We start with the case for and against a large and broad infrastructure package before turning to the specific categories of proposed new spending and proposals for how to pay for it.
Arguments For and Against
The Case For a Big Infrastructure Package
President Biden offered three main reasons to spend $170 billion more per year to address what he believes to be woeful inadequacies in our infrastructure, broadly defined to include physical and human infrastructure. The White House made their first and most important reason for bold infrastructure legislation clear by naming their proposal the American Jobs Plan. Not only would the infrastructure work itself directly create tens-of-thousands of jobs, but the Biden Administration also argues that significantly improving our infrastructure would make the economy more efficient and productive. Those economic benefits, the President argues, would create more jobs beyond those directly involved in building or repairing infrastructure. Some supporters of the American Jobs Plan argue that the economic benefits are more than enough to pay for the investment. Particularly given the COVID-19 economic crisis, President Biden argues, more good jobs for the American people is by far the most important consideration. He suggests that many of the arguments against a bold infrastructure package pale in comparison to what it could do for putting Americans to work.
The President’s second reason for a big package is that the poor condition of our infrastructure is unacceptable because it causes injury, sickness, and death. For example, the American Jobs Plan would invest $11 billion each year to replace 100% of the lead pipes still delivering water to more than six million American homes. Another example is the $2 billion per year in the President’s plan to improve road safety.
Third, the White House suggests that smart investments in infrastructure broadly defined will help address climate change. Reduced time spent idling in traffic; better public transit; a smarter, more efficient electrical grid; and electric vehicle charging stations are all examples of how infrastructure, traditionally defined, can be part of the nation’s answer to climate change that the White House offers. The President argues that a more expansive view of infrastructure that includes measures like plugging abandoned oil and gas wells and reclaiming abandoned mines will do even more to address climate change.
The Biden administration argues that three additional considerations make the job, safety, and environmental benefits of a bold infrastructure investment even more compelling. First, President Biden’s argument goes beyond the impact that the current poor condition of our infrastructure is having today. The White House also argues that at today’s funding levels our infrastructure is further eroding each year. If we do not act boldly, the President argues, the impacts will become even more severe over time.
Second, President Biden observes that our infrastructure’s inadequacies are borne disproportionately by those least in a position to endure them including families of color and lower income families. The Biden administration observes that many wealthy Americans prospered while the rest of the country felt the brunt of the economic pain that the pandemic inflicted on the country. Now more than ever, President Biden argues, improving our poor infrastructure is an appropriate way to address fundamental economic and social unfairness. The President argues that a bold new infrastructure package can help us turn the page on the past, when poor infrastructure was a cause of social injustice, to a brighter new chapter in which it is the means of advancing social justice.
Third, President Biden argued that we should not limit the ambition of what we can achieve by restricting ourselves to an overly narrow definition of infrastructure. The administration argues that by wisely integrating investments in standard physical infrastructure projects with investments in our human infrastructure we can generate even greater benefits than if we consider those investments separately. The White House argues that quibbling about whether something fits the conventional definition of infrastructure should take a back seat to the compelling opportunities before us at a time of deep economic need. The Biden Administration suggests that creating hundreds of thousands of jobs for Americans while also protecting their health and safety and addressing climate change should be ample justification for an expansive view of infrastructure. This is particularly true, the White House argues, if it also addresses core causes of social injustice.
The Case For a Smaller Infrastructure Package
Most congressional Republicans agree that a significant increase in infrastructure spending is warranted. They argue, however, that the President’s $170 billion in new infrastructure spending each year was excessive. Senate Republicans argue that the $37.2 billion of new spending per year is still an historic level of increased infrastructure investment. Their significant but not excessive investment will better serve the American people, Republicans argue, for seven main reasons.
First, they argue that the state of our current infrastructure is not bad enough to significantly constrain economic productivity. As investments in infrastructure increase, some Republicans argue, the economic benefit for each additional dollar invested goes down. Each new funded project, some observe, will be further down the infrastructure project lists which are prioritized, in part, by the economic benefits they produce.
