Republicans oppose the bill, ostensibly as being too costly, and because they incorrectly claim it includes items not traditionally defined as infrastructure. Their first objection is hypocritical. Their second demonstrates historical ignorance.
Their sudden concern about budgets is insincere given their dismissal of deficits and debts whenever tax cuts for corporations and the wealthiest Americans are on the table. Adding more than $5 trillion to the national debt as a consequence of the Bush and Trump tax cuts was just fine with these born-again budget hawks.
Their hand-wringing about non-traditional infrastructure is also disingenuous given the numerous bipartisan precedents and enormous success of prior U.S. investments in both kinds of infrastructure. For example, two extraordinary post-World War II success stories: the Interstate Highway program and the G.I. Bill.
Interstate Highway construction cost $568.5 billion in 2021 dollars. Estimates are that the program returned more than $6 in economic benefits for every $1 of construction expense, or $3.4 trillion. U.S. corporations profited much more from the ability to move their products around the country with greater ease than they have from all of the Republican corporate tax cuts since then. The highway project was a Republican initiative approved by a vote of 89-1 in the Senate and by voice vote in the House.
The original G.I. Bill was the brainstorm of Harry Colmery, a former Republican National Chairman, and was passed unanimously by both the House and Senate. It sent more than 8 million World War II veterans to school between 1945 and 1956, and saved the immediate post-war economy from massive unemployment. In addition, it was an enormous investment success. Beneficiaries earned higher wages and thus pumped more money into the economy. They were able to afford homes and stock them with consumer goods. It was also the gift that kept on giving to the government in the form of increased tax revenues.
This first G.I. Bill cost $213.5 billion in today’s dollars and considerably more in its multiple reiterations since the original bill. Republicans should be delighted that, unlike their customary assurances that tax cuts for the rich would pay for themselves (they never have), the G.I. Bill has generated ten times the program cost in federal tax revenues. Economists across the board label it “the best investment the U.S. government ever made.”
Post-World War II was not the first time the country realized huge benefits from government investment in both physical and human infrastructure. The three great 1862 laws—the Homestead, Land Grant and Railroad Acts—propelled American economic growth and educational attainment for the rest of the nineteenth century and beyond. The New Deal legislation that tempered the ravages of the Great Depression was another example of the federal government jumping in to deal with a massive crisis via both types of infrastructure investments.
One concern worth noting: inflation. A lot of cash is slogging around looking for places to land. Prices are rising, but this may be a temporary phenomenon as supply chains disrupted by the pandemic recover. Fed Reserve chair Jerome Powell and Treasury Secretary Janet Yellen believe that inflation is not going to be a serious problem. I defer to their much greater expertise and experience. Moreover, the history of inflation following past massive infrastructure investments supports this assertion. The peak annual New Deal era inflation rate was 3.0 percent in 1935. The modest inflation that the U.S. experienced following World War II, likely due to the tremendous pent-up demand for consumer goods, was short-term.
Together, the G.I. Bill and Interstate Highway Program boosted America to unprecedented heights of economic prosperity that characterized the postwar era. Joe Biden wants to do it again by investing in order to reap both near- and long-term rewards. This time, however, Republicans, despite a history of strong support for government infrastructure investment, are irrationally opposed. Like so much about the current manifestation of their once-responsible party, this makes no sense.
May 7, 2021