The Moody’s study reports: “The plan’s proposed spending on infrastructure is large but spread over the next decade and paid for in significant part with higher taxes on corporations. Despite the higher corporate taxes and the larger government deficits, the plan provides a meaningful boost to the nation’s long-term economic growth.”
In the short term, according to the report, traditional infrastructure spending has a “multiplier” effect of 1.5. In other words, every dollar invested in infrastructure corresponds with $1.50 increase in the gross domestic product. Overall, Moody’s projects, the plan would translates to a 3.8 percent increase in GDP by 2024, compared with just a 2.2 percent increase if the plan fails to become law. Unemployment is also projected to decrease to 3.5 percent by the end of 2024. (Rather than adding 11.4 million jobs under current trajectories, Moody’s predicts the plan would result in 13.5 million jobs added.) Over the next decade, the plan would result in 18.9 million jobs added, compared to 16.3 million without it.
The benefit to U.S. businesses is considerable. Moody’s reports: “It lowers business costs and thus improves competitiveness and productivity, allows workers to live closer to where they work and thus reduces commute times, improves labor participation, and reduces carbon emissions.”
The Georgetown study’s numbers are slightly different: “The infrastructure plan would create or save 15 million jobs over 10 years and would increase the share of infrastructure jobs from 11% to 14% of all jobs in this country, temporarily reviving the blue-collar economy.” One warning flag: Most of the jobs will be held by men who traditionally dominate the labor pool for infrastructure jobs.
Moreover, “An infrastructure program would create 8 million jobs for workers with a high school diploma or less, 4.8 million jobs for workers with more than a high school diploma but less than a bachelor’s degree, and 2.25 million jobs for workers with bachelor’s degrees and above.” That is a powerful retort to the GOP, which has insisted it is the party of working people. More than 21 million people will gain access to broadband.
In addition, a new report from the Institute of Taxation and Economic Policy underscores how well corporations did over the last four years, with 55 big corporations paying no federal corporate income tax. ITEP reports:
The tax-avoiding companies represent various industries and collectively enjoyed almost $40.5 billion in U.S. pretax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 percent. The 55 corporations would have paid a collective total of $8.5 billion for the year had they paid that rate on their 2020 income. Instead, they received $3.5 billion in tax rebates.
Their total corporate tax breaks for 2020, including $8.5 billion in tax avoidance and $3.5 billion in rebates, comes to $12 billion.
Each of these reports support the essential premise of the bill: Spending a large amount will pay economic dividends, especially for blue-collar workers. And given corporations’ windfall since 2017, asking them to pay somewhat more does not seem like an undue burden.
There are also some warning signs in the data. First, the administration has stressed the outflow of women from the workforce during the pandemic. The preponderance of good, union-paying jobs for men leaves open the question as to how women will benefit from the plan. This concern might have been the reason for including $400 billion for “quality, affordable home- or community-based care for aging relatives and people with disabilities,” as the White House noted in its fact sheet about the plan. That includes new jobs, improved pay and benefits and “an opportunity to organize or join a union and collectively bargain” for workers who are often women of color.
Still, the plan is light on specifics. The Post reports: “Biden’s plan says it would use $400 billion to ‘expand access’ to home care in a way that would also support ‘well-paying caregiving jobs.’ It does not specify exactly how to do either, although a substantial investment could both expand the supply of care-taking services and, potentially, drive down costs overall.”
A second problem, which Republicans will likely seize on, is Moody’s anticipation of reduced growth in 2022 “as the higher corporate taxes take effect right away while the increased infrastructure spending does not get going in earnest until later in the year.” The administration had better hope this temporary blip doesn’t trip up Democrats going into midterm elections.
Finally, the economy added an impressive 916,000 jobs in March, a sign of a recovering economy. Republicans no doubt will claim we do not “need” this bill as a result. The White House will need to make the case that these jobs are higher paying and more sustainable, and that other ancillary benefits (e.g., shorter commute times, improved health from new water systems, modernized Veterans Administration hospitals) will not happen on their own.
Democrats will have plenty of data at their disposal. The test will be whether they can marshal the facts to align themselves with working people and cast Republicans’ as fuddy-duddies holding back progress and lapdogs of big corporations.