Moneybox

Biden’s Huge New Bill Leaves Reaganomics on the Ash Heap of History

Get in, Jack—we’re transforming American infrastructure.

Biden is seen in a face mask and suit.
President Joe Biden arrives at the White House on Monday. Saul Loeb/AFP via Getty Images

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President Joe Biden’s American Jobs Plan has been called an infrastructure bill—and it does fund roads, bridges, the electrical grid, and water pipes. But in a few weeks, the second half of this plan will be released: the American Families Plan. Together, the ideas inside these plans aim to redefine what infrastructure is, by bolstering “human infrastructure” along with everything else. On Tuesday’s episode of What Next, I spoke with Slate senior economics and business correspondent Jordan Weissmann about how Biden is expanding the concept of infrastructure, what human infrastructure entails, and how this plan embraces a new kind of American populism, one that could appeal to Democrats and Republicans. Our conversation has been edited and condensed for clarity.

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Mary Harris: We’re talking about two bills here, the American Jobs Plan and the American Families Plan. Biden sees them as bound together, but we know a lot more about the jobs plan. So let’s go over it a little bit. It’s an infrastructure bill that’s very expansive about what infrastructure is.

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Jordan Weissmann: In a lot of ways, it’s more of an economic modernization bill: It’s a lot more than just roads and bridges and car charging ports, though there is a part of the bill that says we’re going to fix the 10 most economically important bridges in the country.

It outlays $621 billion for roads and bridges.

It’s not $621 billion on just 10 bridges, thankfully—it’s for thousands of smaller bridges, and also for fixing up highways as well as retrofitting schools and taking out lead pipes. Another pillar of is decarbonization. The climate bill is being wrapped into this, everything from electric vehicles to this clean electricity standard that they’re somehow going to put in there. It’s a little bit unclear, but the idea is that we’re going to require that more of our electricity come from carbon-free and environmentally friendly sources. There are all sorts of goodies in there that have climate folks extremely excited right now.

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All of this sounds like traditional infrastructure, maybe a little bit focused on climate change, But then it kind of goes in a different direction, right?

When you’re rebuilding the electric grid, that is infrastructure: It’s absolutely essential to decarbonizing our power sources. But then a big chunk of this is devoted to R&D spending and trying to cultivate the industries of the future. There’s this idea we’re going to create this new technology directorate under the National Science Foundation and channel more money into advanced manufacturing. We’re going to try to create a domestic battery industry, which has been the great white whale for American policymakers who are interested in industrial policy for a while now—

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So we don’t rely on fossil fuels as much.

Also, so we don’t have to rely on batteries that are built abroad. There is an amount of economic nationalism here. But instead of using tariffs, like Donald Trump did, the idea is you’re going to provide government incentives and funding and resources in order to build these industries up domestically.

One of the bigger line items is long-term care for the elderly and disabled. Is that infrastructure? Do I need to rethink what infrastructure is?

They call it “care infrastructure” or “human infrastructure.” I think there are a few ways to think about that part of the bill. Part of it is that the United States is just getting older. There are going to be a lot of elderly people in the future and they’re going to need someone to take care of them. Allowing people to stay in their own home is in a lot of ways more humane than putting them all in nursing homes. It might actually be more affordable, and I think it’s something people would prefer. So this bill is kind of forward-looking in that respect, saying, this is going to be a big part of the workforce and we should make sure people can afford home care and that caretakers are paid appropriately.

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This plan has a $2 trillion dollar price tag. It would largely be paid for by corporate tax hikes. Biden’s plan is to roll back some of the corporate tax breaks offered by the Trump administration.

There are some more subtle and interesting things going on underneath the hood that I think might freak out some conservatives and the Chamber of Commerce, which is already pushing back. The ways we would treat international income under this tax plan are a very big deal. Gabriel Zucman, the Berkeley economist who’s known for his work on tax havens and inequality, has always been an advocate for a global minimum corporate tax, and it actually seems like some of the changes in this bill are meant to advance that agenda. Janet Yellen, the treasury secretary, is also beginning to lobby her global peers on this idea trying to impose some sort of global minimum corporate tax rate.

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Does this keep folks from hiding money?

Not so much, but it’s meant to prevent regular tax competition between countries and also deal with tax havens.

Folks are already asking how this plan can make it through Congress. It sounds like, if this moves through, it would need to be a party-line vote again. Some are already talking about the Senate using reconciliation yet again, which is a budget procedure that most people believe can only be used one time of year. But Democrats are lobbying that they can do it three times a year. I’m wondering what you make of all this.

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Passing this thing is not going to be easy, either politically or procedurally. Spending money and raising taxes is very hard, and doing it with a complicated procedural tool that limits what you can and can’t pass makes it even more difficult. I’m glad Senate Majority Leader Chuck Schumer is trying to see if he can pass multiple reconciliation bills in a year.

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We just saw the stimulus pass really quickly, but are we about to slow down here?

I think we’re going to slow down a bit. They’re already talking about taking at least three months for this bill to pass. I would expect more, especially if they end up combining the infrastructure bill and the families plan—if they end up making it one monster piece of legislation, that could take a while.

Senate Minority Leader Mitch McConnell has come out against these plans, but looking at the pushback so far, it feels different to me than when President Barack Obama was pushing for health care legislation. It was clear from the beginning of that fight that it was going to be a slog, and for some reason this moment feels different to me, even though we’re talking about trillions of dollars in spending. I’m wondering if you can help me understand why. In part, there’s the fact that Joe Biden isn’t burdened by the scrutiny that came with being the country’s first Black president. And there’s also timing—Obama took office in the middle of an economic death spiral, but Biden took control as the country was poised to recover from a collapse. Is there something else?

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The really simple way to put it is that it feels like most Americans—basically all Democrats and a growing number of Republicans, though they aren’t the majority of congressional Republicans by any means—feel like we’ve milked all we possibly can out of tax cuts and deregulation. That’s not the way forward anymore. It’s a rejection of Reaganism.

I think it helps to start by thinking about what Reaganism was, what supply-side economics was, what was it responding to. In the 1970s, there was this period of economic disappointment, of malaise. We were dealing with a combination of high unemployment and inflation, known as stagflation. There were the oil shocks caused by OPEC, and food prices were skyrocketing at the time. It felt like the wheels were coming off and no one fully got it. There were a few ideas that became very popular. One was that if you just poured money into the economy, that would become inflationary. You were in an era where the idea was that you’re trying to grow the economy while controlling inflation. So the notion was that government spending wasn’t going to fix things, that it was the problem. They wanted to instead encourage more business investment, encourage more people to enter the workforce so that you could grow the economy without creating wage price spirals.

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That’s not the issue anymore. Now the problem is rich people are saving too much and they’re not investing.

How do we get them to spend?

Bidenism is the response: The government is going to create demand and invest directly. It is very much a reversal. When it comes to the corporate tax side of the plan. I think it’s economically significant that this plan is funded by taxing capital. It’s funded by taxing corporations. The idea here is, we don’t need to create more private savings. We don’t need to increase the return to investors at this point.

We need to claw those savings into the government and invest them in everyday people.

We need to invest them in infrastructure and R&D. And you do need the hand of government. Inflation is not the worry at this point.

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