Alexander Stevens
Policy Analyst
Institute for Energy Research
….

…

…

[Editor’s Note: Biden’s “American Jobs Plan” infrastructure bill is a corporatist giveaway and a Nickelodeon style green slime job on all Americans]

Yesterday, President Biden unveiled his $2 trillion infrastructure proposal during a speech in Pittsburgh, Pennsylvania. As others have noted, the plan is an unnecessary corporate welfare scheme that “doubles down on everything that makes American infrastructure insanely expensive.” Much like the American Rescue Plan, the most recent “stimulus” bill that was passed in March, the American Jobs Plan includes much more than just infrastructure. Hidden in the proposal is a grab bag of goodies and privileges for progressive special interest groups.

To top it off, the Biden administration plans to pay for some of this infrastructure spending with the biggest tax increase since the Clinton administration. Biden plans to raise the corporate income tax from 21 percent to 28 percent, meaning he will likely break his promise not to raise taxes on anyone making less than $400,000 a year because the burden of this tax increase will likely fall on workers in the form of lower wages.

Transportation 

The plan includes $621 billion for what the administration calls transportation infrastructure, but with only $115 billion of that money going what Americans usually think of as infrastructure: highways, bridges, and surface streets. $174 billion would go toward subsidizing electric vehicle manufacturers, including subsidies to factories in order to boost the domestic supply of materials, additional tax incentives for EV buyers, and grant and incentive programs for charging infrastructure.

As I’ve written elsewhere, there are a number of legislative proposals currently sputtering around Congress that are seeking to expand subsidies for electric vehicles and the infrastructure that is needed to support them. American taxpayers are already spending billions of dollars to subsidize electric vehicles that are mostly purchased by high-income earners. Electric vehicles are mainly subsidized through federal income tax credits, which provide credits for new qualified electric vehicles of up to $7,500.

According to a report by the Congressional Research Service, the majority of people who claim the electric vehicle tax credit earn a much higher income than the national average. As the report notes:

“In 2016, 57,066 individual taxpayers claimed $375 million in plug-in EV tax credits. EV tax credits are disproportionately claimed by higher-income taxpayers. Most of the tax credits (78%) are claimed by filers with adjusted gross income (AGI) of $100,000 or more, and those filers receive an even higher proportion (83%) of the amount of credits claimed. About 7% of credits claimed, and 8% of the total amount of credits, were on returns where the taxpayer’s AGI exceeded $1 million.”

That same report found, based on estimates provided by the Joint Committee on Taxation, that under current law tax expenditure (forgone revenue) for the plug-in EV tax credit would be $7.5 billion between 2018 and 2022.  Since EV registrations in the US in 2020 reached a market share of only 1.8 percent, this influx of $174 billion for EV infrastructure should be seen for what it is: more federal subsidies that allow high income earners to continue to enjoy the consumption of luxury goods. If EVs are truly ready to compete with the internal combustion engine, then EV companies should have no problem building out the infrastructure that is necessary to support them. Afterall, the private sector built out the 136,000 gas stations that supply fuel to the majority of American motorists.

Climate and Electricity

Biden’s plan also claims to put the United States on a path to 100 percent carbon-free electricity by 2035. The plan calls on Congress to spend $100 billion on a ten-year extension of an expanded direct-pay investment tax credit and production tax credit for renewable energy and storage.  The plan also seeks to create additional investment tax credits in order to incentivize the buildout of 20 gigawatts of high-voltage capacity power lines, presumably to aid the costly renewable energy projects located far from any customers. An additional $213 billion would be spent on housing, with some portion of that used to retrofit homes to save energy.

Those numbers may sound big, but it would cost at least $5 trillion to build enough wind, solar, and battery systems just to replace all the power plants that currently burn natural gas and coal—over 60 percent of the nation’s electricity generation. And none of this is doing anything to actually boost productivity or economic growth because that money will have been spent to produce the same quantity of the same product—kilowatt-hours of electricity. Given that the administration sees Germany as the model they want to replicate in the shift to renewable energy, where electricity prices are the highest in Europe, the Biden plan will lead to much higher electricity prices for consumers.

Additionally, this vast construction effort would hardly be environmentally friendly. To generate just half of U.S. electricity with wind would require 1,095,000 two-megawatt wind turbines, each of them requiring 1,671 tons of material, including 1300 tons of concrete, 295 tons of steel, 48 tons iron, 24 tons of fiberglass, 4 tons of copper, and rare earth metals that China dominates: 0.4 tons of neodymium and .065 tons of dysprosium. If the United States were to generate all of the energy it uses with renewable energy, 25 percent to 50 percent of all land in the United States would be required compared to today’s energy system, which requires 0.5 percent of land in the United States.

The plan would also spend $10 billion to establish a Civilian Climate Corps. The details are vague, but this appears to be similar to FDR’s Civilian Conservation Corps—a New Deal era jobs program that was focused on planting trees all over the country. This new version appears to be a similar make-work program, something that is completely unnecessary seeing as there are several non-profit organizations that do this exact thing.

We’ve Been Here Before

The energy and environment provisions of this new infrastructure bill are similar to the 2009 stimulus bill that also focused on concepts such as green jobs and climate investment. If the 2009 stimulus bill is any indication of what all of this tax and spending means for the economy, then Americans should expect this bill to, once again, concentrate benefits on the well-organized and politically-connected and pass the costs on to everyone else, while the climate remains the same.

Follow Us on MeWe and Join Our
Natural Gas for the Future Group