Sprinkles from the Left

The Left is in favor of a more expansive infrastructure bill where the money would come from raising the corporate tax rate to 28% from 21% and creating a global tax on corporate earnings.

A group of GOP senators made the cynical and likely futile move on Thursday of responding to President Biden’s infrastructure plan with a proposal that accounts for around a tenth of the spending that the White House has proposed.

The GOP proposal, which Republican senators described as a reasonable alternative, constitutes a fraction of the $1.7 trillion in spending that Biden has already offered as a concession from his initial proposal of $2.3 trillion. That’s largely due to GOP reluctance to finance any new spending, opting instead to scavenge unused money from elsewhere.

While GOP senators heralded the counteroffer as approaching $928 billion, there’s a big catch at the heart of it: only $257 billion is new spending. The remaining $671 billion, senators said, comes from repurposing money that was appropriated for the response to the COVID pandemic…

While [GOP Sen. John] Barrasso called Thursday’s counter-proposal “a real offer,” the seemingly unsurpassable areas of disagreement remain the same as when this group of Republican senators unveiled their original counteroffer back in April.

Josh Kovensky & Kate Riga; Talking Points Memo

In sum, bipartisanship is in Biden’s interest, but it is most assuredly not in Republicans’ interest. They must surely be tickled pink about the fact that reporters constantly grill the White House about whether the president is being sufficiently bipartisan, but seldom ask Republicans what they’re doing to compromise and seek cooperation.

Hold on, you might say: Why am I not giving Republicans more credit for sincerely wanting infrastructure to happen? Don’t their constituents need better roads and sewer systems and broadband? Wouldn’t they like to see those people’s lives improved?

Sure they would. But if their sincere desire for infrastructure held any real power for them—if it was more than just “I guess we could do that, but I’m not going to put much effort into it”—then they would have done it when Donald Trump was president.

After all, in the first two years of Trump’s presidency they had control of both houses of Congress. But they didn’t pass an infrastructure bill. They and Trump kept claiming they would—to the point where “Infrastructure Week” became a running joke—but they never did it. Once they passed their big tax cut for corporations and the wealthy, they stopped bothering to do much legislating at all.

So while they might have policy preferences within a bill if it’s going to pass anyway—one Republican senator might rather focus on fixing crumbling bridges, while another wants investment in ports—they’re perfectly fine with there being no infrastructure bill at all. They certainly don’t want those bridges and roads fixed so badly that they’ll give Democrats a big political win in order to make it happen.

Paul Waldman, Washington Post

Sprinkles from the Right

The Right is in favor of a smaller, more targeted infrastructure bill that does not correspond with a tax increase.

[The White House’s $1.7T proposal] was largely misdirection. The administration apparently plans to stuff the hundreds of billions in spending they’ve taken from their American Jobs Plan into another bill with strong bipartisan support. This bill, the Endless Frontier Act, is set to fund the research and development of critical technologies and manufacturing processes over which the U.S. is competing with China for dominance. However the GOP sponsors are unlikely to let the act be hijacked…

Is a bipartisan deal likely? No. The ideological gaps between the parties on spending and tax policy are probably too big to bridge. And the White House likely has other plans for that unspent Covid money.

Still, the GOP should keep working in good faith. If a bipartisan bill comes together, both parties get credit. If Democrats pass their version without Republican support, they’ll own a massive, wasteful spending bill as public concerns about inflation and deficits are rising. The tax hikes alone will give Democrats in swing states and districts electoral indigestion and may thereby make it impossible for Democrats to pass it in its current form.

Even if nothing passes, GOP legislators will have shown they aren’t blind obstructionists but practical conservatives who fought for a limited, sensible program to improve America’s infrastructure without giant tax or deficit increases.

Karl Rove; Published in the Wall Street Journal

How a society spends on innovation is the key to its future growth and prosperity. America’s remarkable economy, as with Great Britain’s in the eighteenth century, has come from its innovations, and those have come mostly from the private sector.

President Joe Biden’s $1.9 trillion Covid-19 stimulus and the $2 trillion American Jobs Plan aim to change that, by funneling corporate earnings to the government, so that it, rather than the private sector, can choose what to invest in—either directly or via subsidies to favored industries. In other words, this is industrial policy. If history is any guide, the result will be lower growth and more risk…

In the private sector, [redacted] a multitude of investors and participants determines how capital is invested, but when government gets involved, those decisions become concentrated in fewer hands. For private actors, the risk of failure encourages discipline, forcing companies to respond quickly to information about what products work and what the market will pay. Government decision-makers largely lack these incentives, and in the case of government-subsidized markets, prices convey less information about which investments are really working. That’s why industrial policy has failed more often than it has succeeded…

When it comes to innovation, the private sector remains the better bet.

Allison Schrager, senior fellow at the Manhattan Institute (published in City-Journal)