Second, opponents of the American Jobs Plan argue that the $170 billion per year is particularly excessive given the more than $6 trillion the federal government has recently invested in COVID relief and Biden’s proposal for an additional $1.8 trillion investment in childcare, education, and paid leave. Altogether, that would mean more than $9.5 trillion in new spending since the pandemic struck in early 2020. To put the spending in perspective, opponents point out that $9.5 trillion amounts to $74,000 in new spending per household. Republicans argue that the increases in taxes on the wealthy and corporations will not cover the proposed new infrastructure spending, in addition to all the other recently passed and proposed new spending. Taxes on the middle class will have to go up, or we will have to saddle the next generation of Americans with more federal debt, or both. Republicans suggest that even if the tax burden is carried disproportionately by corporations and the wealthy, government spending with particularly poor returns will create fewer jobs for the American people than the private investment that would happen without those taxes.
Third, opponents make a similar argument about diminishing returns in terms of health and safety. They observe that the billions currently invested in infrastructure every year are already prioritized not only by economic benefits, but also by safety risks. As with economic benefits, opponents argue, an excessive increase in infrastructure spending will push us into projects with marginal improvements in health and safety relative to the costs.
Fourth, some opponents of the President’s plan are dubious that climate change poses the level of risk claimed. Even more are doubtful that the environmental benefits would be worth the costs of President Biden’s plan.
Fifth, Senate Republicans argue that their plan is adequate because even without the $37.2 billion per year in new infrastructure spending that they propose, the condition of American infrastructure is not getting worse over time. They note that dire warnings about the consequences of inadequate federal funding have been issued for decades. If anything, some opponents of the American Jobs Plan argue, the mediocre condition of our infrastructure is actually getting better even at current levels of federal funding.
Sixth, Republicans argue that the cumbersome and lengthy processes for obtaining permits for infrastructure projects mean that the significant and rapid increases in funding proposed by President Biden can’t actually be put to use for years. State and local governments have not been doing the extensive work to plan and then permit projects for which they have not expected to have funding. It often takes five years, and sometimes ten, to complete the permitting process alone once sufficient planning has been done. Some Republicans argue that on the point of having shovel ready projects the bipartisan deal struck by President Biden and the Common Sense Coalition may actually be worse than the American Jobs Plan. They observe that two differences increase the challenge. First, the bipartisan framework spends the total proposed money twice as fast (five years rather than ten years). Second, while the bipartisan plan proposes significantly less new spending overall, it concentrates that spending on fewer categories of physical infrastructure where projects must be planned and then run the permitting process gauntlet. Some Republicans argue that many of the intended new infrastructure projects will not even have their permit to start work within five years.
Finally, most Republicans suggest that whatever the arguments for and against investments that do not fit standard definitions of infrastructure, they should be considered in different legislation. They point out that the word infrastructure has long been understood to mean physical facilities that are broadly accessible to the public to support the efficient functioning of households, businesses, and other entities. This understanding of the term has long included roads, bridges, ports, and inland waterways. Defined this way, the term has easily accommodated advances in technology to include, for example, the infrastructure needed for high-speed access to the internet. However, they argue that expanding infrastructure to include providing seniors and those with disabilities with better access to quality care will make the word meaningless. Many Republicans acknowledge that on this point, the bipartisan framework negotiated by President Biden and the Common Sense Coalition is a meaningful improvement on the American Jobs Plan.
Before reviewing evidence specific to the 11 different categories of investment, we consider in this section the best available evidence on the current condition of American infrastructure overall and the trendline. We also review evidence on how much new funding would be needed to improve the current condition.
As noted above, the ASCE 2021 Report Card confirms the bipartisan consensus and most Americans’ everyday experience that our infrastructure is in mediocre condition. The 169-page ASCE report, citing dozens of other studies, gives American infrastructure an overall grade of C-.
Although confirming that the condition of our infrastructure is not impressive, the evidence from the ASCE Report Cards also indicates that, if anything, our infrastructure is improving slightly with current levels of federal funding. As seen in Figure 2, the 2021 grade of C- is not only better than the D+ in 2017, it is also the highest ASCE grade in over 20 years.
Figure 2: ASCE Infrastructure Grades
Click the crossed out category in the legend below to make visible that category’s grades over time.
