Commentary

Biden’s ‘infrastructure’ bill: High cost, little reward

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On March 31, President Joe Biden unveiled his sweeping infrastructure bill, the American Jobs Plan (AJP), a spending package with over $2 trillion in new federal spending over the next eight years.

In the plan, the Biden administration bends the definition of the term “infrastructure” to mean just about anything. By working in a lot of longtime, unrelated priorities under the innocuous guise of infrastructure, the administration hopes to pass much of the contents of the bill under the nose of the American people.

No matter which way the administration slices it, government programs, public schools, community colleges and the “infrastructure of care” are not infrastructure. The case for roads, bridges, airports, seaports, the power grid and other physical networks and systems being infrastructure, is much stronger.

Many of the ways the AJP tries to accomplish its goals would actually harm the Americans it seeks to serve, especially as it relates to broadband. 

The intent behind this aspect of the bill is popular: give every American high-speed broadband access at a reasonable price. Who could say no to that? The means to achieve that end, though, are lackluster at best.

One significant red flag is the stipulation within the bill that its implementation will prioritize support for broadband networks “owned, operated by or affiliated with local governments, nonprofits, and co-operatives.” By encouraging government ownership of networks, AJP will crowd out private investment, and with it, alternative and cheaper internet solutions.

Government-owned networks (GONs) have been shown to lack financial simplicity and workability due to the lack of incentive to turn a profit. GONs have no intrinsic motivation to improve quality of service while lowering costs.

Similar pushes to create GONs in the past, like one in Tennessee, ended up costing millions more than was projected, placing extra financial burden squarely on the shoulders of taxpayers. Stories like this exist across the country, including Groton, CT and Burlington, VT.

This experiment of government-backed broadband networks has decidedly failed so far, and to federalize such a program would do irreparable harm to communities across the country.

Another piece of the AJP is price caps for internet service, particularly in rural areas. As seen in the past, and through basic microeconomic theory, price caps do not work. Installing a price cap on rural broadband would discourage investment, innovation and growth by existing private providers of broadband. If they can’t recoup the costs of delivering the service and turn a profit, they won’t invest in building out their existing networks. Government is what stands in the way of them completing their mission.

Depending on how ongoing negotiations end in the coming weeks, the bill’s bottom line could be lowered to $1.7 trillion, or even $1.25 trillion. Even so, this would amount to over $7 trillion in federal spending since the beginning of the pandemic in March 2020.

Having just spent nearly $2 trillion on a supposed COVID relief bill, most of which was not actually spent on COVID relief similar to Biden’s “infrastructure” package, calling for an additional $2 trillion in spending is a tall order, to say the least.

The White House says this new spending is necessary to get our country “on the move again.” Wasn’t that supposed to be the goal of the $2 trillion American Rescue Plan Act?

If the administration wanted to pass these long-standing priorities, they should have proposed them in a separate, more transparent bill. By tying them all together in a single piece of omnibus legislation, the Biden administration has made it more difficult for the popular aspects of the plan — like real infrastructure improvements — to pass.

Photo: Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

About Nick Linder

Nicholas Linder, of Cincinnati, is a communications Intern for Maine Policy Institute. He is going into his second year of studying finance and public policy analysis at The Ohio State University. On campus, he is involved with Students Consulting for Nonprofit Organizations and Business for Good.

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