Often the only bipartisanship one sees in Washington is embodied in the passage of big-spending infrastructure bills.
With the ink not yet dry on the $2 trillion third rescue/stimulus legislative package in response to the Coronavirus crisis (the CARES Act, for "Coronavirus Aid, Relief, and Econnomic Security Act ") President Trump has called for a "VERY BIG & BOLD" $2 trillion infrastructure package in the upcoming "Phase 4'" response to Covid-19.
House Speaker Nancy Pelosi (D-California) wants the same , and she'll push the overall spending number higher. Votes could happen as early as April 20.
Both political parties historically show strong mutual inclination toward big-spending stimulus in the form of infrastructure , since there's always something in it for the folks back home. Phase Four coronavirus spendulus will be no different unless things change fast.
We can say this with confidence because your sense of deja vu isn't just a feeling. We have been here before.
Remember " shovel ready " back in the 2008 era economic stimulus? That didn't work out well , but politicians were unable to resist the pressures brought to bear then and now. Mark my words it won't be long before they're also talking about an "Infrastructure Bank " (a bank that robs you) again, too.
Senate Majority Leader Mitch McConnell (R-Kentucky) proclaimed before Phase Three that ” Anything that doesn’t address that pandemic … should not be considered,” but such resistance quickly fades. The second coronavirus package, the Families First Coronavirus Response Act , had already signed off on some of the progressives' sick leave and family leave mandates on employers at the very time they could least afford new costs.
There's still a chance for what next juggernauts America's way to be made more sensible. We can liberalize infrastructure and the regulation of it rather than just spend government money on it .
It is absolutely true that America needs to create and expand " infrastructure wealth " ; we need that just as we need financial wealth, real estate wealth, manufacturing and service wealth, technology wealth and health-care wealth.
But like all wealth creation, the root of infrastructure bounty is property rights , not transferred tax dollars and favors , which are inherently anti-property and dampening of enterprise and abundance. Throwing money at infrastructure stimulus (let's add an "sic") while leaving 19th and 20th Century regulation and creaky "public utility" models intact is not commendable.
A more productive way to maximize infrastructure wealth—and now-critical jobs and consumer benefits besides—-is to clear the path for free enterprise to build it. Yanking funds from unseen, helpless and dispersed taxpayers and applying it to Pelosi's and Trump's incoming high-profile campaign is ultimately a destructive rather than wealth-building enterprise.
Alongside the reflexive spending in the Covid-19 crisis, the bloated regulatory state is at least beginning to getting some of the attention it deserves. The administration almost daily announces deregulatory moves to lighten the load on access to treatment and healthcare. States, too, meanwhile are cutting red tape impeding response to the virus (a roundup of these may be found at #NeverNeeded , and you can suggest your own if so inclined).
I would go so far as to say that regulatory intervention is so important that, instead of another default spending package, there needs to be a " Phase 'X'" Coronavirus stand-alone regulatory liberalization package . This would include already available regulatory reform measures that have stalled in Congress, such as sunsetting, budgeting, and accounting for regulatory guidance documents.
With respect to infrastructure, earlier Trump executive actions easing permitting and regulation were among the most important deregulatory moves of his early presidency. See also the Department of Commerce's overly neglected Permit Streamlining Action Plan in this regard.
It is important to slam the brakes on this train (literally as well as figuratively since you can bank on public transportation boondoggles being thrown in) since federal infrastructure isn't just the Swiss Army Knife of bipartisan big-spending projects, its comes with golden chains attached to recipients that can enrich them but impoverish others by comparison.
Republicans stand to get rolled on the Phase 4 stimulus package because disagreements over funding infrastructure with debt now find Democrats at an advantage. Democrats sense blood in the water since the pandemic easily gives political cover to the more wobbly Republican contingent inclined to go big on infrastructure bucks anyway. The same Republicans that shouted down a mere attempt to have a recorded vote on the Phase 3 CARES Act will bend.
Further cover comes from the reality that Trump and Pelosi both have long hinted at some potential trillion-dollar arrangement on big infrastructure, well before anyone heard of Covid-19.
