Biden gets a big win on infrastructure, but is missing a massive opportunity on manufacturing

The $1.2 trillion bipartisan infrastructure plan finally passes the House of Representatives, giving President Biden a much needed political win, but instead of focusing on supply chains and manufacturing moving forward to permanently address wide-spread shortages and spiking prices, progressives continue to push massive social spending and a tax break for the rich of all things.

President Biden secured a much needed political victory on Friday with the passage of the $1.2 trillion bipartisan infrastructure plan.  The legislation had passed the Senate with 19 Republican votes in August, practically eons ago in political terms these days, but had been stymied in the House by progressives also pushing for massive social “investments” in a separate reconciliation bill.  Progressives finally relented somewhat last week, agreeing to a framework on reconciliation rather than final passage as they previously insisted, and the infrastructure bill passed late Friday evening with 13 Republican votes and 6 Democrat defections, promising some $550 billion in new spending over five years and adding about $256 billion to the deficit over ten years.

Included in the bill are $110 billion for roads, bridges, and other infrastructure projects.  Some $40 billion to repair, replace, or rehabilitate bridges.  $16 billion for major projects too large or complex for regular funding programs.  $11 billion for transportation safety.  $1 billion to reconnect communities.  $39 billion for public transit; $66 billion for passenger and freight rail; $12 billion for intercity rail service and high speed rail.  $65 billion for broadband and plans to help lower income residents pay for service.  $17 billion for ports.  $25 billion for airports.  $7.5 billion for zero or low emission buses and ferries.  $7.5 billion for a nationwide network of plugin electric vehicles.  $65 billion for the electric grid.  $55 billion for water infrastructure.  $50 billion for making both systems more resilient.  $21 billion to clean up Superfund and brownfield sites, reclaim abandoned mines, and cap older gas wells.  Fortunately, most of the funding was secured by repurposing coronavirus relief money and no new taxes were included.

Whether or not the government is capable of spending any of this money efficiently and effectively, or if these funds will disappear into a the ether of consultants and special interests, remains an open question, but Biden has succeeded in passing a large, long-sought after infrastructure plan where both his predecessors had failed and, thus, this is a major achievement by any objective standard.  At the same time, I can’t help but feel that both Republicans and Democrats are missing a much larger, more important, and far more politically advantageous opportunity, one that could truly capture the country’s imagination and win massive support across the board.  Despite the almost relentless focus on infrastructure and various social services, the President has been unable to provide an overarching rationale for these programs that connects with the two crises currently affecting people’s lives, namely spiking inflation and supply-chain induced shortages of goods of every kind.

The best they can offer are generic slogans like “Build Back Better” and at times, the President himself has seemed stuck in another era entirely, like he was speaking to us from before the pandemic followed by the sight of empty car lots and grocery store shelves.  For example, he regularly promotes the infrastructure bill by focusing on construction workers and plumbers. “It will put Americans to work in good-paying, union jobs repairing our roads and bridges. It will put plumbers and pipefitters to work replacing all of the nation’s lead water pipes so every child and every American can turn on the faucet at home or school and drink clean water—including in low-income communities and communities of color that have been disproportionally affected by dangerous lead pipes,” the President said in a statement on July 28th. Plumbers and construction workers, however, don’t really have trouble finding work or need a government subsidy to continue feeding their families. Plumbers make an average of $55,160 and their pay has risen almost 20% in the past 10 years.  Construction workers make less at $36,960, but their pay has risen even faster, by close to a third.

Likewise, President Biden believes, “Americans will build transmission lines and upgrade our power grid to be more resilient and cleaner. Americans will strengthen our infrastructure, like our levees, in the face of extreme weather like superstorms, wildfires, droughts, hurricanes, and heat waves.”  Except, electricians are on par with plumbers in terms of salary with pay growing even slightly faster.  Billions were already spent fixing levees after Hurricane Katrina and deaths from natural disasters have plummeted over the past 50 years.  This is not to suggest that none of these things are necessary in principle or even good ideas in practice, but none capture the public imagination in a meaningful way, connecting policy to what people experience on a daily basis.  The entire “Build Back Better” agenda, in whatever form it takes at the moment, suffers from a similar issue.  Components like paid family leave, childcare support, and expanded health benefits for the elderly have their appeal, but ultimately read more like a summation of Democrat priorities, a literal laundry list of what they’ve been pushing for decades, rather than a truly targeted platform to address people’s current needs and concerns.

The supply chain crisis, on the other hand, represents a tangible opportunity to solve another longstanding challenge with the American economy, one far more important in the long run in my opinion.  At its heart, the supply chain crisis is actually the latest manifestation of the long-running manufacturing crisis.  For the past 50 years or more, the United States has outsourced more and more of its manufacturing to China and other countries.  The share of US GDP from manufacturing has declined over this period, from 27% of the economy to 12%.  As late as 1998, there were 18.1 million manufacturing jobs, but by 2018 that number had dwindled to 13.5 million even as the size of the overall economy increased by 47%.  As Bruce Springsteen sang in “My Hometown” way back in 1984, “Foreman says these jobs are going boys, and they ain’t coming back.”