To raise the 2021 grade of C- to a B, the ASCE 2021 Report Card concludes that a total of $2.51 trillion in additional investment beyond existing funding from all sources—including state and local—would be needed over the next ten years (not including hazardous and solid waste or public parks and recreation which are not included in any of the proposals). As seen in Figure 1, the ASCE estimate of funding needed to raise American infrastructure’s grade to a B works out to an average of $251 billion in new funding per year from federal, state, and local sources. The $170 billion in new spending each year in the American Jobs Plan would provide 68% of new funding needed to raise American infrastructure to a grade of B. However, it should be noted that the American Jobs Plan includes many significant investments in items the ASCE does not include as infrastructure. The $37.2 billion per year Senate Republican proposal would provide 15% of the new funding needed. The $115.8 billion Common Sense Coalition (CSC) plan that President Biden now supports would fund 46% of the need. The $77.3 billion per year Problem Solvers Caucus (PSC) plan would provide 31% of the new funding needed.
The Brookings Institute estimates that about three-quarters of U.S. public infrastructure funding currently comes from the state and local level. If the same 25% federal proportion were maintained, that would mean about $65 billion in additional federal spending per year would be needed for the federal share of improving American infrastructure to a grade of B. The Biden Plan would be 260% of the historic federal proportion of new funding needed to raise American infrastructure from a C- to a B. The Republican Plan is 58%, the CSC plan that President Biden now supports is 178%, and the PSC plan is 119% of the historic federal proportion needed. In other words, under the American Jobs Plan and the CSC plan that Biden now supports, the responsibility for improving American infrastructure would move significantly away from state and local governments to the federal government. Under the Senate Republican plan, responsibility would need to shift significantly to state and local governments if the country is to spend the total amount that ASCE estimates is needed to get our infrastructure to a B. The PSC plan represents a slight increase in the federal share.
Relative to the baseline of federal spending, President Biden’s Plan represents a 216% increase, as seen in Figure 1. The Senate Republican plan would be a 48% increase, the Common Sense Coalition plan supported by President Biden would be a 147% increase, and the Problem Solvers Caucus plan would be a 98% increase over expected federal baseline funding.
The ASCE also issued a 2021 Failure to Act report. It assesses the economic costs of not investing enough to take our infrastructure to a grade of B. Those costs come in the form of factors like unreliable and congested transportation and unreliable water and power. The Failure to Act report concludes that spending the money to take our infrastructure to a grade of B would boost the economy enough that each American household would have an average of $14,600 more disposable income over the next ten years, or $1,460 per year.
The ASCE assessment that improving our infrastructure to a B would generate $1,460 in economic benefits per year per household provides a way to judge the claim of some that infrastructure investments more than pay for themselves. With about 130 million households in the country, the per household cost of spending an additional $260 billion per year (from all sources, including federal, state, and local) to move to a grade of B would be about $2,000 dollars per household. That means that $1,460, or nearly 75%, of the $2,000 increased cost per household of new infrastructure spending would pay for itself through increased economic productivity. That leaves an average of $540 per household per year, or about 25% of the increased spending, that would not pay for itself. Instead, it would be covered by more taxes not offset by increased disposable income. President Biden argues that by placing the tax burden on wealthy corporations who have been doing very well, the net economic effect will be positive for the vast majority of Americans. It is only fair, the White House argues, that the corporations who have significantly benefited from the publicly financed infrastructure that supports the American economy pay more for it.
As some opponents of the American Jobs Plan point out, dire warnings have been issued by ASCE and government agencies for decades that the failure of the federal government to invest more in infrastructure would cause infrastructure conditions to erode. Those issuing the warnings have felt the need to explain how it is that infrastructure conditions are actually improving without the substantial increases in federal spending that have been called for. Part of the explanation offered by ASCE and others is the innovation in cost-effective new materials and designs. Another part of the explanation is smarter asset management programs. Drawing on increasingly sophisticated financial and engineering tools, the state and local agencies who spend most of the infrastructure money, including federal dollars, target their limited funding where it will get the biggest economic and safety benefit for the dollars spent. State and local jurisdictions create a rank order of infrastructure projects from the most to the least cost effective. They then move as far down the list as their funding will take them.
Opponents of a significant increase in infrastructure spending like the President’s point out that increases in funding simply mean moving further down the list of cost-effective projects. The result, they observe, is that the average economic and environmental benefit from infrastructure spending declines as spending goes up significantly.
Some also note that estimates of infrastructure funding needs tend to be high because of self-interest. The Association of Civil Engineers (ASCE) is made up of professionals who would benefit from increased infrastructure spending. The budgets of the government agencies who provide the data and conduct many of the studies cited also benefit from increased spending.