Sometimes it’s only a few hundred meters that separate one America from another. One America is the sparkling towers of New York, the beaches of Florida, the national parks of California, Utah and Colorado. It is the land of the handsome and the rich, tourists in packages and mobile homes from all corners of the earth.
The other America is that of potholes. The crumbling bridges, the dilapidated airports and subway shafts, the tangles of electric cables hanging between houses in cities and poorer neighborhoods. This is the country of Amtrak, the lazy railroad company whose meager rail network has about as much in common with the high-speed lines of Japan, France and Germany as a horse-drawn taxi with a car. Formula One racing is the country in desperate need of the trillion dollar infrastructure package that the US Congress has been debating for months.
On Tuesday, the Senate finally approved the bill with 69 votes to 30, and 19 Republicans also voted yes. The package provides for new spending amounting to $ 550 billion and the reallocation of already approved funds of another $ 450 billion. The state intends to devote about 110 billion dollars to the repair of roads and bridges alone, and 66 billion will be devoted to the modernization of the rail network. For the extension of the broadband network and the rehabilitation of water pipes contaminated with lead, 65 billion and 55 billion dollars, respectively, are allocated.
Republicans in the Senate are playing the game by calculation – for once
After the Senate, the House of Representatives must approve, in which Democrats under President Joe Biden have a narrow majority. Although some of their MPs are unhappy, they are unlikely to let reform fail, as the project is one of Biden’s high profile projects and one of the few things that are largely undisputed among the public. This is also the reason why the Republicans have for once made common cause with the Democrats: Mitch McConnell, the leader of the senatorial minority, hopes that the citizens will honor the “constructive position” of his party in the legislative elections of 2022 .
The Infrastructure Law is the second part of this huge reform package with which Biden wants to overcome the consequences of the Corona recession, improve the economic framework for businesses, employees and customers in the medium term and address the worst shortcomings of the system. social. The goal is a fairer and climate neutral economy, capable of defending its position as world number one against its Chinese rival.
All of the individual packages will cost over six trillion dollars together, negotiations on Part Three, a $ 3.5 trillion family and social program, are expected to begin this week. Among other things, it provides for the introduction of a child benefit independent of income of $ 300 per month, paid parental leave and continued payment of wages in the event of illness. $ 726 billion will be spent on eliminating child care fees and free undergraduate courses at community colleges across the state. Biden plans to invest $ 332 billion in affordable housing and $ 198 billion in renewable energy. Democrats see the program as an investment in “human infrastructure” to complement the rehabilitation of “physical infrastructure.” The programs are to be funded, among other things, by substantial tax increases for the rich, tougher measures against tax evaders and the introduction of a tax on trading in cryptocurrencies.
Longer-term reforms could provide a strong boost to growth
While the future of the social package is uncertain – also because Republicans refuse to cooperate – there are already initial estimates of the possible effects of the infrastructure law. Thus, the direct economic recovery with additional growth of 0.2-0.3% would be manageable for now, which is mainly due to the fact that additional spending of “only” $ 550 billion over ten years with a macroeconomic return of more than $ 21 trillion is a relatively small amount per year. In the medium term, however, the return could be significantly higher, as better infrastructure means more productivity and lower costs. Take the example of road construction: if a company can deliver its goods via a modern highway instead of a rough road, it saves a lot of time and money.
The winners of the reform would be mainly companies whose commercial success is particularly important: logisticians like Amazon, UPS and Fedex, airlines like American and Delta, rail operators like Amtrak. There are also construction companies who can look forward to orders, broadband cable operators who will gain new customers in rural areas with government aid and – surprise – nuclear power plant operators, who are for the moment considered climate-friendly in Biden’s America. being. The losers, on the other hand, would be the new cryptocurrency industry, which is expected to pay $ 28 billion in taxes within ten years, the pharmaceutical and chemical industries, which will have to participate in the disposal of old drugs and the like. waste. , and – of all things – electric car makers involved in building a nationwide network of charging stations will only receive $ 7.5 billion in aid. Biden initially promised them a $ 174 billion subsidy.
The success of the President’s bill, the fight against climate change, a more just society and a controlled China will also depend on the capacity of the reforms to stimulate sustainable economic growth as hoped. Either way, it will be decades before the two Americas become one.