President Joe Biden’s American Employment Plan was called an infrastructure bill – and it finances roads, bridges, electricity and water pipes. But in a few weeks, the second half of that plan will be launched: the American Family Plan. Together, the ideas within these plans aim to redefine what infrastructure is, reinforcing the “human infrastructure” along with everything else. In Tuesday’s episode of What Next, I spoke with Slate’s senior economics and business correspondent, Jordan Weissmann, about how Biden is expanding the concept of infrastructure, what human infrastructure involves and how this plan embraces a new type of American populism, which could appeal to Democrats and Republicans. Our conversation was edited and condensed for clarity.
Mary Harris: We are talking about two bills, the American Jobs Plan and the American Families Plan. Biden sees them as united, but we know a lot more about the work plan. So, let’s go over a little bit. It is a very comprehensive infrastructure bill on what infrastructure is.
Jordan Weissmann: In many ways, it is more of an economic modernization bill: it is much more than just roads and bridges and car loading ports, although there is a part of the bill that says we are going to repair the 10 most economically important bridges in the country.
It spends $ 621 billion on roads and bridges.
It’s not $ 621 billion on just 10 bridges, luckily – it’s for thousands of smaller bridges and also for repairing roads, as well as renovating schools and removing lead pipes. Another pillar is decarbonization. The climate bill is being included in this, everything from electric vehicles to this standard of clean electricity that they will somehow put there. It is not clear, but the idea is that we will demand that more of our electricity come from carbon-free and environmentally friendly sources. There are all sorts of goodies in there that make people in the mood extremely excited right now.
It all sounds like traditional infrastructure, maybe a little bit focused on climate change, but then it goes in a different direction, right?
When you are rebuilding the power grid, this is infrastructure: it is absolutely essential to decarbonize our energy sources. But much of this is dedicated to spending on R&D and trying to cultivate the industries of the future. There is an idea that we are going to create this new technology board under the National Science Foundation and channel more money into advanced manufacturing. We will try to create a domestic battery industry, which has been the great white whale for American lawmakers who have been interested in industrial policy for some time—
So we are not so dependent on fossil fuels.
In addition, we do not need to rely on batteries manufactured abroad. There is an amount of economic nationalism here. But instead of using tariffs, as Donald Trump did, the idea is that you will provide incentives, financing and government resources to develop these industries internally.
One of the biggest line items is long-term care for the elderly and disabled. Is this infrastructure? Do I need to rethink what infrastructure is?
They call it “service infrastructure” or “human infrastructure”. I think there are some ways to think about this part of the bill. Part of this is that the United States is just aging. There will be many elderly people in the future and they will need someone to look after them. Allowing people to stay in their own homes is, in many ways, more humane than putting them in nursing homes. In fact, it can be more accessible and I think it is something that people would prefer. Therefore, this bill is somewhat prospective in this regard, saying: this will be a large part of the workforce and we must ensure that people are able to pay for home care and that caregivers are paid appropriately.
“Tax cuts and deregulation are no longer the way to go.”
– Jordan Weissmann
This plan is priced at $ 2 trillion dollars. In large part, it would be paid for corporate tax increases. Biden’s plan is to reverse some of the corporate tax incentives offered by the Trump administration.
There are some more subtle and interesting things going on under the hood that I think might scare some conservatives and the Chamber of Commerce, which is already backing down. The ways in which we would treat international revenue in accordance with this tax plan are very important. Gabriel Zucman, the Berkeley economist known for his work on tax havens and inequality, has always been an advocate of a global minimum corporate tax and, in fact, it appears that some of the changes in this project are intended to promote that agenda. Janet Yellen, the Treasury secretary, is also starting to lobby with global peers over this idea, trying to impose some kind of global minimum corporate tax rate.
Does this prevent people from hiding money?
Not so much, but it aims to avoid regular tax competition between countries and also to deal with tax havens.
People are already asking how this plan can get through Congress. It seems that if this is approved, a party line vote will be needed again. Some are already talking about the Senate using reconciliation once again, which is a budget procedure that most people believe can only be used at one time of the year. But Democrats are lobbying for this to happen three times a year. I’m wondering what you think of all of this.
Going through this is not going to be easy, either politically or procedurally. Spending money and raising taxes is very difficult, and doing so with a complicated procedural tool that limits what you can and cannot approve makes it even more difficult. I am happy that the Senate majority leader, Chuck Schumer, is trying to see if he can pass several reconciliation projects in one year.
We just saw the stimulus go by very fast, but are we about to slow down here?
I think we’re going to slow down a little bit. They are already talking about taking at least three months for the approval of this project. I would expect more, especially if they ended up combining the infrastructure bill and the family plan – if they ended up becoming a monstrous piece of legislation, it could take a while.
Senate minority leader Mitch McConnell has spoken out against these plans, but looking at the resistance so far, it seems different to me than when President Barack Obama was pushing for health legislation. It was clear from the start of that fight that it would be hard work and, for some reason, this moment looks different to me, even though we are talking about billions of dollars in spending. I wonder if you can help me understand why. In part, there is the fact that Joe Biden is not burdened with the scrutiny that comes with being the country’s first black president. And there is also time – Obama took office in the midst of an economic death spiral, but Biden took control when the country was about to to recover of a collapse. Is there anything else?
The really simple way to put it is that it seems that most Americans – basically all Democrats and an increasing number of Republicans, although they are not the majority of Republicans in Congress, at all – feel as if we have explored everything that we were able to reduce taxes and deregulate. This is no longer the way forward. It is a rejection of reaganism.
I think it helps to start by thinking about what reaganism was, what the supply-side economy was, to which I was responding. 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 oil shocks caused by OPEC, and food prices soared at the time. It felt like the wheels were coming off and no one fully understood. Some ideas have become very popular. One was that if you just poured money into the economy, it would become inflationary. You were at a time when the idea was to try to make the economy grow while controlling inflation. So the idea was that government spending wasn’t going to fix things, that was the problem. They wanted, instead, to encourage more business investment, to encourage more people to enter the workforce so that you could grow the economy without creating wage price spirals.
That is no longer the problem. Now, the problem is that the rich are saving a lot and not investing.
How do we get them to spend?
Bidenism is the answer: the government will create demand and invest directly. It is a reversal. When it comes to the corporate tax plan side. I think it is economically significant that this plan is financed by capital taxes. It is financed by tax companies. The idea here is that we don’t need to create more private savings. We do not need to increase the return for investors at this time.
We need to grab these savings from the government and invest them in ordinary people.
We need to invest them in infrastructure and R&D. And you need the government’s hand. Inflation is not the concern at this point.
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