Fiscal spending of the proposed magnitudes constitutes intervention with massive regulatory effects , and central planning besides. If enacted, it will alter the trajectory of industries engaged in large-scale transactions, and those to come. Back during the 2016 campaign, Trump made some libertarians nervous with his favorable comments toward eminent domain. Expect them to pipe up again. Trump even championed the use of eminent domain to build a wall on the southern border (something that definitely will remain a non-starter with Democrats in Phase 4, however). Eminent domain is nothing new, but Trump envisioned a potential "military version " of such power.
Trump sees today's low interest rates are reason to move, but rates won't stay that way, and with the deficit for this year already punched up to $2 trillion by the CARES Act, Obama is the fiscal conservative by comparison.
Massive infrastructure spending would have then, and will now, come with with ample regulatory set asides and stipulations and tack-ons like renewable energy mandates — all draining resources and wealth that a relief package is intended to boost .
Marc Scribner, a senior fellow at the Competitive Enterprise Institute, my organization, told Politico it’s hard to imagine a worse time for some of these proposals:
This is a recipe for some of the most wasteful log rolling we would ever see. … You've got a panicked legislature, a panicked executive branch, and it sounds like they're going to be evaluating this possible legislation on how many zeroes come after the dollar sign, as opposed to what kind of value you can deliver to the users of this infrastructure.
In the absence of requiring dog collars by which we administer teensy shocks to members of Congress anytime they utter the word "stimulus," here are the sort of programs Washington should be implementing to boost infrastructure wealth:
- Establish an aggressive campaign to liberalize all network and infrastructure industries so they can collaborate. For decades these foundational industries have been segregated artificially into regulatory silos with separate agencies and philosophies (phone, electricity, water, sewer, cable, railroad, airline, air traffic control, Internet). Removing walls would create opportunities for them to finally take advantage of synergies and and jointly invest in new power lines, fiber to the home, roads, bridges, airports, toll roads and all the other complex operations that a Phase 4 package would presume to do suboptimally.
- Relatedly, relax antitrust so that firms within and across industry sectors can combine, initiate joint ventures and create business plans to bring capitalism and infrastructure wealth creation to higher levels than possible today.
- Further liberalize spectrum and secondary markets in airwaves such that wireless wealth is freely created with as little interference as possible from the regulators who create scarcity.
- With respect to broadband deployment and future frontier networks, declare regulatory campaigns like “net neutrality” permanently off the table ; announce that proprietary networks and investments will never be expropriated in any fashion, that there will be no forced sharing, only voluntary agreements and alliances (go here for details ) that inherent expand access better than the compulsory approach . My colleague Patrick Hedger points out that, in response to Americans' homeboundedness amid the Coronavirus, that more than 500 Internet service providers across the country have signed onto an FCC-organized but voluntary Keep Americans Connected Pledge. They're doing things like striking late fees, offering free service, and increasing capacity. Nancy Pelosi has indicated she wants turn such things into Phase Four commandments.
- Encourage, since so much regulation is at the state level, an inventory, reexamination and and removal of exclusive franchises that make it illegal rather than merely difficult for upstarts to compete with incumbents in areas like electricity (it remains illegal to run an extension cord across the street; see ” The Free Market Alternative to Mandatory Open Access .”)
These items are just a start. More generally—in opposition to Phase 4's approach—a privatization of politically provided services needs to be emphasized. Avoiding going overboard on big dollar, mis-targeted infrastructure pork remains a prerequisite for draining the rent-seeking swamp.
Sen. John Barrasso (R-Wyoming) said in a tweet in response to Trump's infrastructure appeal, "America's infrastructure is the lifeblood of our economy. At a time when our nation is dealing with an economic crisis from this pandemic, fixing America's roads and bridges is a great way to create jobs and support businesses.”
But when you endorse big spending like that, the obvious response is, "Why didn’t you do it before?" Score another for liberal Democrats who want to go much farther down that path and already have Phase 5 in mind.
The alternative is fleshing out a "liberate to stimulate" approach that can overcome the spending default. That won't come from progressives, who like government experts to be in charge of everything.
You guys have until April 20 to get it together.
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