying to do the same thing, without the tax increase—he’d fund it with tariffs), but because it’s a Democrat plan, not theirs. I don’t really care, as long as they oppose it.
My worry is that there will be enough horse trading and earmark deals to bring a few Republican senators over and end up passing this turd sandwich. I hope the tax increase part will be toxic enough to prevent that, but I’ve seen things in the last few years that have shaken my faith in Congress to do anything right.
This catastrophic tax and spend plan should not have been born, and it should never be passed.
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