WASHINGTON (Reuters Breakingviews) - Joe Biden is starting his infrastructure push on Wednesday with a big number: $2.3 trillion. Republicans and Democrats can now argue about whether that’s too much, or too little. But the main thing on any journey is to start somewhere.
The White House plan that the president is due to outline on Wednesday afternoon has something for both sides of the political aisle to dislike. Republicans oppose Biden’s proposal to pay for the initiative – albeit over 15 years – by raising the corporate income tax rate from 21% to 28%. Meanwhile, some Democrats want him to spend far more. Senator Ed Markey is pushing for at least $10 trillion, for example, enough to cover not just roads and bridges but also zero-emissions buildings and helping minority communities.
Infrastructure is all about multipliers. A dollar of investment can create up to $2.50 of economic value over the long term, even when factoring in project delays, according to the National Bureau of Economic Research. Each $100 billion in infrastructure spending would add about 1 million full-time jobs, according to the Economic Policy Institute.
But there’s another, less helpful multiplier to consider: A dollar approved by Congress might not be a dollar invested. Most projects require approval by local authorities and permits from multiple agencies. That can increase the costs and the duration. For example, underground rails cost an average of $354 million per kilometer to build in the United States, a 65% increase from similar programs overseas, according to the Eno Center for Transportation.
Whatever investment does take place would help those who have been hit hardest by the pandemic. A bulk of the nearly 13 million jobs created by $1.5 trillion in infrastructure investment in the Biden plan would go to people with a high school diploma or less, according to Georgetown University’s Center on Education and the Workforce.
Politics remains a constraint because the Democrats have only a one-vote advantage in the Senate. But politics has always been a constraint on getting roads and bridges built – so much so that the lack of infrastructure investment has become a joke in Washington. Donald Trump’s administration perennially pitched infrastructure week without any meaningful results. Biden should therefore be prepared to make trade-offs. The movement matters now, more than the destination.
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