There have, of course, been various attempts to reverse the tide during this period.  Former President Trump, for example, attempted to make manufacturing jobs one of the centerpieces of his economic agenda.  Like everything else in the Trump era, whether or not he succeeded was the subject of endless debate, but ultimately Forbes reported in 2019 that “manufacturing is stronger than it was when he took office and policy support is still in place for growth. Headwinds from trade policy and political uncertainty, however, are restraining a more robust growth path.  2017 and 2018 were generally positive for U.S. manufacturing due to the change in policies by Trump and allies in Congress.”  They continued, “Solid data support the view that manufacturing improved in the first two years of the Trump presidency, and probably at least through the first half of 2019. Overall employment in the sector grew by almost half a million jobs since Trump took office, after falling by almost 200,000 in the Obama years. Total manufacturing output in real dollars reached an all-time high in mid-2019, capacity utilization is back to post-war norms, and exports of goods, which are ten times those of agricultural products, have increased by about 15 percent since January 2017. Capital investment recovered from a downturn in 2016 to post solid gains, especially in 2018 as tax reform took full effect.”

At the same time, President Trump himself largely saw the decline in manufacturing as a product of poor trade deals, tariffs, regulations, and tax policy.  To my knowledge, he never put forth a large, comprehensive plan to invest in US manufacturing, at least nothing close to the scale of the infrastructure bill or Build Back Better.  This, however, is precisely what I believe President Biden should be doing right now to his and, hopefully, all of our benefit.  As President Obama’s Chief of Staff Rahm Emmanuel famously said, “never let a crisis go to waste.”  Few crises cry out for solution more so the combination of shortages of needed goods and spiking prices that affect almost every American.  This is especially true after the pandemic thrust the potential danger of our reliance on China for the manufacture of medical supplies and even basic protective masks into the public consciousness last year.  Today, the dark side of manufacturing overseas is front and center for every American almost every time they go to the store.

This is the moment to revitalize a once great industry and help the entire country in the process, and yet President Biden seems incapable of even discussing the issue coherently.  On Saturday, he held a public event to discuss the passage of the infrastructure bill.  A reporter began a question by saying, “Democratic Congresswoman Abigail Spanberger said of your presidency this week: ‘Nobody elected him to be FDR.  They elected him to be normal and stop the chaos’” She went on to ask, “How do you view your mandate after Tuesday’s election losses for Democrats? And is she wrong?”  Biden’s response rambled from the challenges of the pandemic to an almost nonsensical aside on the supply chain.  He said, “I don’t intend to be anybody but Joe Biden. That’s who I am. And what I’m trying to do is do the things that I ran on to do.  And, look, people out there are — ordinary, hard working Americans are really, really — been put through the wringer the last couple years.”

He touched on COVID-19, then plunged headlong into the supply chain crisis.  “What — like, for example, if I had — if we were all going out and having lunch together and I said, ‘Let’s ask whoever the — whoever is at the next table, no matter how — what restaurant we’re in — have them explain the supply chain to us.’  You think they’d understand what we’re talking about? They’re smart people.  But supply chain — ‘Well, why is everything backed up?’  Well, it’s backed up because the people who supply the materials that end up being on our kitchen table or in our — in our fam- — our life — guess what?  They’re closing those plants because they have COVID.  They’re not — And so, it’s a complicated world that people are facing.”  He continued even further, “I mean, I’m not saying it’s the worst of every time in American history, but we never faced anything this — this, sort of, defiant of understanding of what’s going on.  And you can understand why people are upset.  And I — whether you have a PhD or you’re — or you’re working, you know, in a restaurant, it’s confusing.  And so, people are understandably worried.  They’re worried.  And so, all I can say is: What I’m going to try to do is explain to the American people, as best I can — And, by the way, you all write for a living.  I haven’t seen any one of you explain the supply chain very well.  No, no, I’m not being critical.  I’m being deadly earnest.  When your editor says, ‘Explain the supply chain.’  Okay?  ‘Lots of luck in your senior year,’ as my coach used to say.”

In other words, the President himself has no clue how to address the issue, blaming reporters and people at large for being confused.  How much better would it be for us all had he stated the obvious?  Normal in America was a robust manufacturing base up until a few decades ago, when we started shipping those jobs overseas.  The supply chain crisis we are seeing right now is the direct result of our manufacturing crisis.  The infrastructure bill is the first step toward improving transportation to support the flow of goods.  The next step is to build our manufacturing base back better than ever before, and here’s my plan to do precisely that.  There is, quite literally, nothing more important to taming inflation than bringing back manufacturing.  This is why we need to invest in American manufacturing right now.

Of course, this is not to suggest that President Biden and myself or other conservatives would likely agree on what constitutes good policy in reclaiming American manufacturing jobs.  The point is strictly that we need a policy that recognizes the current state is unsustainable and the root cause of many of the challenges we face.  This is one that would capture the public’s imagination and connect directly with their day to day lives in a way far more meaningful than anything currently being discussed or proposed. Manufacturers themselves are certainly onboard. Fox Business reports that the supply chain crisis is already prompting a “renaissance of American manufacturing.” Origin is a manufacturer based in Maine that makes everything from footwear and fitness gear to clothing and nutritional supplements. Their CEO Pete Roberts said of their new approach, “Everything we do here is built off of that American supply chain, which is essential to our success.” He continued, “Every piece of our supply chain is in the U.S. and none of it comes from overseas,” adding “none of it’s stuck on a ship.”

Instead of partnering with companies like Origin, progressives and President Biden himself are planning to move ahead with some form of massive reconciliation bill, paid for with a tax break for the wealthy and a new tax on the poor.  Yes, you read that right.  The Intercept reported last week that taxes for billionaires are out, replaced by massive new taxes on nicotine products that are “highly regressive,” meaning they hit poor people hardest.  In addition, Democrats plan to increase the state and local tax deduction (SALT) from the current $10,000 cap to at least $72,500, which would enable the wealthiest Americans to claim an additional tax credit up to $23,125.  What sense does that possibly make?  None, but they are laser-focused on doing it anyway to all of our detriment.

Investing in manufacturing is a much better approach, especially if President Biden really wants to go big…

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