A Contract For Americans (4/10)

You know, if we return to the tax policies that produced a surplus back in Clinton’s day, THIS would a good place to spend that money.

Roads, bridges, tunnels, levees, dams, water treatment facilities, sewers – all this stuff is falling apart.  We need a LOT of construction workers making decent money working on these projects – and they’ll spend their salaries, growing the economy futher, aka “The Multiplier Effect”.  The Congressional Research Service recently published a report stating that a 1% of GDP increase in public capital investment would increase labor demand by 1.13% in the short term – these would be those “good jobs at good wages” stuff that politicians like to talk about.

And there’s no lack of places needing that kind of money.

The American Society of Civil Engineers produces a Report Card on the state of our infrastructure. And in this “Best Nation On Earth”, what do you think we score?

At the time of this writing, a paltry “C-“. In the time that the ASCE has been doing this (2017 to the current 2021 report), we’ve gone, overall, from a “C” to a “D” to a “D+” before we improved to a “C-” last year. You can read the entire report here.

It’s pretty pathetic when our BEST grade is a “B” in Rail infrastructure. But that just grades what we have. It’s hard to grade something that doesn’t exist – like high-speed passenger rail the way you see it in Japan, France, China, Germany, Italy, Spain, etc.

Our other grades? Here they are by category:
D-: Transit
D: Dams, Stormwater, Roads, and Levees
D+: Aviation, Hazardous Waste, Inland Waterways, Public Parks, Schools, and Wastewater
C-: Energy, Drinking Water
C: Bridges
C+: Solid Waste
B-: Ports

So what will it cost?

On page 7 of the Executive Summary (here) it says that our total needs are just.shy of $6 TRILLION and that $3.35 Trillion is funded, leaving a gap of $2.5 Trillion – but this IS over the course of 10 years (2020-2029, based on current trends). So that $2.5T gap is really around $250 Billion per year. That sounds like a lot until you find out that the Federal Budget includes between $700-$800 Billion EACH YEAR for the Defense Department and Social Security is laying out over $1.2 TRILLION each year.

How would we pay for it?

The original three trillion dollar proposal that the Biden Administration put out had several line items. In addition to the additional tax revenue from the benefits of infrastructure improvements there were 4 categories of “offsets”:

1. $640B from High Net Worth Individual tax increases: 3.8% net investment income tax increase ($250 billion). 5% surtax on income over $10 million and 8% surtax on income above $25 million (230 billion). Expanded limits on business loss deductions (160 billion).
2. $325B from Health Care changes and cost reductions: Reform Part D Medicare drug coverage, cap drug price growth and allow targeted drug price negotiations ($160 billion). Repeal drug rebate rule enacted by the Trump administration ($145 billion). Lower disproportionate share hospital (DSH) payments to qualifying hospitals serving large numbers of Medicaid and uninsured individuals beyond 2025 (20 billion).
3. $180B from “Additional Revenues”: Fund the IRS to reduce the tax gap ($130 billion). Reinstate oil superfund taxes and impose a methane fee ($20 billion). Expand nicotine taxes (10 billion). Reform tax treatment of retirement accounts ($10 billion). Other receipts ($10 billion).
4. $825 from Corporate taxes: 15% corporate minimum tax on large corporations earning more than $1 billion in profits (raising $320 billion). 15% global minimum tax and reform international taxation (raising $280 billion). Levy a 1% surcharge on stock buybacks, which is the amount that companies spend to repurchase shares (raising $125 billion). Enact other corporate tax reforms (raising $105 billion)

There’s about $2T there and it doesn’t raise a penny on most people. And before you talk about the corporate taxes being passed on, that’s not the government. Corporations are making record profits – meaning profits unlike ANYTHING they’ve seen in history. If they hike prices – remember – the taxes are on PROFITS – so they are saying “We need to keep our billions so we’re hiking our prices”.

Remember. Back when our infrastructure WAS the best in the world, the top marginal tax rate on the wealthy and corporations was 91%. So I don’t believe for a minute that hiking taxes a few percent is going to cause an exodus. It didn’t happen before when the same threat was made. After all, they pleaded for the Trump tax cuts saying it would create jobs and it simply didn’t. The money went to CEOs, for stock buybacks enriching shareholders, and even foreign investors. Shouldn’t have been a surprise. That’s what happened with the Bush tax cuts.

Think of it in fantasy terms. “Listen – if we just give the dragon more money for his hoard, SURELY he’ll invest it and we’ll all prosper!”.

Yes, collecting taxes to spend on infrastructure IS “Socialism”. But the best definition I ever heard of Socialism is:

We, The People.…